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The Rome I Regulation on the Law Applicable to Contractual Obligations by McParland, Michael (19th March 2015)

1 All Roads Lead to Rome

From: The Rome I Regulation on the Law Applicable to Contractual Obligations

Michael McParland

Choice of law clauses — Rome Convention — Rome I Regulation and choice of law — Validity of contract

(p. 1) All Roads Lead to Rome

Commerce is now so absolutely universal among all countries; the inhabitants of all have such a free intercourse with each other; contracts…are so common among persons, whose domicils are in different countries, having different and even opposite laws on the same subjects; that without some common principles adopted by all nations in this regard there would be an utter confusion of all rights and remedies; and intolerable grievances would grow up to weaken all the sanctity of contracts and the security of property.

Joseph Story (1834).1

The question is: pursuant to which legal norms is the judge of our state to decide the legal relationship brought before him, which either was formed abroad, or in which foreigners are involved, or which otherwise has some connection with another country?

Carl Georg von Wächter (1841).2

(p. 2) A.  A New Roman World

1.01  The Rome I Regulation (593/2008)3 (‘Rome I’) is a current solution to some very old questions. It contains a set of harmonized conflict-of-laws rules (règles de conflit)4 that are to be applied by the courts and tribunals of all but one of the Member States of the European Union (‘EU’).5 These rules determine the laws that are ‘applicable’ in situations that involve ‘a conflict of laws’ in most contractual obligations in civil and commercial matters.6 Those situations involve ‘one or more elements that are alien to the domestic social life of a country’,7 and therefore require a decision as to which system of law should define, shape, and control the duties, rights, and remedies of the parties to the contract in dispute.

1.02  The questions that Rome I seeks to answer first arose in Europe after the collapse of the Roman Empire.8 With the end of a universal empire governed by a common legal system, conflicts between foreign and local laws inevitably arose in transactions involving persons owing allegiance to different rulers. It was with the revival of interest in Roman law in the 12th century, when Justinian’s Code was studied and taught among the independent city-states of Northern Italy, that possible answers to these problems began to appear. Aldricus of Bologna first suggested in about 1200 ad that in cases where courts had to choose between different competing laws a judge had a discretion to apply the better and most useful law.9 From the Middle Ages onwards, the evolution of solutions to the conflict-of-laws problem grew in practical importance for both individuals and States as travel, commerce, and trade across national borders increased. The Industrial Revolution gave this process greater impetus. By 1834, Professor Story would observe:

A person sometimes contracts in one country, and is domiciled in another, and is to pay in a third; and sometimes the property, which is the subject of the contract, is situate in a fourth; and each of these countries may have different, and even opposite laws. What this is to be done in this conflict of laws? What law is to regulate the contract, either to determine the rights, the actions, and the defences growing out of it; or the consequences flowing from it; or to interpret its terms, and ascertain its stipulations? Boullenois10 has very justly said, that these are questions of great importance, and embrace a wide extent of objects.11

(p. 3) 1.03  In Europe, the idea of unifying conflicts rules is often attributed to the work of the German scholar, Friedrich Carl von Savigny,12 and contemporaries influenced by his work.13 Von Savigny’s method involved the determination of the proper law of any legal relationship, and fixing its ‘seat’ based on certain factual criteria.14 The domicile of a person generally controlled issues of capacity, succession and family relationships. The location of a thing (such as an item of property) that was the subject of the relationship between the parties determined all rights in that thing, save for questions of capacity and procedure. The location of a legal transaction, which had occurred or was to occur, governed obligations arising out of contracts, but not questions of capacity or torts or delicts. The location of a forum court controlled procedural as opposed to substantive matters. Von Savigny recognized that this method had a number of difficulties in relation to contractual obligations, because they necessarily involved at least two parties who frequently were performing reciprocal obligations, and many contracts involve objects that are difficult to geographically locate. Von Savigny suggested these problems could be overcome by recognizing that (i) for voluntary transactions the expectations of the parties should control; (ii) that the essence of an obligation is its fulfillment, not its origin; (iii) that an obligation relates essentially to the debtor rather than the creditor; (iv) that reciprocal obligations were to be governed by their own law.15 With those matters in mind, obligations were to be located at the place of performance, when expressly stipulated or, in default of an express provision, according to appropriate circumstances from which the parties’ tacit intention may be inferred, such as the debtor’s place of business, the place of contracting (if this was the debtor’s domicile or suggested by other circumstances), or, failing any other indications, at the debtor’s domicile.16

1.04  The Rome I Regulation owes much to the residual legacy of von Savigny’s ideas. It applies to contracts concluded on, or after, 17 December 2009. Rome I has been described by the European Commission as ‘a central element of the Community acquis in the area of civil justice’ within the EU.17 Rome I is the successor to the Rome Convention of June 1980 (‘the Rome Convention’),18 an international convention which has not been denounced and remains in force. The conflict-of-laws rules found in the Rome Convention will continue to apply to all contracts concluded up to 16 December 2009, and to contracts in cases before the courts and tribunals of Denmark and in a tiny number of non-European territories of Member States.

(p. 4) 1.05  Rome I has a sister Regulation, the Rome II Regulation (864/2007) for non-contractual obligations (‘Rome II’).19 This is not a book about Rome II, but together the Rome I and Rome II Regulations have created a new ‘Rome Regime’ for determining the applicable law in civil and commercial obligations in Europe. Along with the Brussels I Regulation (44/2001/EC) and its successor, the Brussels I Recast (1215/2012/EU), on jurisdiction and enforcement of judgments in civil and commercial matters (‘the Brussels Regime’),20 the Rome Regime is at the heart of a rapidly developing EU private international law, that has evolved to replace much of the national private international laws of Member States.21

1.06  Beginning tentatively with the Maastricht Treaty (1992), before gathering speed after the Treaties of Amsterdam (1997) and Nice (2001) came into force, the EU has promoted the progressive establishment of an ‘Area of Freedom, Security and Justice’,22 which includes adopting ‘measures relating to judicial cooperation in civil matters with a cross-border impact to the extent necessary for the proper functioning of the internal market’.23

1.07  Both Rome Regulations are the product of work to develop harmonized conflict rules that was started in the 1960s by the original Six Member States of the then European Economic Community (‘EEC’). The plan was to iron out the differences in pre-existing national laws to enhance the functioning of the fledgling European Common Market. This work of reform (p. 5) commenced in 1968, and resulted in a preliminary draft convention in 1972 for both contractual and non-contractual obligations (‘the 1972 Draft Convention’).24 Further negotiations involving the new 1973 intake of Member States, (Denmark, Ireland, and the United Kingdom), eventually produced an intergovernmental convention, the Rome Convention in 1980, that was limited solely to contractual obligations in civil and commercial matters. This Rome Convention finally came into force in April 1991, with the protocols giving the Court of Justice of the then European Union jurisdiction to interpret it finally coming into effect in 2004.

1.08  The history and background to the development of Rome I is an important interpretative tool. Rome I inherits much of its content, structure, and legislative intent from the solutions and compromises reached in the 1970s that were reflected in the Rome Convention. As times passes, it is easy to forget why these compromise solutions were reached and what their intended limitations were.

1.09  But while preserving much of the past, Rome I also contains much that has been changed. Those changes represent amendments to both the form, and sometimes, the substance of the inherited Rome Convention text. They are the product of the negotiations and compromises reached by the institutions of the EU legislature between 2003 and 2008 as the Rome Convention was converted into a Union instrument. This book looks at those developments in detail and identifies those matters and materials which may well be relevant in practice to the interpretation of the Regulation using the methods adopted by the Court of Justice.

1.10  This chapter summarizes the road from, and back to, Rome, that produced both the Rome Convention and the Rome I Regulation. It marks out the major steps in the development of both, setting them in context with wider developments in EU private international law. It asks the essential questions of how, when and why did we get where we are? It is a story that is rich in topics for discussion that cover the whole spectrum of attitudes to the EU, the growth of its legislative powers and the nature of private international law within the European Internal Market. At one end of the opinion spectrum, there are some who believe that Rome I, like the Rome Convention before it, is an example of cooperation between Member States that works to the good of all. At the other end, there are some who see it as the product of law-making by small committees, imposed by Brussels with little regard for its actual or potential impact on national legal systems and legal and business practice. Given the nature of the debate, we should begin by investigating why we need such rules in the first place.

B.  What is an ‘Applicable Law’ of a Contract?

1.11  Contracts, like the people who make them, are incapable of independent existence in a vacuum. Unless made by reference to some system of private law contracts are ‘mere pieces of paper devoid of all legal effect’.25 The law that gives them life, which defines the obligations assumed by the parties and prescribes the remedies that a court will enforce for a failure to perform them, is described in various interchangeable terms as ‘the proper law of the contract’ or its ‘governing law’; but the modern phrase adopted in the new European regimes is that of the ‘applicable law’.

(p. 6) 1.12  What law should be the applicable law? When all the elements of a contractual relationship arise in one country there is no difficulty in applying that country’s laws. But when a contract forms part of the stream of commerce and trade that flows across national borders—involving parties located in different countries who share neither a common language nor common laws—how should a forum court determine whose law should apply to a contract? Should it automatically apply its own law (the lex fori), or should it adopt different rules to reflect the international elements involved?

1.13  In 1929, in the Payment of Various Serbian Loans Issued In France case, the Permanent Court of International Justice (‘PCIJ’) answered that question in the following terms:

Any contract which is not a contract between States in their capacity as subjects of international law is based on the municipal law of some country. The question as to which this law is forms the subject of that branch of the law which is at the present day usually described as private international law or the doctrine of the conflict of laws. The rules thereof may be common to several States and may even be established by international conventions or customs, and in the latter case may possess the character of true international law governing the relations between States. But apart from this, it has to be considered that these rules form part of municipal law.26

1.14  Neither the term ‘conflict of laws’ nor the PCIJ’s alternative label of ‘private international law’ is consistently applied even within the Member States.27 In its broadest sense, private international law comprises mechanisms to facilitate the settlement of cross-border, private law disputes that answer three questions: firstly, which country’s courts have jurisdiction over the parties and their dispute? Secondly, which country’s substantive law is to be applied by the court hearing the case? Thirdly, will a decision given in a court which has declared it has jurisdiction ultimately be recognized and/or enforced in another country?

1.15  It is the second of those questions that the Rome I Regulation and this book is concerned with. It is an issue known in most (but not all) Member States as the ‘conflict of laws’ (‘conflit des lois’ or ‘Kollisionsrecht’), which is the term adopted in this book. It describes the process whereby the applicable law of a contractual obligation is identified and selected. It is often referred to in the common law as the ‘choice of law’, though often the only person doing the choosing is the court itself.

1.16  But why do we need a common European set of conflict-of-laws rules, and how did they come about?

C.  A New Age of International Cooperation (1945–1968)

1.17  The historical background to the Rome I Regulation, like everything else associated with the EU, is rooted in the post-1945 desire to cooperate; both within Europe and in the wider world. It was a new age, that saw the emergence of a positive ‘international law of cooperation’, replacing previous principles that had focused on rules of coexistence.28 This new age was reflected in the creation of international organizations such as the United Nations, the 1947 General Agreement on Tariffs and Trade (‘GATT’) and its subsequent negotiations,29 new (p. 7) international conventions on international arbitration,30and revised international transport conventions,31 all of which sought to promote trade, commerce, and prosperity.

1.18  In the aftermath of the Second World War, efforts by Nation States to harmonize both rules of private international law and substantive contract law also increased. The Hague Conference on Private International Law (‘the Hague Conference’)32 had resumed its pre-war activities. A 1954 convention on civil procedure33 was followed by the Hague Convention of 15 June 1955 on the Law Applicable to International Sales of Goods (‘the 1955 Hague International Sales Convention’). This Convention created its own set of conflict-of-laws rules for contracts that fell within its material scope.34 By the time it came into force in September 1964, it had been signed by five of the six of the original EEC Member States (the exception being West Germany), but had been ratified by only France, Italy, and Belgium.35

1.19  Other, mainly unsuccessful, civil and commercial law Hague Conference conventions followed: on the law governing the transfer of title in international sales of goods,36 on the jurisdiction of the selected forum in international sales of goods,37 on the settlement of the conflicts between the law of nationality and the law of domicile,38 and on the recognition of legal personality of foreign companies, associations, and institutions.39 In 1965, Hague Conventions were concluded relating to (i) the service abroad of judicial and extra-judicial documents in civil or commercial matters which did come into force,40 and (ii) on the effects of a contractual submission of disputes to a foreign court which did not.41

1.20  As for the harmonization of substantive contract law, the former Rome Institute had become the permanent Institutional Institute for the Unification of Private Law (‘UNIDROIT’), and UNIDROIT inspired the Netherlands in 1951 to call a diplomatic conference to discuss a pre-war draft of a uniform international law of the sale of goods. UNIDROIT directed work continued until an April 1964 Conference in the Netherlands,42 which (p. 8) produced two Conventions of 1 July 1964. These were (i) the Convention relating to a Uniform Law on the International Sale of Goods (‘ULIS’), and (ii) the Convention relating to a Uniform Law on the Formation of Contracts for the International Sale of Goods (‘ULFC’).43

1.21  The United Nations Commission on International Trade Law (‘UNCITRAL’) was created in 1966. Its mandate was to ‘further the progressive harmonization and unification of the law of international trade’ by ‘preparing new international conventions, model laws and uniform laws’. UNCITRAL would decide in 1968 to give priority to the production of a uniform law on international sales.44

European cooperation: the new Supra-National creations

1.22  The most significant areas of international cooperation for present purposes are the developments that occurred within Western Europe.45 In 1951, the European Coal and Steel Community was established by the Treaty of Paris. This was signed by France, the West German Federal Republic, Italy, Belgium, The Netherlands, and Luxembourg (‘the Six’). This Treaty was based on the Schuman Declaration of 9 May 1950, which advocated the radical idea of a community where all national barriers preventing the free movement of coal and steel across borders should be dismantled, while seeking to move the wage scales of coal and steel workers in Member States towards a common level.46 To achieve this objective, the Treaty of Paris created a community with its own High Authority, a Special Council of Ministers, a Joint Assembly, a Court of Justice—which was charged with acting as the guardian of the ‘rule of law’ in the new community47—and a consultative committee. Contemporaries recognized that: ‘[i]ts supranational powers mark a basic departure from the conception of all previous international organizations’.48 Indeed:

Although it is scarcely possible to give an exact definition of the community, it has one conspicuous feature. It is super-national…the community is in effect more federal than international, and that it represents a real transfer of sovereignty such as none of the member States has ever accepted before. The community is a new structure in the marches between internal law and international law.49

1.23  While many agreed the community was new, the relationship between the new community laws and Member States’ national laws was seen as ‘unusually complex and (p. 9) hybrid’.50 Matters became even more complicated by the creation of two more European communities by the signing of two more treaties in Rome in March 1957. These treaties created both the European Economic Community (‘EEC’) and the European Atomic Energy Community (‘Euratom’).51 The following is concerned with the first and most important of those treaties.

D.  From Rome to Brussels (1957–1968)

The Treaty of Rome (1957)

1.24  The 1957 Treaty of Rome created a European Economic Community comprising the same Six Member States of the Coal and Steel Community.52 For some, it was a major step towards a ‘United States of Europe’; for others it was a journey towards an unknown destination. The EEC’s objectives were bold. It was to promote ‘a harmonious development of economic activities, a continuous and balanced expansion, an increase in stability, an accelerated raising of the standard of living and closer relations between the States belonging to it’. These objectives required establishing a customs union and a common market among the Six Member States, and by progressively approximating their economic policies.53 To achieve these goals, the EEC’s activities were to include ‘the approximation of the laws of Member States to the extent required for the proper functioning of the common market’.54 The cornerstones of the common market were to be the ‘four freedoms’, the free movement of people, goods, services and capital across the national boundaries of Member States.

1.25  But again, as with the Coal and Steel Community, what was the nature of the relationship between the rules and laws created by the EEC and the national laws of Member States? Starting in 1963, the European Court of Justice (‘the Court’), in a series of landmark decisions, established four doctrines that, in the eyes of some, rendered the relationship between EEC law and national laws ‘indistinguishable from analogous legal relationships in constitutional federal states’.55 These were the doctrines of (i) the supremacy of community law, (ii) direct effect, (iii) implied powers, and (iv) human rights.56

A new ‘European’ private international law?

1.26  The creation of the EEC gave rise to questions among scholars about what role private international law would play within this new Supra-National structure.57 It had been emphasized in 1957, the same year the Treaty of Rome was signed, that private international law was concerned with ‘questions that arise in the course of private commerce (p. 10) across state lines’, and its principal objective is achieving legal ‘security’ or ‘certainty’. This involves maximizing ‘uniformity in defining the legal and socio-economic consequences of transactions and events by the selection and application of the corresponding law’, a process impeded ‘by variations in the conflicts rules in different jurisdictions and in the conceptions they connote’.58 Given the principal objectives of the EEC centred on the promotion of such cross-border commerce, the potential for engagement with private international law in promoting the functioning of the Common Market was significant.

1.27  Questions over what role private international law might play fell into two categories. The first of these concerned the rules of private international law created by, and for, the EEC itself. These had originated in the Treaty of Rome, and were emerging in the EEC’s developing secondary legislation and the case law of the Court of Justice,59 and in the everyday functioning of the EEC and its agencies. The most obvious potential source was in the treaties concluded by Member States under the sponsorship of the EEC as directed by the Treaty of Rome itself.60 The second category of questions concerned how private international law was to deal with the fact that, within the EEC, citizens of Member States were entitled to exercise the four freedoms of movement across national borders, and therefore they, and their business activities, were less ‘foreign’ to each other than had previously been the case.

Article 220 of the Treaty of Rome (1957)

1.28  The history of a distinct private international law of the European Union begins on or about Monday 11 March 1957; some 14 days before the Treaty of Rome was signed in Michelangelo’s renovated Palazzo dei Conservatori on Rome’s Capitoline Hill.61 For it was at this time that a new, last-minute addition to the text of the draft Treaty of Rome was added. This was Article 220 that provided that:

Member States shall, so far as is necessary, enter into negotiations with each other with a view to securing for the benefit of their nationals:

  • –  the protection of persons and the enjoyment and protection of rights under the same conditions as those accorded by each State to its own nationals;

  • –  the abolition of double taxation within the Community;

  • –  the mutual recognition of companies or firms within the meaning of the second paragraph of Article 58, the retention of legal personality in the event of transfer of their seat (p. 11) from one country to another, and the possibility of mergers between companies or firms governed by the laws of different countries;

  • –  the simplification of formalities governing the reciprocal recognition and enforcement of judgments of courts or tribunals and of arbitration awards.62

1.29  Article 220 was introduced as ‘a way to harmonize those differences in the national legislation, which are considered an obstacle to the real functioning of the EEC’.63 Member States were directed to negotiate international conventions to iron out those differences. Although Article 220 did not force all the Member States to participate in negotiations,64 the Commission’s view was that if the four freedoms guaranteed in the Treaty of Rome were to ‘be fully effective and [to] ensure equality of competitive conditions all member states have to participate’. Although no end-result of the negotiations referred to in Article 220 could be mandated, ‘[t]his negotiation is, however, assumed to result in conventions’.65 Article 220 produced two initial conventions.

1.30  The first convention resulting from Article 220 (third indent), dealing with issues relating to the mutual recognition of companies, was the Mutual Recognition of Companies and Bodies Corporate Convention, signed on 29 February 1968.66 But the second convention was to be the key foundation text for developing a distinctly European private international law.

Reciprocal recognition and enforcement of judgments and awards

1.31  Article 220 (fourth indent) of the Treaty provided, so far as was ‘necessary’, that Member States should enter into negotiations with each other to secure for their nationals ‘the simplification of formalities governing the reciprocal recognition and enforcement of judgments of courts or tribunals and or arbitration awards’. This was intended to cause Member States to make the necessary changes to their own private international laws to give effect to the relative change in status between each of them arising out of their shared membership of the EEC. As a consequence, there were sound reasons for the judgments and arbitral awards of the courts and tribunals of a Member State A not being treated in the same way as other ‘foreign’ judgments or awards when it came to their recognition and enforcement in Member State B.

1.32  Article 220 was intended to plug something of a gap in the Treaty of Rome that reflected the hybrid nature of the EEC itself. The Treaty of Rome lacked any equivalent to the Full Faith and Credit Clause of the US Constitution. That clause required US States, as a matter of federal law, to recognize and enforce any valid judgment rendered in another State except in very limited circumstances.67 The Full Faith and Credit clause served important policy (p. 12) objectives in creating the USA, altering the status of the states from independent countries foreign to each other, into integral parts of a single, federal nation.68 That clause arguably also granted Congress the power to prescribe conflict-of-law rules regarding interstate relations to prevent intra-regional forum shopping.69

1.33  Understandably, given the earlier failure of initiatives advocating European political integration,70 the Treaty of Rome attempted nothing similar. The economic integration of the EEC Member States was to take priority. The 1956 Spaak report on ‘The General Common Market’71 emphasized there should be a distinction between matters which would affect the functioning of the common market, control of which might be entrusted to the new EEC institutions, and those matters of general policy which were to remain ‘the reserved domain of the [Member] governments’.72 However, even though the overriding federalizing, political imperative of the US Constitution was not present in the Treaty of Rome, the EEC still required some system to improve the free movement of persons, companies, and judgments. Accordingly, Article 220 directed the Member States towards negotiations to resolve these important issues at an intergovernmental level.

1.34  On 22 October 1959, the EEC Commission sent a note to Member States inviting them to commence negotiations. This note pointed out that a true Internal Market between the Member States would only be achieved ‘if adequate legal protection could be secured’. Legal protection and, hence, legal certainty in the common market depended on the adoption by the Member States of a satisfactory solution to the problem of recognition and enforcement of judgments.73

1.35  On 18 February 1960, the Committee of Permanent Representatives of the Member States (‘COREPER’)74 agreed to set up a committee of experts. This comprised delegates from the Six Member States, along with observers from the Benelux Committee on the unification of law, the Hague Conference on private international law, and representatives from the EEC Commission. The Brussels expert committee met for the first time in July 1960, appointed Professor Bülow as their chairman, and the Belgian official Mr Pierre Jenard as its rapporteur. In December 1964 the committee adopted a preliminary draft convention.75(p. 13) This draft, with an explanatory report,76 was submitted to the Member States for comment. After consultation, the draft jurisdiction convention was finally adopted by the experts at a meeting in July 1966.77

The 1968 Brussels Convention

1.36  On 27 September 1968, the six EEC Member States signed the Brussels Convention on Jurisdiction and the Enforcement of Civil and Commercial Judgments (the ‘1968 Brussels Convention’).78 This scope of this Convention went beyond the express requirements of Article 220. Member States had created a ‘double convention’, that dealt with questions of the exercise of jurisdiction by their courts and the recognition and enforcement of those courts’ judgments. This established a ‘new system based on direct jurisdiction’, with ‘the adoption of common rules of jurisdiction’ among the Member States. Subject to its provisions, persons domiciled in a Contracting State, ‘shall be answerable to the courts of that State, whatever their nationality’.79 ‘Special jurisdiction’ was provided, which allowed any defendant domiciled in a Contracting State, to be sued in another Contracting State, in specified circumstances. These included, ‘in matters’ of contract, ‘the court of the place where the obligation has been or is to be fulfilled’,80 and in matters of tort or quasi-tort, ‘the court of the place where the tortious act occurred’.81 Special rules were created for jurisdiction in matters of insurance,82 and for ‘matters of credit sales and hire purchase’, an early, limited form of consumer contract rules.83 Parties were allowed, within limits, to reach agreements on jurisdiction,84 subject, as in every other case, to the ‘sole jurisdiction’ provisions in Article 16, which restricted jurisdiction to certain courts ‘regardless of domicile’. The intention behind the 1968 Brussels Convention was that it ‘would allow harmonization of laws, provide greater legal certainty, avoid discrimination and facilitate the “free movement” of judgments, which is after all the ultimate objective’.85 Arbitration was excluded from the scope of the 1968 Brussels Convention despite the terms of Article 220. This was in deference to other international conventions, principally the 1958 New York Convention which had entered into force on 7 June 1959.

1.37  The 1968 Brussels Convention came into force on 1 February 1973.86 On 1 June 1971, a Protocol permitting the Court of Justice of the European Communities to interpret the Convention was concluded.87 This became binding on 1 September 1975, and the Court’s first judgments on the 1968 Brussels Convention were handed down on 6 October 1976.88 The 1968 Brussels Convention and its amending successors in the form of both Conventions and now EU Regulations, as well as the Court’s interpretative rulings on these jurisdictional (p. 14) provisions (‘the Brussels Regime’) both shaped the development of the common rules for the choice of applicable law in Europe, and have a crucial role in the interpretation of the rules now enshrined in the Rome I Regulation.

E.  Harmonizing the Conflict-of-Laws Rules of Member States

1.38  With 1968 Brussels Convention being negotiated, questions arose whether the harmonization of the laws of Member States was required because of ‘the indirect, secondary repercussions that the activities of the Community produce on the existing national conflicts rules’.89 Debate focused on contractual dealings, involving contracts with the EEC itself, and regarding cross-border contracts between nationals of different Member States.

‘The law applicable to the contract in question’

1.39  The Treaty of Rome had declared that ‘[t]he contractual liability of the Community shall be governed by the law applicable to the contract in question’.90 But there was no guidance as to how that law was to be determined. Did it refer to the ordinary applicable law of the contract which depended on the national conflict-of-laws rules of the forum hearing the dispute,91 or was it a reference to some other, Community-based concept of the law applicable to the contract? It would take almost 30 years before the Court of Justice declared that the ‘law applicable to the contract in question’ in Article 215 of the Treaty was simply the national law that applied to the contract in question under ordinary conflict-of-laws rules, and was not a reference to some law derived from the general principles common to the legal systems of the Member States.92

Private contracts between nationals of different states

1.40  Several commentators considered there was a pressing need for harmonization of conflicts rules regarding private law contracts concluded between nationals of different EEC Member States. In 1964 Walter Hallstein advocated harmonizing of all national conflict-of-law rules among the Member States.93 Professor Zweigert’s 1966 review of the differing approaches founded in Member States concluded that harmonization or unification of national contractual conflicts rules was not only desirable but was required as a matter of necessity. Professor Zweigert even outlined basic rules that could be adopted by the Member States.94

1.41  But could a common approach to contractual conflict-of-law rules be deduced from existing national laws? Some French scholars argued that the only rule accepted by all Member States (p. 15) was that of party autonomy in choice of law.95 But what rule should be applied when the parties included no choice-of-law clause in their contract? Professor Drobnig argued:

The Court of Justice should be free to develop the best rule possible, using the most progressive methods available in Europe, whether derived from member states or not; particular attention should be paid to the Swiss formula based on the ‘characteristic performance’, i.e. to that particular place where obligations of a certain kind are most typically performed.96

1.42  In France, Professor Henri Batiffol had long believed that international trade had different needs from those of internal commerce.97 Professor Batiffol had hoped that the problems arising from the differences in national conflicts rules for international contracts of sale could be resolved by a general adoption by all Member States of the 1955 Hague International Sales Convention.98 But the April 1964 Hague Conference had seen considerable division of opinion among Member States on the use of conflicts rules to achieve harmonization and regarding the solutions adopted in the 1955 Convention.99 By 1967, while Belgium, France, and Italy had ratified the 1955 Hague International Sales Convention, it seemed very unlikely that the Netherlands and West Germany would follow their lead.100

1.43  Apart from contracts of sale, contracts of employment, and the need to protect workers, differences in applicable national laws also gave rise to several issues.101

1.44  Given the impending arrival of the common rules of jurisdiction agreed in the 1968 Brussels Convention, there were increasing concerns that something needed to be done to harmonize the conflicts rules of Member States to prevent outcomes differing by reason of a parties’ permitted choice of forum.

An age of codification

1.45  Some early commentators argued that the EEC should seek to harmonize its substantive laws, especially for contractual obligations.102 But harmonizing conflict-of-laws rules was seen as both the easier and quicker option.103 As Professor Drobnig observed, ‘[t]he ultimate (p. 16) superiority of a uniform substantive rule has to be balanced off against the greater price in terms of time and effort necessary for its development’.104

1.46  This debate was taking place in an era ‘characterized by a strong tendency towards codification’ of private international laws,105 even though problems with codification were recognized.106

1.47  In 1947 in France, the De Gaulle provisional government had appointed a Commission for a Revision of the 1804 Civil Code, which only had a few articles dealing with conflict-of-laws issues. By 1950, that revision commission had published a draft law of more than one hundred articles.107 A further draft was published by the French Civil Code Reform Commission in 1955.108 The Benelux countries also produced their own convention in 1951 which, as we shall see, proved to be highly influential in developing the choice-of-law rules in Europe.

1.48  In the United States, work on revising the First Restatement Conflict of Laws had begun in 1952.109 Codifications in Eastern Bloc countries such as Czechoslovakia110 and Poland111 revised earlier private international law statutes112 based on an Austrian draft statute of 1913.113 Hungary had prepared draft legislation in 1947.114 Work was continuing on a statute in East Germany which would be enacted in 1975.115 With a modest growth in east–west trade, the Eastern Bloc’s approach to private international law attracted greater attention in the west.116

(p. 17) 1.49  Comparative studies of both substantive and conflict-of-laws were also reinvigorated after the Second World War, not least because of the strong connections developed between the common law and émigré German scholars.117 Many had travelled to the United States and saw the developments that led to the Restatement (Second) Conflict of Laws. In 1950, the German Association of Comparative Law was refounded. Professor Dölle’s report on its objectives highlighted that the economic and political integration of Europe ‘must be supported and accompanied by a gradual approximation and finally unification of the domestic legal systems in Europe’.118 The post-war period also saw the second volume of Professor Rabel’s Foreign Corporations, Torts, and Contracts in General being the subject of a second edition.119 In 1953, the German Council for Private International law was formed, which included Professors Beitzke, Dölle, Ferid, Kegel, Raape, Rabel, and Zweigert among its leading members.120

The Benelux Committee and the Benelux Uniform Law

1.50  Concerns over the absence of a harmonized conflicts of law rules within the EEC were noted by the Benelux Committee on the unification of law (‘the Benelux Committee’). This body was a permanent committee of legal experts from Belgium, the Netherlands, and Luxembourg that had been set up in 1948,121 the same year that a customs union between these countries had entered into effect.122 The Benelux Committee had from 1960 been observers to the working party developing the 1968 Brussels Convention. The Benelux Committee had previously drafted harmonized private international rules for their own countries, namely the Benelux Convention on Private International Law (1951), which was accompanied by a supporting Joint Memorandum.123 This had proved to be a failure. Luxembourg ratified the 1951 Convention in 1954, but neither Belgium nor the Netherlands did because of disputes over its terms. In 1962 a special commission of the three countries had been set up to reconsider the text. A draft was completed and revised by March 1966, and the Benelux Ministers of Justice agreed on a new text in November 1966.124 This Uniform Law (‘the Benelux Uniform Law’) was broad in scope and included provisions relating to choice of law in both contractual and non-contractual obligations. It would subsequently be signed by the three Benelux countries on 3 July 1969 but was never ratified.125 The (p. 18) Benelux Uniform would prove influential in both initiating and shaping the development of the Rome Convention.126 The draft Benelux law was passed onto Brussels. Some have been sceptical on the motives involved.127

The Benelux Proposal (1967)

1.51  On 8 September 1967, Ambassador Joseph van der Meulen, Belgium’s Permanent Representative to the EEC, sent a letter on behalf of the Benelux countries to the newly unified European Commission.128 This letter invited the Commission to collaborate with experts from the Six Member States in the unification of private international law. Their proposed task was to attempt the codification of conflict-of-laws rules within the Community. The Benelux proposal called for a new convention ‘to eliminate the inconveniences arising from the diversity of the rules of conflict, notably in the field of contract law’. There was said to be ‘an element of urgency’, having regard to the reforms likely to be introduced in some Member States and the consequent ‘danger that the existing divergences would become more marked’.129 The Benelux countries’ primary fear was of ‘forum shopping’ arising out of the operation of the forthcoming Brussels Convention.130 The recently completed draft Benelux Uniform Law was proposed as a basis for discussion at EEC level.131

The reaction of the European Commission

1.52  This proposal from half of the EEC Member States was welcomed by the Commission, who accepted that, at least in some special fields of private international law, the harmonization of conflict-of-laws rules ‘would be likely to facilitate the workings of the common market’.132 This opinion reflected the EEC Commission’s October 1959 note that had begun the Brussels Convention’s negotiations. A proposed new conflicts of law convention would be seen by some as ‘a logical complement’,133 a ‘natural sequel’,134 and a ‘natural extension’135 to the 1968 Brussels Convention, which would turn the EEC into ‘one large law-district’ for the purpose of the rules of jurisdiction (p. 19) and recognition and enforcement of judgments. It was also defensible on general economic grounds.136

1.53  Economically and politically the Benelux letter had come at an opportune time. By January 1968, the Commission viewed the economic functioning of the common market with great satisfaction. It had produced a huge increase in internal trade among the Member States, that had grown at almost three-and-a-half times the rate of increase in world-trade over the same period.137 In almost every economic measure, the Six were outpacing the United States and the United Kingdom. All had happened before 1 July 1968, the date of completing the customs union, which was to see the abolition of all customs duties between the Member States, and implementing the Common Customs Tariff for external trade.138 However, political rows, including disputes over the enlargement of the Community, greatly concerned the Commission.139 Denmark, Ireland, Norway, and the United Kingdom had applied to join the three communities in 1961, but their applications had been suspended after France’s President de Gaulle had exercised his veto in 1963. The four countries had renewed their applications on 11 May 1967, and there appeared to be better prospects of their being accepted. Any suggested measures at the end of 1967 and early 1968 that could further improve the functioning of the Common Market and to promote its benefits to Member States were likely to be received by the Commission with a favourable response. This was a good time to be talking to the Commission about ways of improving a successful common market.

F.  Preliminary Work (1968–1972)

1.54  In February 1968, a group of government experts appointed by the Six Member States met to consider the Benelux proposals and conduct ‘the first survey of the situation’.140 This meeting was under the chairmanship of Mr T Vogelaar, then the European Commission’s Director-General for the Internal Market and Approximation of Legislation. In his opening address, Mr Vogelaar said:

This proposal should bring about a complete unification of the rules of conflict. Thus in each of our six countries, instead of the rules of conflict and apart from cases of application of international Agreements binding any Member States, identical rules of conflict would enter into force both in Member States’ relations inter se and in relations with non-Community States. The great advantage of this proposal is undoubtedly that the level of legal certainty would be raised, confidence in the stability of legal relationships fortified, agreements on jurisdiction according to the applicable law facilitated, and the protection of rights acquired over the whole field of private law augmented. Compared with the unification of substantive law, unification of the rules of conflict of laws is more practicable, especially in the field of property law, because the rules of conflict apply solely to legal relations involving an international element.141

(p. 20) 1.55  Mr Vogelaar then set out the grounds on which the Commission’s conclusions were founded. He observed that:

According to both the letter and spirit of the Treaty establishing the EEC, harmonization is recognized as fulfilling the function of permitting or facilitating the creation in the economic field of legal conditions similar to those governing an internal market. I appreciate that opinions may differ as to the precise delimitation of the inequalities which directly affect the functioning of the common market and those having only an indirect effect. Yet there are still legal fields in which the differences between national legal systems and the lack of unified rules of conflict definitely impede the free movement of persons, goods, services and capital among the Member States.

Some will give preference to the harmonization or unification of substantive law rather than the harmonization of rules of conflict. As we know, the former has already been achieved in various fields. However, harmonization of substantive law does not always contrive to keep pace with the dismantling of economic frontiers. The problem of the law to be applied will therefore continue to arise as long as substantive law is not unified. The number of cases in which the question of applicable law must be resolved increases with the growth of private law relationships across frontiers.

At the same time there will be a growing number of cases in which the courts have to apply a foreign-law. The Convention signed on 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters uniformly governs the international jurisdiction of the courts within the Community. It should help to facilitate and expedite many civil actions and enforcement proceedings. It also enables the parties, in many matters, to reach agreements assigning jurisdiction and to choose among several courts. The outcome may be that preference is given to the court of a State whose law seems to offer a better solution to the proceedings. To prevent this ‘forum shopping’, increase legal certainty, and anticipate more easily the law which will be applied, it would be advisable for the rules of conflict to be unified in fields of particular economic importance so that the same law is applied irrespective of the State in which the decision is given.

To sum up, there are three main considerations guiding our proposal for harmonizing the rules of conflict for a few well-defined types of legal relations. The first is dictated by the history of private international law: to try to unify everything is to attempt too much and would take too long. The second is the urgent necessity for greater legal certainty in some sectors of major economic importance; the third is the wish to forestall any aggravation of the differences between the rules of private international law of the various Member States.142

These were in fact the motives which prompted the Commission to convene a meeting of experts from the Member States in order to obtain a complete picture of the present state of the law and to decide whether and to what extent a harmonization or unification of private international law within the Community should be undertaken. The invitation was accompanied by a questionnaire designed to facilitate the discussion.143

1.56  Viewed as a manifesto for the next 40 years of developments in private international law within the EU, Mr Vogelaar’s speech reveals a consistency of purpose from which the Commission has barely wavered. The core objective was the ‘creation in the economic field of legal conditions similar to those governing an internal market’. The Community was to become effectively a ‘one law’ area: an idea that would continue to grow in importance throughout the expansion of legislative competence of the Community.

(p. 21) Vive la différence?

1.57  Did the differences between the national laws of the Six really require urgent harmonization to deal with the matters referred to by Mr Vogelaar? No formal study was conducted—this was not an age of ‘impact assessments’. With the benefit of hindsight, a case can be made that the differences between Member States did not require the imposition of a new, harmonized regime at all. There was more in common between the Six than not. But the mood of the age demanded the abolition of national differences to protect and enhance the functioning of the Common Market. This mood was captured in 1973 in the context of the harmonization of EEC company laws:

Differences in the Member State’s legislative and administrative provisions affect the establishment or functioning of the Common Market. They hamper the free circulation of goods, persons and capital, provoke distortion in competition making unequal the burdens on the competing national industries and are, therefore, obstacles for the development of the Common Market to the same extent as the maintenance of tariff borders or of different national policies in the various economic fields. Therefore, these differences have to be abolished.144

1.58  For some scholars, this argument was:

equally applicable to each and every aspect of the conflict of laws: to the extent that differences exist between the rules and practices prevalent in the respective Member States with regard to the assumption of jurisdiction, or once jurisdiction has been assumed, with regard to the choice of the applicable law, infinite possibilities arise for variations in the outcome of cases which are in principle similar, or even virtually identical, to each other, depending exclusively upon which of the Member States happens to be the forum for litigation.145

Work begins

1.59  At the second meeting of the appointed experts in October 1968, five delegations146 declared themselves to be ‘fundamentally in agreement on the value of the work in making the law more certain in the Community’. A start was recommended on ‘matters most closely involved in the proper functioning of the common market’.147 Work was to begin on the law applicable to (1) corporeal and incorporeal property, (2) contractual and non-contractual obligations, (3) the form of legal transactions and evidence, and (4) ‘general matters’ arising (ie renvoi, classification, the application of foreign law, acquired rights, public policy, capacity, and representation). The results of the meeting were submitted to the Commission with a proposal to seek the agreement of the Member States to continue the work, and for preparing a preliminary draft convention establishing the uniformity in certain relevant areas of private international law.148

The French contribution

1.60  In May 1969, the French Government forwarded a draft of their Law Completing the Civil Code in the Field of Private International law to the Commission for consideration as part of the proposal.149

(p. 22) The Expert Group

1.61  In January 1970, COREPER authorized these experts (‘the Expert Group’) to continue their work on the harmonization of the rules of private international law, with priority being given to their four identified categories.150 It was left to the Expert Group’s discretion whether to put their proposals in a single draft convention or in several separate drafts.151

1.62  In February 1970, the Expert Group met and elected as its chairman the Belgian official Mr Pierre Jenard, previously rapporteur for the 1968 Brussels Convention.152 For contractual and extra-contractual obligations, the work was to be led by the Italian delegation, and Professor Mario Giuliano153 of Milan University was appointed rapporteur. The French delegation were to review the law applicable to the form of legal transactions and evidence. Professor Paul Lagarde was appointed rapporteur. The Benelux countries were entrusted with the ‘general matters’ with Mr T van Sasse van Ysselt,154 appointed as rapporteur.155 At the same meeting, the great majority of experts favoured the creation of a universal convention not based upon reciprocity.156

1.63  The Expert Group was a small one.157 Only 34 representatives from the Six Member States attended any of its 11 meetings.158 The ‘core’ of the Expert Group was even smaller. Only 19 people attended five meetings or more. Those regular attendees comprised seven professors,159 four judicial officers,160 and eight government officials.

1.64  In June 1970, the Expert Group examined and discussed questionnaires prepared by the rapporteurs and agreed to set up meetings devoted to examining Professor Giuliano’s report on the law applicable to contractual and non-contractual obligations, and to the subject matter of Professor Lagarde’s161 and Mr van Sasse van Ysselt’s reports if this related to Professor Giuliano’s work. The Expert Group had ten further meetings162 before their meeting on 21–23 June 1972, at which they completed the preliminary draft convention on the law applicable to contractual and non-contractual obligations.

(p. 23) G.  The 1972 Draft Convention

1.65  The Preliminary Draft Convention on the Law Applicable to Contractual Obligations (XIV/398/72) (‘the 1972 Draft Convention’) proposed common rules of private international law to apply in situations of an international character, to contractual and non-contractual obligations.163 Although broadly stated, the draft was limited by exclusions of obligations arising under the law of succession, negotiable instruments, and various other matters.

1.66  In relation to the core aspects of contractual obligations under the 1972 Draft Convention, the right of parties to a contract to choose the applicable law was the key rule. The first sentence of draft article 2 declared that ‘[a] contract shall be governed by the law chosen by the parties’.164 That choice could be express or implied,165 and could be made by the parties either at the time of the conclusion of the contract or at a later date and could be changed by agreement between the parties. Any change would be without prejudice to the rights of third parties.166 ‘Conditions governing the validity of the consent’ of the parties to the applicable law were however, to be determined by the (putatively) applicable law.167 Two possible variants on the effect of silence on whether an agreement had been reached were discussed in an Annex to the text.

1.67  The parties’ freedom of choice of law was broadly stated but was not unlimited. Only the rules of law in force in a country could be selected.168 Any choice was to be ‘without prejudice’ to the application of private international law rules contained ‘in normative acts of the institutions of the European Communities or in national laws which have been harmonized in implementation of such acts’.169 Any choice of law was subject to the possible operation of the public policy rules of the forum.170 A further possible provision limited the effects of party autonomy in employment contracts, by preventing a choice of law by the parties not prejudicing ‘the operation of mandatory rules for the protection of the employee which are in force in the country in which he habitually carries out his work’ was raised.171

1.68  Draft article 4 was perhaps the most controversial provision of the 1972 Draft Convention. This provided, absent express or implied choice of law by the parties, that the general rule was that a contract was to be governed ‘by the law of the country with which it is most closely connected’.172 This country was to be located, not by any of the methods in regular (p. 24) use in any of the Member States, but by a new technique borrowed from Swiss law. This required the identification of the performance which was ‘characteristic of the contract’ and the party who was to effect such performance.173 There was also an escape clause if, in all the circumstances, it was clear that the contract was more closely connected with another country.174 Contracts that did not fall within the general rule in draft article 4 were (i) contracts of employment for which a special rule in the absence of an express or implied choice of law was made in draft article 5, and (ii) contracts whose subject matter is immovable property under draft article 6.

1.69  Special provision was also made in draft article 7 for the possible application of ‘rules which govern the matter compulsorily in such a way that they exclude the application of every other law’, ie overriding mandatory rules, or lois de police. Conditions governing the validity of the consent of the parties to the contract was to be determined ‘according to the law which is applicable’ under article 7 of the Draft Convention. The law governing the obligation should also determine the ‘conditions of its performance, the various ways in which it may be extinguished and the consequences of its non-performance’.175

The 1972 Expert Group Report

1.70  The 1972 Draft Convention was explained in an expert report finalized at a September 1972 meeting, and then submitted to COREPER for transmission to the national governments (‘the 1972 Expert Group Report’).176 The Expert Group Report was primarily drafted by Professor Giuliano,177 with contributions from Professor Lagarde178 and Mr van Sasse van Ysselt.179 The text of the 1972 Draft Convention and the French text of the Expert Group Report, are most readily accessed in the Copenhagen Colloquium papers (discussed at para 1.73)180 and all references to that text refer to that publication.

A civil law creation

1.71  Unsurprisingly the 1972 Draft Convention was the product of the civil law experience of private international law. The position of the common law was sometimes noted but played little part in developing the 1972 Draft Convention,181 other than providing casual comparative assertions.182 The recent developments that provided most inspiration for the Expert Group were those observed in Switzerland, not the common law from either side of the Atlantic, including the new solutions found in the US 1971 Restatement (Second) Conflict of Laws.183

(p. 25) Reactions to the 1972 Draft Convention

1.72  A contemporary American observer described initial European reactions to the 1972 Draft Convention,184 as ‘[they] seem to be reserved if not entirely negative’.185

The 1974 Copenhagen Colloquium

1.73  The 1972 Draft Convention was discussed at a colloquium held in Copenhagen in April 1974 (‘the Copenhagen Colloquium’). Some 20 experts involved in the work and the subsequent development of the Rome Convention participated in the colloquium, and there were several special reports. The papers presented were collected and published.186 Besides a General Report on Contractual Obligations by Professor von Hoffmann, initial comments from Professor Lipstein,187 and other aspects from a British viewpoint from Professor Hartley,188 key topics also discussed included party autonomy,189 the possible effects of silence on party choice of law,190 exception clauses,191 the mandatory rules provision in draft article 7,192 and certain problems relating to the international maritime law.193 These materials, and other contemporary writings, highlight the controversies during this phase.194

(p. 26) The 1976 London Colloquium

1.74  A second major colloquium was held in London in 1976 (‘the 1976 London Colloquium’).195 This featured contributions from several scholars on controversial matters. Besides an introduction to the 1972 Draft Convention, from Professor Lipstein,196 key topics discussed included (i) an explanation of the Swiss concept of characteristic performance of contractual obligations from one of its chief proponents, Professor Vischer;197 (ii) a discussion of the rules relating to employment contracts;198 (iii) an analysis of restitution;199 (iv) a discussion of the proposed scope of the convention;200 and (v) the debate over the mandatory rules provision found in article 7 of the 1972 Draft Convention.201

H.  When Six became Nine (1973–1975)

1.75  Any further development of the 1972 Draft Convention had been complicated by the accession of Denmark, Ireland, and the United Kingdom to the EEC on 1 January 1973. Upon joining, the new Member States had to accede to those conventions created under Article 220 of the Treaty of Rome, and to the Protocols on their interpretation by the Court of Justice, ‘and to this end to enter into negotiations with the original Member States in order to make the necessary adjustments thereto’.202 The key convention was the 1968 Brussels Convention. The Commission provided an interim report on what revisions might be needed in November 1971, and a comprehensive report on 15 September 1972 after consultation with the new Member States. As a result, COREPER set up a working party, which met for the first time on 16 November 1972.203 In June 1973, COREPER appointed Mr P Jenard as the permanent chairman of the working party.204 Professor P Schlosser was appointed rapporteur.

1.76  No clear guidance had been given in either the Act of Accession or the terms of reference of the working party as to what was meant by ‘necessary adjustments’.205 As a consequence, (p. 27) achieving that objective proved to be a substantial task. Almost six years passed before the Council Convention on accession of Denmark, Ireland, and the UK to the Brussels Convention was signed on 7 October 1978 (‘the 1978 Accession Convention’).206 The text of the revised Brussels Convention was found in Schedule 1 to the Civil Jurisdiction and Judgments Act 1982 and entered into force in the United Kingdom on 1 January 1987.

The United Kingdom Law Commissions and the 1972 Draft Convention

1.77  The new Members had been invited to nominate experts to participate in the negotiations over the 1972 Draft Convention.207 In December 1972, the Lord Chancellor asked the Law Commission to consider how the 1972 Draft Convention ‘could best be subjected to a thorough examination’. The Lord Advocate made a similar request to the Scottish Law Commission. In February 1973, officers of the Law Commissions attended an Expert Group meeting, and raised some particularly pertinent queries.208 The new Member States naturally needed time for consultation.209 In April 1973, the English and Scottish Law Commissions recommended jointly reviewing the 1972 Draft Convention and other matters, and set up a joint working group on private international law (obligations) under the joint chairmanship of the Hon Mr Justice Cooke and Hon Lord Hunter, which also included Mr A E Anton, Dr F A Mann (who later became a severe critic of the Rome Convention), and other members of the Law Commissions and leading solicitors’ firms.210

1.78  The contemporary reaction to the 1972 Draft Convention from some scholars in the United Kingdom was mixed. Professor Kurt Lipstein gave an initial common law perspective at the Copenhagen Colloquium which was not unfavourable, drawing appropriate parallels with the common law.211 But on further reflection, Professor Lipstein doubted the official aim of the 1972 Draft Convention to prevent forum shopping which was alleged to require a uniform approach to private international law: indeed, ‘it may be doubted whether the assumption is true and whether drastic action is necessary…it remains doubtful whether the proposed Convention is needed to combat the evil which it seeks to eliminate’.212 Lord Collins of Mapesbury also questioned if there was any need for the proposed Convention, and argued that the limitation which it would place on the power of each contracting state to legislate its own domestic law could have important adverse consequences, restricting Member States from legislating in relation to legal relationships which the 1972 Draft Convention provided was to be governed by some other system of law: ‘Thus the loose rules of private international law become strict rules of public international law’.213 While Lord Collins accepted that the draft Convention (p. 28) reached results that were generally in line with international business practices, at least two provisions appeared to him to be defective: draft article 4 on the method to be applied in the absence of party choice in isolating the system of law with which the contract was most closely connected, and draft article 7 on applying foreign mandatory laws which had a connection with the contract.

Should the proper law of contract be abandoned?

1.79  The ultimate issue for the United Kingdom was whether to abandon the product of two centuries of judicial endeavour in favour of a proposed, harmonized, regime reflected in the 1972 Draft Convention. The pre-existing English conflict rules required the determination of the ‘proper law’ of a contract,214 ie the law or laws by which the parties intended, or might fairly be presumed to have intended, to govern the interpretation and the validity of the contract and the mode of performance and the consequences of breach.215 Wide party autonomy was respected, ‘provided the intention expressed is bona fide and legal, and provided there is no reason for avoiding the choice on the ground of public policy’.216 The concept of the English proper law of the contract was a highly flexible one. It represented a judge-led development of the common law based on the vast accumulated experience of international trade and commercial disputes that passed through United Kingdom courts. It was also reinforced by the experiences reflected in the persuasive authorities of major Commonwealth countries who adopted the same approach.217 Scots law (and Irish law) had adopted similar methods to determine the proper law of the contract.218 Was it really worth the United Kingdom abandoning all of this tradition, learning, and experience in favour of differing and indeed ‘novel’ solutions found in this proposed European codification?

The Law Commissions’ 1974 Consultation

1.80  The Law Commission and the Scottish Law Commission (‘the Law Commissions’) published a detailed consultation paper in August 1974, which provides a valuable record of contemporary views and concerns over the proposal. This paper, which included the French text and Foreign Office-prepared English translation of the 1972 Draft Convention, adopted the approach of (i) analysing the proposed text of each provision, (ii) summarizing the explanations given for each provision contained in the Expert Group report, before (iii) providing the Law Commissions’ own, provisional commentary on the issues that might arise; particularly on ‘the concepts, many of them unfamiliar to British lawyers, that the drafters had had in mind’.219

(p. 29) Joining the Jeux Sans Frontières‎?

1.81  Given the scale of concerns raised by the Law Commissions in their paper, was it in the United Kingdom’s interests to join these entirely optional negotiations to change laws that few felt needed changing? The answer to that question had a political dimension. The Law Commissions noted that:

the United Kingdom is not under a formal obligation to become a party to any convention on the lines of the present preliminary draft, it seems possible that the original Member States, at least, will reach agreement on such a convention. If they do, the United Kingdom together with the other new Member States may be regarded as being under a moral obligation, and will probably come under pressure, to accede to it.220

1.82  Reading the Law Commissions’ 1974 paper there is an overriding air of wariness about this suggested new regime. Apart from the novelty of some of the concepts proposed, its pages show British lawyers still coming to terms with the practical difficulties of this new EEC world: one where the accents in their typewritten version of the French text of the 1972 Draft Convention had to be written in by hand.

1.83  No report on the Law Commissions’ consultation was ever published. The ultimate conclusion from the negotiating team sent by the United Kingdom was there were merits in harmonization, as long as differing traditions were respected and the whole process did not tackle too much.


1.84  In Ireland, the Department of Justice (EEC Division) and the newly formed Law Reform Commission221 were given the task of considering the project. The latter noted in the first programme of reform222 there was ‘very little case law in Ireland in regard to private international law and little has been written on the subject’. The Law Reform Commission intended as a long-term project to prepare proposals for a statute codifying, reforming, and modernizing the rules of conflicts as they applied in Ireland.223


1.85  In Denmark, Professor Lando, although not in agreement with all of the proposals contained in it, considered that the Expert Group ‘has achieved a remarkable piece of work which in many respects will bring about a much needed innovation in the conflict of laws of the EC countries, including the three newcomers’.224

(p. 30) I.  The Return to Rome (1975–1980)

The Rome Convention Working Group

1.86  Work on the draft choice-of-law convention resumed after the uncertainties over continued United Kingdom membership of the EEC were resolved by a substantial ‘yes’ vote in the June 1975 referendum. This enlarged body (the ‘Working Group’) started work in September 1975.225 The Working Group had grown to some 45 representatives from the Nine Member States.226 Interestingly, very few people participated in both the 1972 Expert Group and the Rome Convention Working Group. Some national delegations to the latter had a completely new membership.227 Only 11 people participated in both groups. Of those, five were professors: Belgium’s Professor R Vander Elst, West Germany’s Professor Dr K Arndt, Professors H Batiffol and P Lagarde from France, and Italy’s Professor M Giuliano.228

1.87  The United Kingdom delegation was led by The Hon Lord P Maxwell229 and comprised Professor Sir Peter M North,230 Professor A L Diamond,231 Mr A E Anton,232 Mr K M Newman,233 and Mr A Akbar.234

1.88  It soon became clear:

that quite a few of the decisions taken in preparing the 1972 preliminary draft convention would have to be reopened. This was partly because of the need to accommodate the different approaches of the common law and Scandinavian legal systems now represented in the Community; and partly because, with second thoughts, the Group as a whole found major improvements could be made.235

1.89  The task for the new Member States was two-fold: first, to convince the representatives of the Six they were different; that their legal systems, traditions and experiences, sometimes required different solutions than those in the 1972 Draft Convention. Second, to prevent the Convention attempting to do too much, and cover too many areas. For although the British negotiators thought that the 1972 Draft Convention had merits, some elements were just unacceptable. These would eventually result in the agreement to allow States to sign with reservations against the operation of certain provisions of the Rome Convention.

1.90  The method adopted by the United Kingdom to promote revision of those issues it particularly objected to was tactful and appropriate. Clarification would be sought from the (p. 31) representatives of the Six on the British analysis of the operation of a particular provision in the 1972 Draft Convention that produced a patently absurd result. The British would ask whether they had their analysis wrong. The Six would consider the matter, tell the British they had not got their analysis wrong, and then decide that the original provision needed to be reconsidered.

Limitation to Contractual Obligations

1.91  Between 17 December 1975 and 23 February 1977, the Rome Convention Working Group held ten plenary sessions.236 At their meeting in March 1978 it was decided to limit the proposed Convention to contractual obligations only. The provisions in the 1972 Draft Convention dealing with tort had been described as ‘naïve’, while those dealing with restitution (quasi-contract) as ‘obscure’.237 The biggest stumbling block to a combined Convention had been disputes over the basic rule to be applied for non-contractual obligations. As Professor North said, ‘[t]here was no uniformity of approach. Although support for the lex loci delicti was strong (though its definition was difficult), that was not the common law rule’.238 Negotiations for a second convention on non-contractual obligations were postponed, and would only begin after the first one had been completed.

1.92  Because of this decision, the contractual obligation elements of the 1972 Draft Convention were re-examined in 14 plenary sessions from 22 September 1975 to 23 February 1979. Three special meetings were also held on issues relating to transport and insurance contracts.239 These meetings took place in parallel with the continuing negotiations, which concluded in October 1978, on the accession of the new Member States to the 1968 Brussels Convention. There was sharing of ideas between the two Conventions, especially regarding developing weaker party protections, eg for consumers, something which had not featured in the 1972 Draft Convention or the 1968 Brussels Convention.240

Completing the Draft Convention (1979–1980)

1.93  By February 1979, the Working Group had finished a draft, and instructed Professors Giuliano and Lagarde to draw up a report. On the 18 May 1979, a draft convention was sent to the President of the Council and Member States. The Member States were asked to comment by the end of 1979 with a view to concluding the convention in 1980. In June 1979, the text of the draft convention was finalized at a meeting of rapporteurs in which one expert from each delegation participated.241The final text was then transmitted to the (p. 32) Council. On 20 July 1980, a draft of the Giuliano–Lagarde Report was also sent to the Council.242

The Commission’s 1980 Opinion

1.94  On 17 March 1980, the Commission’s opinion on the draft Rome Convention was published.243 The Commission saw the Rome Convention as:

the first step towards unification and codification of general rules of conflict in the field of civil law in Community. Unification will make it easier to determine the law applicable and will increase legal certainty. It should also ensure that all courts in the Community always apply the same substantive law to the same matter in dispute between the same parties. Where the parties are free to choose between courts in different Member States, their choice should not influence the law applicable to the action, and this should operate to prevent forum shopping.

1.95  The Commission regretted that it had not been possible for the Rome Convention to include non-contractual obligations, but did not regard that fact as one which would give rise to their opposing the signature of the Convention. The Commission was anxious that (i) the entry of force of the Rome Convention in all Member States was not guaranteed; (ii) it was not concluded for an unlimited period; and (iii) uniform interpretation could not be guaranteed without a comprehensive protocol conferring jurisdiction on the Court of Justice. The first two defects ‘might have the effect of preventing the creation and maintenance of a unified juridical area within the Community’, and be regarded as ‘fundamental defects’ by which the Convention ‘cannot contribute, or can contribute only temporarily, to the functioning of the common market’.244 The Commission regarded it as essential that not only should the Court of Justice be given jurisdiction over the Rome Convention, but that rules governing that jurisdiction be enacted in the body of the Convention by incorporating a provision based on Article 177 of the EEC Treaty. However, the Commission indicated that it would accept a Protocol like the 1971 Brussels Convention Protocol as an alternative.245 In taking this stance, the Commission merely reflected what Member States had previously promised to do in the ‘Solemn Declaration on European Union’ approved by the European Council in Stuttgart on 19 June 1983. Member States had agreed to consider, on a case-by-case basis, the inclusion in international Conventions between Member States, a clause conferring jurisdiction on the Court of Justice regarding the interpretation of the texts. This had been followed up by a strong recommendation of the Dooge Committee to adopt a standard clause to this effect.246

Conferring jurisdiction on the Court of Justice

1.96  Even before the Commission’s Opinion, on 16 January 1980 COREPER had set up an ad hoc working party on private international law to finalize the text in the light of Member State’s comments, and to consider whether, and if so within what, limits the Court of Justice should be given jurisdiction to interpret the Convention.247

(p. 33) The 19 June 1980 Joint Declarations

1.97  A special Council Meeting in Rome of Ministers of Justice was held to consider the points of disagreement raised by the Commission. A last-minute fudge was agreed, in the form of an insipid Joint Declaration on the interpretation of the Convention by the Court of Justice.248 This stated that the governments of the Contracting States ‘desiring to ensure that the Convention is applied as effectively as possible’, and ‘anxious to prevent differences of interpretation of the Convention from impairing its unifying effect’ declared themselves ready ‘to examine the possibility of conferring jurisdiction in certain matters on the Court of Justice…and, if necessary, to negotiate an agreement on this effect’, and to ‘arrange meetings at regular intervals between their representatives’. This Joint Declaration was adopted in ‘partial accommodation’ of the Commission’s concerns, but, as time would prove, merely ‘smoothed out the immediate difficulties but did not remove several Member States reservations’ about conferring jurisdiction on the Court.249 Another Joint Declaration of the same date sought to encourage the EEC to adopt choice-of-law rules which were as far as possible consistent with those of the Rome Convention, and expressing the view that any State becoming a member of the EEC should also accede to the Rome Convention.250

J.  The Rome Convention (1980)

1.98  The Rome Convention was signed on the 19 June 1980 by the Plenipotentiaries of the original Six Member States, plus Ireland.251 Denmark signed on 10 March 1981. The United Kingdom signed on 7 December 1981.252 The revised text of the Rome Convention 1980 (80/934/EEC) is at Appendix E.253 The differences between it and the 1972 Draft Convention will be discussed where appropriate throughout this volume.

1.99  The Rome Convention was concluded by its High Contracting Parties as an exercise in power of sovereign States to make treaties: ‘it ought to be regarded, not strictly speaking as an EEC Convention, but rather as a Convention between nine sovereign States who happened to be Member States of the EEC’.254 Although the Commission had serviced the Rome Convention negotiations, the delegates from the High Contracting Parties had insisted that negotiations be conducted in various cities in their own countries and not in Brussels.255

1.100  The Preamble to the Convention declared to be the work of the ‘High Contracting Parties to the Treaty establishing the European Economic Community’, who were ‘[a]nxious to continue in the field of private international law the work of unification of law which has already been done within the Community, in particular in the field of jurisdiction and enforcement (p. 34) of judgments’. As a consequence, they wished ‘to establish uniform rules concerning the law applicable to contractual obligations’.256 As the Court subsequently observed in its first ruling on the Convention in the case of ICF,257 the Rome Convention was borne of a wish to eliminate the inconveniences arising from the diversity of the conflict-of-law rules in the area of contracts. The function of the Convention was to raise the level of legal certainty by fortifying confidence in the stability of legal relationships and the protection of rights acquired over the whole field of private law.258

Reactions of United Kingdom Negotiators

1.101  Two UK negotiators wrote comments on the Rome Convention. Professor North was the more enthusiastic. He considered that the Rome Convention constituted ‘a major contribution to the codification and harmonization of the private international law of contract’, and would provide a model for, or assistance in future developments at national and international levels. Professor North concluded that:

At the end of the day, the result of the implementation of the Rome Convention in England will be that the choice of law rules in contract are put on a clear, firm, statutory basis. There will be no great substantial change in the rules which have worked well for a long period; but there will be the benefit of substantial harmonisation throughout the EEC in an area of law of real significance for the free provision of goods and services within the Community.259

1.102  Professor Diamond wrote that:

I think it is probable that we will sign it. Perhaps it is true that there is not much wrong with the present English rules of conflict of laws on contract, and I do not pretend that the new draft meets a current need for reform of the law. Much of it accords with our existing law; it clarifies some issues yet undecided; there is, I hope, nothing in it that is positively harmful to our law.260

The 1981 Newcastle Colloquium

1.103  In September 1981, the United Kingdom National Committee on Comparative Law devoted its annual colloquium at the University of Newcastle-upon-Tyne to an examination and discussion of the Rome Convention (‘the 1981 Newcastle Colloquium’). Valuable papers were presented and published that reflect the contemporary understanding of what had got negotiated and agreed.261 These included works from Professor Lagarde262 and Professor North.263(p. 35) Important contributions to the interpretation of the Convention included papers on the choice of law,264 the application of mandatory rules and ordre public,265 the consumer protection provisions,266 contracts of employment,267 the concept of characteristic performance in contracts for the carriage of goods,268 and the practical implications in England of the Convention.269 There were also assessments of the Rome Convention from German,270 Italian,271 Swiss,272 American,273 and Australian274 perspectives.

1.104  Other helpful British scholarship of the period following the signing of the Convention include works by Professors Diamond,275 Morse,276 and Jaffey,277 and from Mr P R Williams.278

(p. 36) No real change or ‘unnecessary, useless, and unfortunate?’

1.105  Among British scholars the majority reaction appeared to be that the basic rules found in the Rome Convention did not differ significantly from the existing rules and would consequently produce no fundamental changes in the existing law.279 Some scholars considered there were several important areas in practice (especially regarding distribution agreements, international loan agreements and mandatory rules, and employment contracts) in which the Convention would be difficult to apply.280

1.106  Dr F A Mann went further than most critics. In a review of the papers from the Newcastle Colloquium, Dr Mann attacked the Rome Convention as one of the ‘most unnecessary, useless and indeed, unfortunate attempts at unification or harmonization of the law that has ever been undertaken’ and he ‘fervently hoped no British Government will ratify [the Convention] and no British Parliament will be prepared to adopt [it]’. For Dr Mann, ‘the Convention results from a misconceived initiative, would be likely to corrupt our present law and should be rejected—the sooner the better if insecurity and irritation all over the world are to be avoided’.281

K.  Hurry Up and Wait

Delay in ratification

1.107  Despite the claim in the Convention’s Preamble that the High Contracting Parties were ‘anxious’ to continue the work of unification of private international law, their subsequent actions suggest the use of the phrase was more rhetorical than real.

1.108  Ratification of the Rome Convention by the original nine signatories took over eleven years to complete. The process began with France on 10 November 1983. Italy followed on 25 July 1985, and Luxembourg on 1 October 1986. Denmark ratified the Convention on 7 January 1987, followed a day later by Germany on 8 January 1987. There was then a four-year gap until the United Kingdom ratified it on 29 January 1991, followed on 21 June 1991 by the Netherlands. The process finally concluded with Ireland on 22 October 1991.282

1.109  The creation and subsequent ratification of the First and Second Protocols to confer interpretative jurisdiction on the Court of Justice took over a generation. Over eight years were spent negotiating their terms before the Protocols were opened for signature on the 19 December 1988.283 But the Protocols were structured so they only came into effect when they were both signed by the last contracting party. That process of ratification proceeded at the pace of a very tired snail with a tendency to dawdle. The United Kingdom ratified on 29 January 1991, followed by the Netherlands on 26 June 1991, and Ireland on 29 October 1991. (p. 37) There was some further progress in 1992 with Greece (8 May 1992), Luxembourg (13 August 1992), and Italy (9 December 1992), all taking the necessary steps that year. But it was 1994 before Portugal (30 June 1994) and Spain (14 September 1994) ratified, and even longer until France (on 1 December 1995) and Germany (on 26 March 1996) did so. There then followed five years of further delay before Denmark ratified on 7 March 2001, only for the Belgians to contribute another three years of delay entirely on their own before they eventually ratified the Protocols on 5 May 2004. Belgian ratification finally confirmed the jurisdiction of the Court of Justice to give interpretative rulings over the Convention. The first reference to the Court of Justice in Intercontainer Interfrigo SC (ICF) was duly lodged on 2 April 2008, only 28 years after the Rome Convention was signed.284

1.110  During the period from 1991 to 2008, the absence of any guidance from the Court of Justice allowed differences in interpretation of key provisions to arise among the courts of Member States. This would be a key justification in the subsequent conversion of the Rome Convention into a community instrument.

The perils of ‘DIY’

1.111  While awaiting the Rome Convention coming into force, a few countries enacted laws reflecting its contents into their own domestic laws.285 Some initial efforts were not successful. In 1985, Germany received a stern rebuke from the Commission about their intended draft law. The German text proposed excluding eight of the Rome Convention’s provisions, had redrafted or changed the substance of four others, and made comprehension and interpretation more difficult by dividing up the Convention among various sections of their statute. In the Commission’s eyes, the German approach would have prevented the proper application of the Rome Convention when it came into force. The Germans were told to correct it in no uncertain terms.286

L.  The Contracts (Applicable Law) Act 1990

1.112  In the United Kingdom, the Rome Convention was enacted into law by the Contracts (Applicable Law) Act 1990 (‘the 1990 Act’) subject to reservations in relation to Articles 7(1) and 10(1)(e). The 1990 Act came into force on 1 April 1991.287 It applied to contracts made after that date.288

1.113  Notwithstanding Article 19(2), the Convention was to apply in the case of conflicts between the laws of different parts of the United Kingdom.289 Power was also reserved to (p. 38) Her Majesty by Order in Council to direct that all, or any, of the provisions of the 1990 Act should be extended to (a) the Isle of Man; (b) any of the Channel Islands; (c) Gibraltar; and (d) the Sovereign Base Areas of Akrotiri and Dhekelia in Cyprus.290 An express declaration was subsequently made applying the Rome Convention to Gibraltar.291 The Rome Convention has never applied to any of the other British territories.

Using the Giuliano–Lagarde Report as an interpretative aid292

1.114  The 1990 Act also gave express directions to United Kingdom courts as to the sources of guidance for interpreting the Rome Convention. This included taking account of any guidance from the Court of Justice.293 Without prejudice to any practice of the courts on the matters which may be considered, the courts were also instructed that:

the report of the Rome Convention by Professor Mario Giuliano and Professor Paul Lagarde which is reproduced in the Official Journal of the Communities of 31st October 1980 may be considered in ascertaining the meaning or effect of any provision of that Convention.294

1.115  The Giuliano–Lagarde Report is derived in substantial part from their 1972 Expert Report on the 1972 Draft Convention. Now, with one less collaborator, the work was shared more equally between the two scholars; though, once again, Professor Giuliano wrote the commentary on the Convention’s core provisions.295 Occasionally, a comparison of the changes between the Expert Group Report and the final Giuliano–Lagarde Report might provide some additional assistance in interpreting the Rome Convention, by giving another point of reference to help track the legislative intention reflected in the changes that occurred during this second phase of negotiations.

The Reaction in the United Kingdom to the 1990 Act

1.116  Lord Wilberforce famously made a plea in the House of Lords debate on 1990 Act to restrict the Convention to EEC contracts only. Part of His Lordship’s concern was to preserve the status (and business) of the Commercial Court and London arbitration, which was founded on the reputation of English law. He said:

If faced with a choice of law, our Commercial Court or UK arbitrators apply the UK rules of conflicts of law. That is an excellent body of law built up by judges over the years. It is not criticised in any way. As far as I know there is no demand for reform of it. I hope no one will mention the name of Mr Vogelaar of Brussels. I can confidently say that there is no demand for reform of that body of law. It has been formulated in an accessible and convenient form in our textbooks, which are known all over the world. My noble and learned friends will be familiar with Dicey’s Conflict of Laws. That book contains a comprehensive code which deals with all the subjects which come under the heading of conflicts of law.296

(p. 39) 1.117  Lord Wilberforce was not being chauvinistic.297 Underpinning his concern was a long-standing common law preference for leaving this area of the law to the judges, a preference which was shared by many others. Statutory intervention was traditionally seen in England as being ‘remedial: the legislature provides a statute in the same way that a doctor provides a brace or other surgical appliance to correct some defect in the body’.298 Lord Wilberforce would return to this theme in challenging the proposed replacement of English common law rules on choice of tort by Part III of the Private International Law (Miscellaneous Provisions) Act 1995, itself a legislative ‘spin-off’ of the failed non-contractual obligations aspect of the 1972 Draft Convention. Lordship Wilberforce then said:

the subject of conflict of laws is essentially one which ought to be left to the judges. It has been developed by the judges over the years and, on the whole, the judges have done a very good job. There are very few cases where injustice has been seen to be done. One does not want this part of the law frozen into the lapidary phrases of the Parliamentary draftsmen, however well drafted they may appear to be. It is better to leave it to the judges.299

‘Imprisoned within the terms of the Convention’

1.118  In the debate in the House of Lords on the 1990 Act, Lord Wilberforce’s proposed amendment (subsequently withdrawn) was supported by Lord Goff of Chieveley. Lord Goff who confessed himself ‘startled’ from his discussions with Professor North at the proposed scope of the Rome Convention.300As His Lordship observed:

if the convention is given the broad scope for which Professor North has contended, it will have a far greater impact in this country than in any other European country. From what I have been able to gather, it may well be that our European friends and lawyer colleagues do not fully appreciate the impact which it would have on commercial litigation in this country…It is right to say that the convention has basically adopted the common law test for ascertaining the system of law which governs a contract, but the simple fact is that in certain significant respects it is not the same as our law…I have little doubt that our customers in the Commercial Court from the world outside Europe, especially those in the United States of America and the developed Commonwealth countries, will be startled if that is the scope of the convention. They will ask why England of all countries should apply a European test to contracts between parties, both of whom come from outside Europe…As far as I am aware, there has been no real criticism of that part of the common law which lays down a test for the choice of the governing law of a contract. So far as I know, it is accepted throughout the whole common law world under which between a quarter and a third of the world’s population live. All that is set out in the work of Dicey and Morris, The Conflict of Laws, which is the prince of legal textbooks and is used throughout the common law world.

Had it been left to me, I could never have proposed or recommended that change if it had been placed before me as a matter for consideration. As I understand the position, I imagine (p. 40) that the trouble is that this country has ratified the convention. It may well be that that has been done for good policy reasons, but it may be that we are now imprisoned within the terms of the convention.

1.119  In the shadow of the 1990 Act, Dr F A Mann wrote an obituary to the common law’s proper law of the contract and remarked that the day the 1990 Act came into force was one which ‘many lawyers and traders will remember with sadness’.301 Dr Mann said:

The Act replaces one of the great achievements of the English judiciary during the last 140 years or so, an achievement which produced an effective private international law of contracts, was recognized and followed in practically the whole world and has not at any time or anywhere led to dissatisfaction or to demand for reform…[T]he Act substitutes statutory rules for judicially development experience and thus creates problems of statutory interpretation, where formerly there existed flexible and fruitful judicial evolution based on argument and derived from principles, precedents and experience. This is particularly so where, as in the present case, the statute adopts, among other peculiarities, the odious method of interpretation which has become fashionable on the Continent and involves reference to reports by two continental academics (see s 3(3)); their distinction is not in doubt, but their familiarity with and experience of the common law and the requirements of practical men is likely to be minimal. The statute, therefore, involves a break not only with English tradition, but also with the law and the development in the countries of the Commonwealth where in the past the English doctrine of the proper law was almost invariably followed and thus represented a cultural and intellectual tie of considerable strength. Why was it thought right to abandon it in order to assist certain Continental countries to improve their law?302

The accommodation of other new Member States

1.120  Whether it was improving their law or not, a small part of the delay in implementing the Convention and the subsequent jurisdictional protocols might be attributable to the need to accommodate even more Continental countries into the Convention scheme. All new members joining the EEC had to accede to the Rome Convention.303 On 10 April 1984, the Convention on the Accession of the Hellenic Republic to the Rome Convention (‘the Luxembourg Convention’) was signed by all ten Member States.304 After the Rome Convention came into force on 1 April 1991, there were three further conventions. The first was the Funchal Convention on the Accession of Spain and Portugal to the Rome Convention signed on 18 May 1992. This was on similar terms to the Luxembourg Convention, but also involved revisions to the text of the Rome Convention.305 Ratification of the Funchal Convention took place at a desultory pace over the next seven years. The Funchal Convention was followed by the Accession Convention for Austria, Finland and Sweden, signed on the 29 November 1996.306 An explanatory report was published in 1997.307 Finally, on 14 April 2005, the Member States signed a Convention on the accession of Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, (p. 41) Slovakia, and Slovenia to the Rome Convention.308 It was declared that Member States would take ‘the necessary measures towards ratifying this convention within a reasonable time frame’.309 A joint declaration sought to achieve ratification ‘if possible, before December 2005’.310 But by then, the next phase of the development was underway, with the transformation of the Rome Convention into a Community Regulation.

M.  New Age after New Age

Informal cooperation on Matters of Common Interest (1960–1992)

1.121  The Rome Convention had been part of the piecemeal cooperation between Member States on matters of common interest which had begun in the 1960s.311 During the following decades, save for conferring jurisdiction to the Court of Justice to interpret the Brussels and Rome conventions, there was no formal role of the European institutions in these legislative developments. The Commission might be an observer at the negotiations, and sometimes the European parliament was asked for an opinion. But any ‘hard law’ instruments produced took the form of Conventions that were matters of public international law, rather than Community law,312 which had to be unanimously agreed between the Contracting Parties.313 The story of this period is of the informal cooperation of Member States being gradually replaced by entirely new concepts within the framework of revised European treaties.314 Judicial cooperation in civil matters with a cross-border impact has, in the words of the UK Ministry of Justice, ‘became of greater importance as internal borders between Member States disappeared, the Single Market emerged and membership of the EU grew’.315

The path towards a European Union

1.122  On 14 February 1984, the European parliament adopted a draft treaty establishing the European Union. Partly in response, the June 1984 Fontainebleau European Council created an ad hoc committee for institutional affairs chaired by the Irish senator, Mr James Dooge (‘The Dooge Committee’). The Dooge Committee’s 1985 report invited the European Council to convene an intergovernmental conference (‘IGC’) to negotiate a Treaty on European Union.316 The Dooge Committee recommended this Union should involve the creation of a homogeneous internal economic area and the ‘gradual (p. 42) establishment of a homogeneous judicial area’ that included ‘increased harmonization or approximation of national laws in all fields covered by the European Union, in so far as these are consistent with the objectives of the Union’. The committee also envisaged a further codification of Community law, and importantly for future developments anticipated that, ‘in certain areas of inter-governmental cooperation’, agreements between Member States could be applied inter se even if unanimous agreement could not be reached.317 Following the Dooge Committee’s report, the Commission submitted a white paper on the subject of ‘Completing the Internal Market’.318 This asked the European Council to pledge itself ‘to [the] completion of a fully unified internal market by 1992 and to approve the necessary programme together with a realistic and binding timetable’.319

The Single European Act (1986–1992)

1.123  On 28 February 1986 the intergovernmental conference concluded, having produced the text of the Single European Act (‘SEA). The SEA, which came into force on 1 July 1987, was the first major revision of the Treaty of Rome. The SEA had the objective of completing the translation from the ‘common market’ between Member States into a single ‘internal market’ by 31 December 1992.320 The SEA defined this Single Market as ‘an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of this Treaty’.321

1.124  To promote these developments, important institutional changes were made. The SEA established the European Council,322 formalizing the previously informal conferences of the heads of state or government of the Member States which had begun in 1974. The European Council was however, given no specific legislative competencies. The European parliament’s powers were enhanced, not least by the institution of the cooperation procedure that promoted (within limitations)323 inter-institutional dialogue on proposed European legislation. But perhaps most significantly, the concept of qualified majority voting (‘QMV’) was introduced into the EC Treaty.324 Unanimity among Member States was no longer required for measures designed to establish the Single Market, except in relation to matters concerning taxation, the free movement of persons, and the rights and interests of employees.

Private international law and the single market

1.125  The Dooge Committee’s desire to see the development of a homogeneous judicial area in Europe did not feature in the SEA’s drive for completion of the Single Market by 1992. Few expected major changes of the kind that occurred.325

(p. 43) N.  The New Imperium (1992–2003)

The Maastricht Treaty (1992)

1.126  The Maastricht Treaty, formally known as the Treaty on European Union (‘TEU’), was signed in the Netherlands on 7 February 1992 and came into force on 1 November 1993.326 This established ‘a European Union’327 founded on the three existing European Communities ‘supplemented by the policies and forms of cooperation established by this Treaty’.328 The TEU declared itself to be marking ‘a new stage in the process of creating an ever closer union among the peoples of Europe, in which decisions are taken as closely as possible to the citizen’.329 Whatever else the Maastricht Treaty might represent, it marked the beginning of a new stage in developing a common, EU private international law.330

1.127  Under the Maastricht Treaty, the Treaty of Rome was amended and renamed as the Treaty Establishing the European Community (‘TEC’). The European Economic Community was renamed the ‘European Community’ and embedded within the European Union.331 The activities of the Community listed in the TEC were to be amended to include: (i) work relating to the ‘internal market’,332 which was to be characterized by the abolition between Member States of obstacles to the free movement of goods, persons, services, and capital; (ii) the approximation of the laws of Member States to the extent required for the functioning of the Internal Market; and (iii) a contribution to the strengthening of consumer protection.333

The new co-decision procedure after Maastricht

1.128  To reduce the democratic deficit that lies at the heart of law-making within the Community, the Maastricht Treaty increased the role and powers of the European Parliament. Changes, including a new legislative procedure, the co-decision procedure, which was found in Article 189B, which established the principle of direct negotiations between the Council and the European Parliament. Article 189B meant the European Parliament had, for the first time, the chance to vote down that common position by a majority of its members, thereby ending the legislative procedure.334

‘Justice and Home Affairs’ and the third pillar

1.129  A key component of the legislative changes at Maastricht involved the creation of a formal mechanism within the framework of the Treaty for some (but not all) areas previously left to informal intergovernmental cooperation. This new arrangement gave rise to three separate approaches to European integration, commonly described as three ‘pillars’.335 The first was (p. 44) the ‘Community’ pillar, which comprised the three European communities themselves.336 The second consisted of a common foreign and security policy, while the third pillar with matters that fell within the concept of ‘justice and home affairs’.

1.130  The Maastricht Treaty outlined objectives that included the development of ‘close cooperation on justice and home affairs’.337 This was the first formal recognition within the EC Treaty framework of the concept of ‘justice and home affairs’ which represented a collective description of the areas of informal cooperation between Member States that had existed since the 1960s.338 The provisions were placed in the ‘third pillar’ of the Community, in Article K of Title VI of the TEU.339

1.131  Article K.1 emphasized that, in achieving the Union’s objectives relating ‘in particular the free movement of persons’, and ‘without prejudice to the powers of the European Community’, Member States should regard several areas as matters of ‘common interest’.340 These included among a list of nine areas, the concept of ‘judicial cooperation in civil matters’.341 In relation to these matters of common interest, Article K3.2 empowered the Council of Ministers of Member States (‘the Council’) to adopt joint positions and promote, using the appropriate forms and procedures, any cooperation contributing to the pursuit of the objectives of the Union,342 to take joint action,343 and, without prejudice to Article 220, to ‘draw up conventions which it shall recommend to the Member States for adoption’.344 The Council had to adopt measures unanimously, except for procedural questions, measures implementing joint positions under Article K.3, and measures implementing Conventions, which only required two-thirds of the vote of the Member States unless the particular Convention provided otherwise.345 The Commission had a shared power along with Member States to make proposals on some of the identified matters, including measures relating to judicial cooperation in civil matters.346

1.132  These third pillar matters were still left to the Member States but were not ‘pure intergovernmental co-operation’347 because the Community institutions were involved. But neither were they part of Community law, in the same way as the first pillar, as the European institutions themselves still lacked direct legislative competence in justice and home affairs matters.348 Third pillar matters were subject to a complex structure that operated at various levels, but had one of the many ‘configurations’349 of the Council, with the Justice and (p. 45) Home Affairs Council (‘The JHA Council’) at its apex. The JHA Council comprised ministers from the Member States which acted as the ‘supreme policy-making body’.350

European private international law conventions after Maastricht

1.133  Article K of the Maastricht Treaty provided some new impetus into 1960s goal of harmonizing European private international law.351 The concept of ‘judicial cooperation in civil matters’352 was broader than the provisions previously found in Article 220 (now Article 293 TEC) of the Treaty. As a consequence, new private international law Conventions were formulated on the basis of Article K. These were (a) the ‘Service Convention’, on the Service in the Member States of the European Union of Judicial and Extrajudicial Documents in Civil or Commercial Matters,353 which never came into force, and (b) the ‘Brussels II Convention’, on Jurisdiction and the Recognition and Enforcement of Judgments in Matrimonial Matters, which did come into force.354 A third, the 1995 Convention on Insolvency Proceedings,355 was negotiated but also never came into operation. In addition, during this post-Maastricht period, a few, isolated rules involving private international law matters, also appeared in various sectoral directives, often based on Article 95 TEC.356 But while there was new impetus towards extending cooperation in the field of European private international law, the working methods required by the Treaty were criticized as being unwieldy and ineffective.357

From Italy to Amsterdam (1996–1999)

1.134  On 29 March 1996, the Turin European Council launched an intergovernmental conference aimed at preparing the Community for its next phase of enlargement. The IGC began ‘its examination of the revision of the Treaties with the purpose of creating an ever closer union among the peoples of Europe’.358 It was noted that ‘European citizens pay growing attention to justice and home affairs’. In an area of free movement for people, goods, capital, and services such as the EU, ‘the exercise of these rights according to the Treaty provisions must be accompanied by adequate protection’. The IGC was called upon ‘to produce adequate results’ on issues that included ‘better methods and instruments’, and ‘clearing divergent views on jurisdictional and parliamentary control of EU decisions in the field of justice and home affairs’.359 Negotiations began in Messina, Sicily on 2 June 1995, and (p. 46) were completed just over two years later in Amsterdam on the 18 June 1997. On 2 October 1997, a formal signing of the Treaty of Amsterdam took place.360 The European Parliament endorsed the Treaty on 19 November 1997, and eventually,361 the 15 Member States ratified it. The Treaty of Amsterdam finally entered into force on the 1 May 1999. This new Treaty contained new legislative powers that entirely changed the landscape of European private international law.

O.  ‘An Area of Freedom, Security and Justice’

1.135  The Recitals in the Preamble to the Rome I Regulation begin with the declaration that:

The Community has set itself the objective of maintaining and developing an area of freedom, security and justice. For the progressive establishment of such an area, the Community is to adopt measures relating to judicial cooperation in civil matters with a cross-border impact to the extent necessary for the proper functioning of the internal market.362

1.136  This objective has become the principal engine for developing a European private international law.

The Treaty of Amsterdam (1997)

1.137  It began with the Treaty of Amsterdam’s revisions to both the Maastricht Treaty (the TEU) and the TEC.363 The Treaty of Amsterdam conferred new powers on the Community to legislate in the field of judicial cooperation in civil matters. The former goal of developing ‘close cooperation on justice and home affairs’364 was replaced by the new, broader objective of:

maintaining and developing the Union as an area of freedom, security and justice, in which the free movement of persons is assured in accordance with the provisions of this Treaty.365

1.138  This new objective was ‘the device employed to reorganize the pillar structure created at Maastricht’.366 Article K of the Maastricht Treaty was removed, and EU legislative competence was transferred to the ‘first pillar’, with amendments to the main Treaty that included (p. 47) the insertion of a new Article 65 in the new Title IV of the TEC.367 The jurisdiction of the Court of Justice was extended to cover these former ‘third pillar’ matters.368

The New treaty base: Article 65 of the TEC369

1.139  The treaty base for the Rome I Regulation is described in Recital (2) in the Preamble to Rome I:

According to Article 65, point (b) of the Treaty, these measures are to include those promoting the compatibility of the rules applicable in the Member States concerning the conflict of laws and of jurisdiction.

1.140  Article 65 of the TEC was a new provision that conferred powers on the Community to adopt measures in the field of judicial cooperation that included ‘civil matters having cross-border implication’, but only ‘insofar as necessary for the proper functioning of the internal market’.370 Such measures included ‘improving and simplifying…the recognition and enforcement of decisions in civil and commercial cases, including decisions in extrajudicial cases’,371 and, most importantly for present purposes, ‘promoting the compatibility of the rules applicable in the Member States concerning the conflict of laws and of jurisdiction’.372 The aim of Article 65 ‘was to improve the efficacy and ease with which cross-border disputes were handled’.373

1.141  Article 65 TEC (ex Art 73m) read:

Measures in the field of judicial cooperation in civil matters having cross-border implications, to be taken in accordance with Article 67 and insofar as necessary for the proper functioning of the internal market, shall include:

  1. (a)  improving and simplifying:

    • –  the system for cross-border service of judicial and extrajudicial documents;

    • –  cooperation in the taking of evidence;

    • –  the recognition and enforcement of decisions in civil and commercial cases, including decisions in extrajudicial cases;

  2. (b)  promoting the compatibility of the rules applicable in the Member States concerning the conflict of laws and of jurisdiction;

  3. (c)  eliminating obstacles to the good functioning of civil proceedings, if necessary by promoting the compatibility of the rules on civil procedure applicable in the Member States.

1.142  Article 65 gave rise to considerable debate over the scope of the legislative competence given to the Community.374 Some queries arose because Article 65 had been housed in Title IV (p. 48) of the TEC, headed ‘Visas, Asylum, Immigration and Other Policies Related to Free Movement of Persons’, and the intended relationship between conflicts of law rules and free movement provisions were unclear. Ultimately, the location of Article 65 was regarded as an ‘accident of negotiation’ arising out of the late proposal to include the Article K.3 provisions of the Maastricht Treaty in the new Treaty.375 It was also recognized that this transfer proposal had ‘encountered some misgivings by a number of Member States. This may explain the somewhat awkward and ambiguous language’ of Article 65.376

1.143  Questions arose over the relationship between Article 65 and Article 95 of the TEC. Article 95 conferred power on the EU to approximate national laws where their object was ‘the establishment and functioning of the internal market’.377 The powers granted under Article 65 also empowered the EU to take measures where necessary ‘for the proper functioning of the internal market’. Was Article 65 a form of lex specialis or did it have an independent, autonomous meaning? The intended relationship between Article 65 and Article 220 (which continued to exist as a renumbered Article 293 TEC) was also less than transparent.

A proper treaty base?

1.144  But the keenest debate questioned whether Article 65 was a sufficient treaty base to enable the Community to create harmonized conflict-of-laws rules.378 Article 65 appeared on its face to restrict the legislative competence of the Community to those measures deemed ‘necessary for the proper functioning of the internal market’. This phrase had been introduced by the United Kingdom as a late addition to the text of the Treaty.379 Its terms suggested (at least to the British and to some others) that a relatively high hurdle had to be overcome before legislative measures could be adopted under Article 65. A measure had to be necessary rather than merely desirable, and it had to affect the proper functioning of the Internal Market before the Community had vires to legislate. The concept of the ‘internal market’ was also considered to be one that must have some determinable limit, and have some economic justification.

1.145  The Commission took a different view on the scope of Article 65. This difference is vividly illustrated in a hearing before a House of Lords Select Committee in January 2004. (p. 49) Mr Mario Tenreiro, a Commission official responsible for civil justice, was giving evidence in relation to the Commission’s Rome II proposal for a regulation harmonizing the conflict-of-laws rules for non-contractual obligations. The Select Committee included several members who were sceptical about the Community’s legislative competence to create such an instrument.380 The following exchange occurred:

Q14 Chairman:

  • The problem that is being looked at is not just a question of whether there is a large, practical problem or a small, practical problem; it is a question of vires. As I understand it, the only power that the European Union has to legislate in this field is derived from Article 65 of the TEC. The regulation has to be said to be established as being necessary, which is a strong word, for the proper functioning of the internal market. The internal market does not mean just everything; it has a Community autonomous meaning. How does this facility in relation to tort claims, delictual claims, non-contractual claims, bear upon the proper functioning of the internal market, because if it does not there is no vires.
  • Mr Tenreiro:

  • The condition of Article 65 which we take very seriously is a condition which is not only legal but also has a political content and a margin for appreciation. For instance, there was a question raised four years ago when the Commission presented the proposal on rules on jurisdiction and recognition of divorce as to what is the link between divorce and the proper functioning of the internal market. The answer is that the link is there and this concept of the internal market is something that should be read in a wide context, taking into account the overall aims and objectives of the Treaty and what the internal market really means for people. The internal market in tort law means that companies and victims should have predictability and good access to justice. We should simplify proceedings and the application of justice and we should improve the recognition of decisions also.381
  • 1.146  As Mr Tenreiro demonstrated, for the Commission the ever flexible concept of a ‘margin of appreciation’ entitled them to read the concept of the Internal Market in ‘a wide context’ giving them the right to decide what the Internal Market ‘really means for people’. In response, Mr Tenreiro was asked:

    Q15 Chairman:

  • Has the European Court endorsed this view of what the internal market extends to?
  • Mr Tenreiro:

  • Not yet.382
  • 1.147  The Commission’s arguments in support of the Community’s legislative competence was challenged during the development of the Rome II Regulation.383 Not everyone agreed (p. 50) with the Commission.384 Doubts among a minority of Member States led to the Council’s Legal Service providing an opinion on the proposed legal basis for the Rome II Regulation. That opinion considered that the Community had competence.385 No Member State ever formally challenged this analysis.

    1.148  Residual disputes of similar issues about legislative competence would arise again in relation negotiations over the Rome I Regulation. The United Kingdom and some other Member States386 were concerned about the treaty base, regarding it as ‘far from clear how choice-of-law rules as regards contractual disputes between parties neither of whom is domiciled or habitually resident in a Member State would be “necessary for the proper functioning of the internal market” as required by Article 65’.387 This was a question to which some may say the United Kingdom would never receive a satisfactory answer.

    Initial restrictions (1999–2003)

    1.149  The Community’s new legislative powers in Article 65 TEC were still restricted. For a transitional period of five years, the Council’s decisions in this field were to remain unanimous, and the European Parliament’s role was purely consultative.388 It would not be until the Treaty of Nice (2001)389 came into force on 1 February 2003 that the Treaty was amended to provide that all matters, except those relating to family law, were to be subject to the co-decision legislative procedure, with qualified majority voting in the Council.390

    The special position of Denmark, Ireland, and the UK

    1.150  But one set of limitations on the effectiveness of the Title IV provisions of the Treaty of Amsterdam which would not be changed involves the special provisions391 relating to (i) Ireland and the United Kingdom392 and (ii) to Denmark.393 Ireland and the United Kingdom negotiated a position where they could opt-in any Title IV measures designed to create and maintain this Area of Freedom, Security and Justice on the basis of a process set out in a protocol to the Treaty. Failing a decision to opt-in to a particular measure, either country could always apply to opt-in at a later stage; as the United Kingdom would do in relation to both the Rome I Regulation itself and the Maintenance Regulation (4/2009/EC). The United (p. 51) Kingdom negotiated the opt-in ‘to maintain its border controls and to protect its common law system’.394 Denmark’s position was very different. Denmark opted out of all Title IV matters, though individual agreements have been entered into on certain key matters.395

    Awaiting the new powers (1998–1999)

    1.151  While the Treaty of Amsterdam awaited ratification by Member States, future plans for implementing its objectives had to be made. In June 1998, the Cardiff European Council called on the Council of Ministers and the Commission to present an action plan on ‘how best to implement the provisions of the Treaty of Amsterdam on an area of freedom, security and justice’.396 The Commission responded quickly, emphasizing the need to speed up progress in relation to judicial cooperation in civil matters, especially in relation to matters concerning both the ‘competent jurisdiction’ and ‘clear designation of the applicable law’.397 The following day, the Austrian Presidency presented a paper on the principal questions to be addressed by a convention on the law applicable to non-contractual obligations.398

    The Vienna Action Plan

    1.152  On 3 December 1998, the Vienna Action Plan of the Council and Commission on how best to implement the Treaty of Amsterdam on the area of freedom, security, and justice was adopted.399 Regarding matters of judicial cooperation in civil matters, the Council and Commission repeated the Commission’s earlier July 1998 Communication.400 Both emphasized that the ‘aim is to make life simpler for European citizens’, by ‘promoting the compatibility of conflict-of-laws rules and on jurisdiction’.401 The goal was set that, within two years after the entry into force of the Treaty of Amsterdam, there should be (i) the finalization of the work on the revision of the Brussels and Lugano Conventions; (ii) the ‘drawing up a legal instrument on the law applicable to non-contractual obligations’; and, most importantly for present purposes, the Community should (iii) ‘begin revision, where necessary of certain provisions of the Convention on the Law applicable to contractual obligations, [to] take into account special provisions on conflict-of-laws rules in other Community instruments (Rome I)’. The Vienna Action plan represents the first ‘green light’ for the Rome I project.

    Tampere: ‘A genuine European area of justice’

    The European Council meeting in Tampere on 15 and 16 October 1999 endorsed the principle of mutual recognition of judgments and other decisions of judicial authorities as the cornerstone of judicial cooperation in civil matters and invited the Council and the Commission to adopt a programme of measures to implement that principle.402

    (p. 52) 1.153  Recital (3) to the Rome I Regulation refers to the next major step in its legislative development, which occurred at the special meeting of the European Council held in October 1999 at Tampere, Finland. The Treaty of Amsterdam had come into force on 1 May 1999.403 The Tampere meeting created the first five-year programme to develop the Union as an area of freedom, security, and justice, ‘by making full use of the possibilities offered by the Treaty of Amsterdam’. The European Council declared that the EU had already put in place for its citizens the major ingredients of a shared area of prosperity and peace. The ‘challenge’ of the Treaty of Amsterdam ‘is now to ensure that freedom, which includes the right to move freely throughout the Union, can be enjoyed in conditions of security and justice accessible to all’.404 The Tampere European Council therefore wanted to send ‘a strong political message to reaffirm the importance of this objective’ and agreed on several policy orientations and priorities which it considered ‘will speedily make this area a reality’. They invited the Council and the Commission, in close cooperation with the European Parliament, ‘to promote the full and immediate implementation of the Treaty of Amsterdam on the basis of the Vienna Action Plan’, and of the political guidelines and ‘concrete objectives agreed here in Tampere’.405

    1.154  As for concrete objectives relating to cooperation in civil law matters, the Tampere European Council emphasized there should be a ‘genuine European Area of Justice’ in which ‘individuals and businesses should not be prevented or discouraged from exercising their rights by the incompatibility or complexity of legal and administrative systems in the Member States’.406 To achieve this, the European Council wished to see ‘enhanced mutual recognition of judicial decisions’ which should become ‘the cornerstone’ of judicial cooperation in both civil and criminal matters.407 There were also calls for ‘greater convergence in civil law’, and the Council and the Commission were invited to prepare new procedural legislation in cross-border cases.408

    The flexing of new legislative muscles

    1.155  The initial focus of the exercise of the Community’s new legislative powers conferred by the Treaty of Amsterdam involved three distinct elements.

    1.156  The first element was the transposition into Community Regulations of the Article K and Article 220/293 Conventions. On 29 May 2000, three new European private international law Regulations were adopted. Two were re-boots of failed Conventions, namely the Insolvency Regulation (1346/2000)409 and the Service Regulation (1348/2000).410The other, Regulation (1347/2000), was a replacement of the 1998 family law Brussels II (p. 53) Convention with a Community instrument.411The latter would be subsequently repealed and replaced by the Brussels II bis Regulation (2201/2003) in December 2003.412

    1.157  The second element was converting the Brussels Convention into a Regulation. Earlier attempts to reform both the Brussels and Lugano Conventions had been overtaken by the political crisis that caused the resignation of the entire Santer Commission on 15 March 1999, and by the change in legislative competence. At an ad hoc working party held on 19–23 April 1999, agreement was reached on a revised text for the Brussels and Lugano Conventions.413 But with the coming into force of the Treaty of Amsterdam on 1 May 1999, the new powers conferred on the Community gave rise to questions whether or not any new Lugano Convention must be negotiated and concluded by the Community alone, or by the Community together with the Member States.414 As a result, the working party’s new draft Convention was ‘frozen’ by the Council, pending resolution of this question by the Court of Justice. In the meantime, at a meeting on 27 and 28 May 1999, the European Council gave approval in principle to the agreement reached by the working party.415 On 14 July 1999, the Commission, despite their interim role, published a proposal for a Council Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.416 This was based on the revised Brussels Convention text drawn up by the ad hoc working party, with necessary adjustments to take account of its conversion into a draft Regulation, and also revised provisions relating to consumers.417 The enacted ‘Brussels I Regulation’ (44/2001) was approved by the Council on 22 December 2000418 and came into force in all Member States, except Denmark, on the 1 March 2002.

    1.158  The third element focused on harmonization of conflict-of-law rules, creating entirely new legislation to give effect to every one of the objectives set out in Article 65.419

    Converting the Rome Convention into a community instrument

    1.159  After Tampere, discussions continued, and by the end of November 2000, a programme of measures based on the Tampere objectives had been adopted. As Recital (4) to Rome I declares:

    On 30 November 2000 the Council adopted a joint Commission and Council programme of measures for implementation of the principle of mutual recognition of decisions in civil and commercial matters.420 The programme identifies measures relating to harmonisation of conflict-of-law rules as those facilitating the mutual recognition of judgments.421

    (p. 54) 1.160  This 30 November 2000 programme focused on the barriers to the free movement of judicial decisions.422 As part of the subsidiary ‘measures ancillary to mutual recognition’, the last item on the agenda declared that ‘implementation of the mutual recognition principle may be facilitated through harmonization of conflict-of-law rules’.423 Despite the more positive terms of Recital (4) to the Rome I Regulation,424 harmonizing choice of law issues did not appear at that stage to be a pressing or a mandatory component of the legislative programme.

    Academic support

    1.161  From 2000 onwards there was increasing academic support in some quarters for modernizing the Rome Convention. The Group Europeén du Droit International Privé (‘GEDIP’) considered possible revisions to the Convention in meetings from September 2000 onwards, and advocated several updates, especially regarding consumer protection.425

    1.162  In 2002, the Commission funded a research project under the framework programme for judicial cooperation in the civil matters. This project was to focus on a joint analysis of key issues in both the Rome Convention and the new Brussels I Regulation. The contract was granted to the universities of Antwerp, Barcelona, Louvain-la-Neuve, and Toulouse, and was coordinated by the University of Antwerp (‘the Antwerp Study’). Fourteen reports were written by professors of 11 European universities.426 The Antwerp Study argued strongly in favour of the transformation of the Rome Convention into a Community instrument. It was regarded as being of the ‘utmost importance that the Community develops a private international law system which is as clear and transparent as possible’.427 The transnational subject matter of the private international law was seen as calling for the adoption of a regulation as opposed to a directive. This would enhance ‘the uniformity and effectiveness of the Community’s achievements, but also improve the transparency of the emerging Community private international law system’.428

    The Treaty of Nice in Force (2003): Qualified majority voting and the co-decision procedure

    1.163  The last piece in the enabling provisions of the legislative jigsaw arrived in the revisions made in the Treaty of Nice, which came into force on 1 February 2003.429 The Treaty of Nice introduced qualified majority voting by the co-decision procedure for measures falling with Article 65 (including those relating to conflict of laws).430

    (p. 55) 1.164  The co-decision procedure in Article 251 of the Treaty now provided for the Commission to submit a proposal for the adoption of an act to the European Parliament and the Council, and the Council, acting by a qualified majority after obtaining the opinion of the European Parliament and approving all the amendments (if any) made by the Parliament, may adopt the proposed amended act.431 Otherwise, it was to adopt a common position and communicate it to the European Parliament, and then the latter may approve, reject or propose amendments to the common position.432 If, within three months of this process the Council, acting by a qualified majority, approves all the amendments of the Parliament, then the act will be deemed adopted in the form of the common position thus amended.433 Failing which a Conciliation Committee, involving the Council, the European Parliament and the Commission would be set up and attempts made to reach an agreement.434

    The Rome II Regulation (2003–2007)

    1.165  The first ‘beneficiary’ of these new powers concerned the rules for determining the applicable law in non-contractual obligations. In 1996, some 18 years after work had been suspended on a Convention in that field, it had resumed. In February 1998, the Commission had sent Member States a questionnaire on a draft convention. Four working meetings were held, and it was established that all Member States supported the principle of a Rome II instrument. The Commission had also financed a Grotius project, presented by GEDIP, to examine the feasibility of a European Convention. This project produced a draft text. The Vienna Action plan in December 1998 had authorized the ‘drawing up of a legal instrument on the law applicable to non-contractual obligations (Rome II)’.435 Consultations and a public hearing in Brussels on 7 January 2003 followed.

    1.166  On 22 July 2003, shortly after the Treaty of Nice came into force, the Commission published their Rome II proposal.436 This traced the history of attempts to harmonize the rules, and borrowed from both the experience of both abortive 1972 Draft Convention and the Rome Convention. Their stated purpose was to ‘standardise’ the conflict-of-laws rules in this field, ‘and thus extend the harmonization of private international law in relation to civil and commercial obligations which is already well advanced in the Community with “the Brussels I” Regulation and the Rome Convention of 1980’.437 The Commission stressed the underlying belief that such harmonization facilitated the settlement of cross-border disputes:

    The harmonisation of conflict rules, which must be distinguished from the harmonisation of substantive law, seeks to harmonise the rules whereby the law applicable to an obligation is determined. This technique is particularly suitable for settling cross-border disputes, as, by starting with reasonable certainty the law applicable to the obligation in question irrespective of the forum, it can help to develop a European area of justice. Instead of having to (p. 56) study often widely differing conflict rules of all the Member States’ courts that might have jurisdiction in a case, this proposal allows the parties to confine themselves to studying a single set of conflict rules, thus reducing the cost of litigation and boosting the foreseeability of solutions and certainty as to the law.438

    1.167  After a report from the European Parliament’s Committee on Legal Affairs (‘JURI Committee’),439 and following a debate in July 2005, the European Parliament adopted 54 amendments at the first reading in plenary session on 6 July 2005.440 This resulted in the Commission publishing a modified legislative proposal on 21 February 2006.441 On 25 September 2006, the Council common position was agreed by a qualified majority.442 On 8 November 2006, the JURI Committee’s draft recommendations for a second reading on the Council’s common position were produced.443 On 20 December 2006, the European Parliament’s JURI Committee adopted the rapporteur’s report amending the Council’s common position. The European Parliament approved several amendments to the text that had been deleted in the Council’s common position on the 18 January 2007.444 On 19 April 2007, the Council decided not to approve all the European Parliament’s amendments in the second reading, and it was decided in agreement with the European Parliament to convene the Conciliation Committee. This Committee met formally on 15 May 2007. Three trilogues were held between 6 March and 24 April 2007, before a meeting of the Conciliation Committee agreed at midnight on 15 May 2007. A joint text was approved by the Conciliation Committee co-chairs on 22 June 2007,445 and a third reading report on the joint text approved by the Conciliation Committee was produced on 28 June 2007.446 The leg