1.01  The EC Regulation on the law applicable to non-contractual obligations (Rome II)¹ was adopted on 11 July 2007 and will apply² from 11 January 2009.³ When, in September 1967, the Belgian permanent representative to the EEC, Joseph van der Meulen, wrote to the Commission urging it to consider possible measures to unify conflict of law rules in the (then) six Member States,⁴ he can scarcely have foreseen that his letter would trigger a diplomatic and legislative process stretching over thirty years and resulting in a legislative instrument re-writing private international law rules in twenty-six European States.⁵ Indeed, the letter emphasized an element of urgency in his proposal, noting the prospect of imminent reforms in some Member States with the consequent risk of crystallizing existing differences. Moreover, while Ambassador van der Meulen and his colleagues might well have anticipated that the co-ordination of rules of applicable law, particularly those for torts and other non-contractual obligations, would not be free from political difficulty,⁶ the adoption of the Rome II Regulation undoubtedly has a wider legal and political significance than any multilateral convention of the kind that they contemplated could have had. As the first piece of Community legislation laying down uniform rules of applicable law of a general nature, the Regulation not only laid down a marker for later instruments in this area⁷ but also tested the (p. 5) legislative competence of the Community in the field of civil justice.⁸ Thus, in the view of one commentator:⁹

Rome II is a dramatic step in the federalization or ‘Europeanization’ of private international law in the EU member states, a step that has been aptly characterised as the European conflicts revolution.

1.02  From a political viewpoint, the legislative process highlighted tensions between the Commission Directorates General as to the relationship between Community law and private international law, as well as between the Community organs participating in the legislative process as to the structure and content of the instrument. The end product marks the ascendancy of the Council and the Commission positions over that of the European Parliament,¹⁰ and is closer to the aspirations of private international law ‘traditionalists’ than those advocating a ‘country of origin’¹¹ approach. At the same time, consumer protection and other policy objectives of the Community have shaped the final form of the Regulation, most obviously in the formulation of tailored rules of applicable law for specific torts.¹²

1.03  The Regulation, and the Rome I Regulation with which it is closely linked,¹³ will likely also play a significant role in the debate as to whether the substantive law of obligations in the Member States should be harmonized by a Community instrument. On the one hand, as instruments that use the techniques of private international law to promote greater harmony in the Member States’ widely diverging¹⁴ systems of civil liability for contractual and non-contractual obligations, the two Regulations might be thought to (p. 6) apply a (welcome) brake to the ambitions of those who advocate a European civil code.¹⁵ On the other hand, the creation of uniform applicable law rules for torts, unjust enrichment and other civil obligations (and the accompanying interpretative competence of the European Court of Justice¹⁶ and external Community competence¹⁷) will undoubtedly cast a greater light on the common ground among, and differences between, civil liability rules in the Member States. Furthermore, if the two Regulations do not prove successful in their objective of securing greater predictability in the outcome of litigation before Member State courts, the clamour for a root and branch reform of the law of obligations within the European Community will no doubt increase, with ominous consequences for the independence of the English common law and other Member State legal systems.

1.04  In January 2008, the Study Group for a European Civil Code (chaired by Professor Christian von Bar) published an ‘interim outline’ version of the ‘Draft Common Frame of Reference’ (DFCR) containing ‘principles, definitions and model rules of European private law’.¹⁸ Despite its unambitious title, it is a prototype European civil code. Books V to VII of the DFCR deal, respectively, with benevolent intervention in another’s affairs, noncontractual liability arising out of damage caused to another, and unjustifi ed enrichment. These three topics cover most of the subject matter of the Rome II Regulation and, if adopted, would represent a seismic shift in European private law. Whatever the future may hold, even the staunchest opponents of the civil code movement must admit a grudging respect for the tenacity of its disciples and of Professor von Bar, its high priest.

1.05  While maintaining, at least for the time being, the diversity of European legal culture, the Regulation may influence the future development of Member States’ systems of non-contractual liability in a different way. As will be seen, its outlook, particularly the general rule for torts¹⁹ and the special rules for product liability and environmental damage,²⁰ approaches (p. 7) the problem from the perspective of the ‘victim’ and favours the philosophy that tort law, in particular, should take as its primary objective the distribution of loss among members of society, rather than the regulation of conduct.²¹ As a consequence, it may be supposed that, in cross-border situations, a Member State’s rules will more often be applied to its own residents (whether by its own courts or by those of another Member State) as persons suffering, rather than causing, injury. This in turn may focus political minds on increasing the level of protection afforded to the injured party. In this respect, the common law systems of the UK and Ireland have further to travel than their continental cousins. As Professor van Dam notes:²²

France and England represent two opposite policy approaches to tort law. Whereas French tort law primarily focuses on compensation and the principle of distributive justice (strict liability), the predominant focus of English tort law is on conduct regulation and the principle of corrective justice (fault liability). These differences are particularly, though not solely, recognizable in the area of accident law and in the way that the liability of public authorities is dealt with. German tort law takes a somewhat intermediate position; on the one hand it formally and dogmatically often applies the tools of conduct regulation (fault liability), but at a policy level it is strongly inspired by the principle of distributive justice.

1.06  Finally, the Regulation has a broader international significance. First, in crystallizing the external competence of the Community (and excluding that of the participating Member States) to negotiate and conclude treaties within its area of application.²³ Secondly, as a possible trigger for renewed efforts to conclude an international treaty on the law applicable to torts and other non-contractual obligations, most obviously under the auspices of the Hague Conference on private international law. The issues of jurisdiction and applicable law with respect to torts were suggested as items to be placed on the agenda of the Hague Conference in the late 1960s, an option that was investigated by the Permanent Bureau and the Special Commission.²⁴ At that time the Special Commission concluded that ‘the field of torts was too wide and heterogeneous to be dealt with in one single convention’, and recommended that the Conference focus, first, (p. 8) on traffic accidents²⁵ and, subsequently, on product liability.²⁶ Since then, the Hague Conference has not (at least so far as the author is aware) given further consideration to the possibility of a convention dealing with torts or non-contractual obligations generally, preferring to focus its efforts on specific areas of liability.²⁷

1.07  This book consists of a commentary on the Rome II Regulation, and the process that led to its adoption. It is divided into four Parts. The first Part considers certain introductory topics, including (in this chapter) an overview of the pre-existing rules of applicable law in selected Member States and an account of the legislative history of the Regulation, (in Chapter 2) analysis of the treaty basis for the Regulation, and (in Chapter 3) discussion of the approach to interpretation, the scope of the Regulation, and certain key concepts and terms. The second Part considers the rules of applicable law for torts and delicts, including the special rules for product liability, competition law, violations of the environment, intellectual property, and industrial action. The third Part considers the rules of applicable law for other non-contractual obligations (unjust enrichment, negotiorum gestio‎, and culpa in contrahendo‎). The final Part considers topics common to all non-contractual obligations falling within the scope of the Regulation, including party choice of law, scope of the law applicable under the Regulation, public policy and mandatory rules, and the Regulation’s relationship with EC and international law.

1.08  It cannot be doubted that when the Regulation was adopted the Member States of the European Community had reached widely differing solutions to the question as to which country’s rules concerning non-contractual (p. 9) liability should be applied by their courts in cross-border situations. The following (partial) survey is offered by way of illustration of this point, and should not be taken as a comprehensive statement of the law in force in each Member State. The law is described as it stood at the time of writing, prior to the date of application of the Regulation. The rules described below will be largely superseded by those in the Regulation, but will continue to apply to cases falling outside the Regulation’s scope.²⁸

1.09  The pre-Regulation rules of applicable law for torts or (in Scotland) delicts³⁰ are principally contained in the Private International Law (Miscellaneous Provisions) Act 1995. This legislation, which entered into force on 1 May 1996, largely replaced³¹ the formerly applicable common law rule of ‘double actionability’ under which, in order to be actionable in the UK, conduct abroad³² must generally both (a) have constituted a tort under the law of the forum, and (b) have been civilly actionable (although not necessarily as a tort) according to the place where, in substance, the tort occurred.³³ In later years, flexibility was introduced into this rule by an exception which (on the view that gained general acceptance) permitted either or both limbs to be displaced in relation to a particular issue by the law of the country which had the most significant relationship with the occurrence and the parties with respect to that issue.³⁴

(p. 10) 1.10  In contrast, the general rule under section 11 of the PILA (UK), the law generally applicable to issues relating to tort or delict is the (domestic³⁵) law of the country in which the events constituting the tort or delict occur.³⁶ Where elements of those events occur in different countries, different subrules identify the applicable law as follows: (a) in cases of personal injury, the law of the country where an individual was when he sustained injury, (b) in cases of property damage, the law of the country where the property was when it was damaged, and (c) in other cases, the law of the country in which the most significant element or elements, weighed together,³⁷ of those events constituting the tort or delict occurred.³⁸ Under section 12 the general rule may be displaced with respect to the case as a whole or a particular issue if it appears from a comparison of the significance of (a) the factors that connect the tort or delict with the country whose law would apply under the general rule, and (b) the factors that connect the tort or delict with another country, that it is substantially more appropriate for the law of the latter country to determine the case or that issue.³⁹ The PILA (UK) contains no provision allowing party choice of law, although a choice of law provision in a contract related to the tort or delict may be taken into account in applying the rule of displacement in s 12.⁴⁰

1.11  A public policy exception applies to the application of foreign law under the rules outlined above.⁴¹ Further, matters of evidence and procedure remain governed (as at common law) by the law of the forum.⁴² Most controversially, the law of the forum has been held to apply to the quantification of damages.⁴³

1.12  Non-contractual obligations other than torts/delicts remain subject to judge made rules, which were still developing at the time of adoption of the Regulation. For obligations based on unjust enrichment, the most recent edition of Dicey, Morris & Collins: The Conflict of Laws, the leading (p. 11) English work on the conflict of the laws, summarizes the current state of the case law in the following way:⁴⁴

1. (1)  The obligation to restore the benefit of an enrichment obtained at another person’s expense is governed by the proper law of the obligation.

2. (2)  The proper law of the obligation is (semble‎) determined as follows:

   1. (a)  If the obligation arises in connection with a contract, its proper law is the law applicable to the contract;

   2. (b)  If it arises in connection with a transaction concerning an immovable (land), its proper law is the law of the country where the immovable is situated (lex situs‎);

   3. (c)  If it arises in any other circumstances, its proper law is the law of the country where the enrichment occurs.

1.13  As indicated by the tentative nature of the second paragraph, it has not always been possible for practitioners to predict with confidence how the principle of the proper law of the obligation would be applied to the facts of an individual case. In 2005, Sir Lawrence Collins, the senior editor of the work referred to above, while acting in a judicial capacity, described this as ‘an uncertain and developing area of the law’ and the place of enrichment connecting factor (sub-para (c) above) as a ‘tentative formulation’ of the proper law approach ‘where the parties have no prior connection’.⁴⁵

1.14  Finally, beyond the province of the law of torts and (common law) unjust enrichment, English law recognizes a wide variety of ‘equitable obligations’, being obligations of a kind formerly recognized by the Courts of Equity.⁴⁶ It was formerly suggested that, putting to one side trust obligations to which the 1985 Hague Convention on the law applicable to trusts and on their recognition and the UK legislation implementing that Convention (p. 12) applies,⁴⁷ only the forum’s rules of equity could apply to equitable obligations, even if they arose from conduct abroad.⁴⁸ The modern trend, however,⁴⁹ favours the rejection of a separate category of ‘equitable obligations’ in private international law and instead seeks to allocate its subject matter between other, well-recognized categories (contract,⁵⁰ tort, trusts, restitution,⁵¹ company law⁵²).

1.15  By Art 99§1 of the Belgian Code of Private International Law,⁵³ obligations resulting from a harmful act (fait dommageable‎) are governed (a) by the law of the State⁵⁴ of common habitual residence of the person liable and the injured person at the time that the act occurs, (b) otherwise, by the law of the State in which both the fact giving rise to damage and the damage itself occurred in their entirety or are likely to occur, and (c) in all other cases, by the law of the State to which the relevant obligation has its closest connection. Specific rules are contained in Art 99§2 for cases of defamation or violation of privacy or personality rights,⁵⁵ unfair competition,⁵⁶ (p. 13) pollution of the environment,⁵⁷ product liability,⁵⁸ and road traffic accidents.⁵⁹ These general and specific rules are, however displaced in favour of the law applicable to an existing legal relationship between the parties which is closely connected to the obligation deriving from a harmful act.⁶⁰ Further, the parties may, after the dispute has arisen, expressly choose the law applicable to such obligation.⁶¹ By Art 103 the law applicable to an obligation resulting from a harmful act extends (among other matters) not only to the existence and nature of the damage which is taken into account for compensation but also to the specific rules regarding the method and extent of compensation (i.e. including quantification).

1.16  Quasi-contractual obligations are governed by the law with which they have their closest connection, generally presumed to be the law of the State in which (having regard to existing and envisaged relations between the parties) the fact resulting in the obligations occurred.⁶² Again, the parties may expressly choose the applicable law after the dispute has arisen.⁶³

1.17  The Code gives overriding effect to Belgian public policy and mandatory rules,⁶⁴ as well as facilitating the discretionary application of the public policy and internationally mandatory rules⁶⁵ of a third State with which the situation has a close connection.⁶⁶ The doctrine of renvoi‎ is expressly excluded.⁶⁷

1.18  There is no specific provision in the French Civil Code concerning the law applicable to non-contractual obligations.⁶⁸ Case law points towards the (p. 14) application of the law of the place of delict,⁶⁹ which in practice may lead to the application of either the country where the event triggering the damage occurred (‘fait générateur du dommage‎’) or the law of the country where the damage crystallized (‘lieu de réalisation du dommage‎’),⁷⁰ the choice between these two possible conclusions depending on which of the two laws is seen to have the closest connection to the situation.⁷¹ France is a party to the Hague Traffic Accidents and Products Liability Conventions⁷² and, for situations falling within their scope, the rules of the relevant Convention apply instead.⁷³

1.19  For quasi-contractual obligations, French case law supports the application of the law of the place of the fact which gave rise to them.⁷⁴

1.20  The application of a law other than French law may be displaced for reasons of public policy (ordre public international‎) or on the ground of incompatibility with overriding lois de police‎, being rules considered necessary for safeguarding the political, social, or economic organization of the country, whether France or (more rarely) a third country.

1.21  By Art 40(1) of the Introductory Act to the German Civil Code,⁷⁶ claims arising from delict (‘unerlaubter Handlung‎’) are subject to the law of the State where the person liable acted (‘in dem der Ersatzpflichtige gehandelt hat‎’). Nevertheless, the injured person may elect that the law of the State (p. 15) where the result of that action came into effect (‘in dem der Erfolg eingetreten ist‎’) should be applied instead.⁷⁷ If, however, the person liable and the injured person had their usual residence (or, in the case of legal persons, head office or relevant branch) in the same State, the general rules in Art 40(1) are displaced in favour of the law of that State.⁷⁸ A further rule of displacement applies if a substantially closer connection exists to the law of another State,⁷⁹ in particular one arising from a special legal or factual relation between the parties that is connected with the obligation.⁸⁰ German courts have invoked this rule of displacement, for example, in applying the law of the affected market to competition law claims, and the law of the place where industrial action takes place to claims that are directly connected with that action.⁸¹ In any event, delict claims subject to the law of another State are unenforceable if they (a) reach substantially beyond that which is necessary to provide reasonable compensation for the injured person, (b) manifestly serve purposes other than providing such compensation, or (c) contradict liability regulations of an international treaty binding on Germany.⁸²

1.22  By EGBGB Art 38, claims for unjust enrichment resulting from performance with respect to a legal relationship (‘Leistungskondiktion‎’) are generally governed by the law applicable to that relationship.⁸³ Claims for unjust enrichment caused by interference in a protected interest (‘Eingriffskondiktion‎’) are generally governed by the law of the State where the interference occurred.⁸⁴ In other cases, unjust enrichment claims are governed by the law of the State where the enrichment occurred.⁸⁵ By Art 39, (a) statutory claims arising from the management of another’s business without mandate are subject to the law of the State where the business was carried out,⁸⁶ and (b) claims arising from the discharge of (p. 16) another’s obligation are subject to the law applicable to that obligation.⁸⁷ The law applicable under these rules may also be displaced if there exists a substantially closer connection to the law of another State, including from a special legal or factual relation or (for cases other than unjust enrichment by performance rendered) from the common usual residence of the parties at the time of the legally relevant event.⁸⁸

1.23  For all these non-contractual obligations, the parties may (pursuant to Art 42) choose the law governing the non-contractual obligation, but only after the event giving rise to the obligation has occurred.⁸⁹

1.24  A foreign rule will not be applied under these provisions if it is manifestly inconsistent with the fundamental principles of German law, particularly fundamental (constitutional) rights (Grundrechte‎).⁹⁰ Unusually,⁹¹ the EGBGB contains a general renvoi‎ provision whereby, in case of referral to the law of another State (other than by choice of the parties), the private international law rules of that State shall be applied, unless this contradicts the meaning of the referral.⁹² If that State’s rules of applicable law refer back to German law, the substantive rules of German law will apply, breaking the chain of referrals and avoiding an inescapable circularity (circulus inextricabilis‎). If, however, the applicable law is determined by reference to a party choice of law (as in Art 42 and, indirectly, Arts 38(1) and 39(2)), there is no renvoi‎, the reference being to the material provisions of the relevant legal system exclusive of its rules of private international law.⁹³

1.25  By Art 62(1) of the Italian Law No 218/1995 concerning the reform of the Italian system of private international law,⁹⁴ liability for unlawful acts⁹⁵ is governed by the law of the State in which the ‘event’ (‘evento‎’) occurred. Nevertheless, the injured person may demand application of the law of (p. 17) the State where ‘the fact which caused the damage’ (‘il fatto che ha causato il danno‎’) occurred. This language suggests that the former connecting factor is, more naturally, to be equated with the place where the effects of the injurious act are suffered by the injured person.⁹⁶ By Art 62(2), however, if the unlawful act only involves persons who are citizens of the same State and are habitually resident there, the law of that State shall apply instead. Special rules apply to non-contractual liability for damages caused by a product⁹⁷ and to fundamental rights of the person.⁹⁸

1.26  By Art 61 of the 1995 Law, obligations deriving from management of another’s affairs⁹⁹ (negotiorum gestio‎), unjust enrichment, undue payments, and other legal obligations not regulated by a specific rule of applicable law are governed by the law of the State where ‘the fact from which the obligation derives’ (‘il fatto da cui deriva l’obbligazione‎’) occurred.

1.27  Art 13 of the 1995 Law concerns questions of renvoi‎, but does not apply to non-contractual obligations. By Art 16, foreign law must not be applied if its effects are contrary to public policy.¹⁰⁰ Art 17 gives effect to overriding mandatory provisions of Italian law.

1.28  By Art 3(1) of the Dutch Act regarding conflict of laws for unlawful acts¹⁰¹ obligations arising from an unlawful act are governed by the law of the State on whose territory¹⁰² the act took place. Nevertheless, by Art 3(2), in cases of harmful effects to persons, things, or the natural environment in (p. 18) another country, the law of that other country shall apply instead, unless the wrongdoer could not reasonably foresee the effect in that territory. According to further rules of displacement, if the wrongdoer and victim have their ordinary residence or establishment in the same State, the law of that State shall apply instead,¹⁰³ while if the unlawful act is closely connected with a juridical relationship between wrongdoer and victim the law applicable to that relationship shall apply.¹⁰⁴ A special rule applies to unfair competition designating the law of the State on whose territory competitive relations were affected.¹⁰⁵ In all cases, the parties may instead, expressly or otherwise with sufficient clarity, choose the law applicable to obligations resulting from unlawful acts.¹⁰⁶ By Art 7, the scope of the applicable law extends (among other matters) not only to the existence and nature of damage qualifying for compensation but also to the extent of the damage and the manner of its compensation (including, it would appear, matters of quantification). By Art 8, the rules just described do not prevent account being taken of traffi c and safety rules existing at the place of the unlawful act, or of other comparable rules intended to protect persons or things.

1.29  The Netherlands is a party to the Hague Traffic Accidents and Products Liability Conventions¹⁰⁷ and, for situations falling within their scope, the rules of the relevant Convention will apply instead.¹⁰⁸

1.30  Outside situations regulated by the Rome Convention,¹⁰⁹ the law governing unjust enrichment claims under Dutch law remains unsettled, although the law of the State where the enrichment occurred is often reverted to in decisions of the lower courts and legal writing.¹¹⁰ In the absence of party choice and in the absence of a pre-existing legal relationship between the parties, claims based on management of another’s affairs (negotiorum gestio‎) are governed by the law where the manager acted, or—when the manager has acted in several countries—by the law with which the negotiorum gestio‎ is most closely connected.¹¹¹ If there is a pre-existing relationship between the parties, the law applicable to that relationship applies.

(p. 19) 1.31  Under Dutch law, public policy is not used to exclude objectionable foreign laws from being applied. It may, however, serve as a means to prevent enforcement where the outcome of the application of foreign law is unacceptable.¹¹²

1.32  By Art 10, para 9 of the Spanish Civil Code,¹¹³ ‘non-contractual obligations’ are governed by the law of the place where the event from which they arise occurred, without distinguishing obligations arising in tort or delict from other obligations. By way of exception, however, (a) management of another’s affairs (negotiorum gestio‎) shall be governed by the law of the place where the manager undertakes the principal activity, and (b) in unjust enrichment cases (including the recovery of payments not due¹¹⁴), the law by virtue of which the transfer of patrimonial value in favour of the enriched person took place shall apply. Further, although Art 10, para 9 is expressed in broad terms, it does not apply to every other non-contractual obligation. It has, for example, been doubted whether the rule applies to obligations concerning the fundamental rights of privacy and freedom of expression.¹¹⁵ In this connection, it has been noted that:¹¹⁶

[S]uch rigid and undifferentiated legislation calls for a response adapted to the special nature of the case, either by way of interpretation or even through development of the law by the courts.

1.33  Spain is a party to the Hague Traffic Accidents and Products Liability Conventions¹¹⁷ and, for situations falling within their scope, the rules of the relevant Convention will apply instead.

1.34  Under Art 12.3 of the Civil Code, foreign law shall not be applied when it is contrary to public order. Further, under Art 12.4, the use of a conflicts (p. 20) rule for the purpose of evading a Spanish imperative law shall be considered a fraud of the law (fraude de ley‎). Finally, the Spanish Law on Unfair Competition¹¹⁸ applies to all acts of unfair competition that produce or may produce substantial effects on the Spanish market, giving it overriding effect in such cases.

1.35  The law applicable to tortious acts in Sweden is regulated by case law, designating the law of the place of the tort, without exception.¹¹⁹ The identifi cation of the applicable law gives rise to greater difficulty, however, if the wrongful acts have occurred in more than one country or have produced effects in one or more other countries. Various solutions have been suggested by legal writers.¹²⁰ In the situation where an act in one country causes damage in another, the leading case suggests that the place of the act is the most important connecting factor.¹²¹

1.36  Sweden is not a party to the Hague Products Liability Convention or the Hague Traffic Accidents Convention, but is (together with Denmark and Finland, among Member States, and Norway) a party to the Nordic Environmental Protection Convention.¹²² Art 3 of that Convention appears to provide for sole application of the law of the place of the activity giving rise to actual or potential damage, although in practice it appears that the claimant is given the choice between that law and the law of the forum, being the place in which he is affected by that activity.¹²³ By virtue of the participation of two states not bound by the Rome II Regulation, (Denmark and Norway), the Convention will continue to apply to matters within its scope, in accordance with Art 28(1) of the Regulation.

1.37  The division of non-contractual obligations into torts/delicts, on the one hand, and other non-contractual obligations, on the other is not reflected in Swedish law.¹²⁴ While unjust enrichment, negotiorum gestio‎, and culpa in (p. 21) contrahendo‎ are all recognized bases of legal obligations,¹²⁵ no clearly established rules of applicable law has been established by case law for such cases,¹²⁶ although relationships bearing a resemblance to contracts will likely be characterized as such for the purposes of determining their applicable law.

1.38  Application of foreign law to non-contractual obligations is objectionable on public policy grounds.¹²⁷ Further, in the case of traffic accidents, Swedish citizens and persons habitually resident in Sweden injured in an accident involving a car registered in Sweden may always claim compensation under the Swedish system, which imposes strict liability and gives an independent right to compensation from the insurer of the Swedish vehicle.¹²⁸

1.39  Although not a Member State of the European Community, the Swiss Federal Code of Private International Law¹²⁹ provides an interesting comparative model as, at least until the adoption of the Belgian Code¹³⁰ in 2004, it provided the most comprehensive model for a possible European private international law code and may have influenced the formulation of the Rome II Proposal, at least in terms of the matters which it addresses. The rules described below are unaffected by the Rome II Regulation.

1.40  Under the Swiss Federal Code, claims founded on an unlawful act (acte illicite‎) are governed (a) by the law of the State in which the person responsible and injured party have their common habitual residence,¹³¹ and (b) otherwise, by the law of the State in which the unlawful act was committed unless the person responsible should have foreseen that injury would result in another State, in which case the law of the State in which injury occurred shall apply instead.¹³² If, however, the wrongful act violates an existing relationship between the person responsible and the injured (p. 22) party, claims founded on an unlawful act are governed instead by the law applicable to that legal relationship.¹³³ There are special rules for traffic accidents,¹³⁴ product liability,¹³⁵ unfair competition,¹³⁶ restraint of competition,¹³⁷ damaging emissions from immovable property,¹³⁸ and infringements of personality rights by the media.¹³⁹ In addition, the parties may agree at any time after the harmful event occurred to apply the law of the forum (Swiss law).¹⁴⁰

1.41  Unjust enrichment claims are governed by the law that governs the existing or supposed legal relationship from which the enrichment results or (absent such relationship) by the law of the State in which the enrichment occurs.¹⁴¹ Again, the parties may agree that the law of the forum shall apply.¹⁴²

1.42  The Code gives overriding effect to Swiss public policy and internationally mandatory rules.¹⁴³ In addition, a mandatory provision of a system of (p. 23) law other than that designated by the Code may be taken into account if the circumstances of the case are closely connected with that system and if, under Swiss law, the legitimate and manifestly preponderant interests of a party so require.¹⁴⁴

1.43  Although, at least structurally, there are similarities between the applicable law solutions for non-contractual obligations adopted by European countries, it will be evident even within the narrow confines of the preceding survey that the differences between them far outweigh the common features. Indeed, these differences have increased in recent years with the adoption of detailed legislation in Italy (1995), the United Kingdom (1995), Germany (1999), The Netherlands (2001), and Belgium (2004). In view of the wide divergences between the Member States’ substantive approaches to non-contractual liability¹⁴⁵ and in the absence of any international agreement of a general character in this field, the lack of uniformity is unsurprising. It is, however, a feature that played a significant role in the Commission’s case for legislative intervention and in the following debate as to the competence of the European Community to adopt the Rome II Regulation.¹⁴⁶

1.44  Appendix 5 contains a chronology of key developments in the process leading to the adoption of the Rome II Regulation, with references to the principal documents.

1.45  By a letter dated 8 September 1967, Joseph Van Der Meulen, the permanent representative of Belgium to the EEC invited the Commission to organize a collaboration of Member State experts with a view to unifying private (p. 24) international law rules within the Community. That invitation was the product of an initiative by the governments of Belgium, Netherlands, and Luxembourg, whose joint efforts in this area had already resulted, in 1951, in the Benelux convention on private international law, although this had not yet entered into force.¹⁴⁸ The invitation came during the latter stages of the negotiations leading to the adoption by the Member States, in 1968, of the Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters.¹⁴⁹ Indeed, collaboration between the Member States in the area of reciprocal recognition of judgments had been specifically contemplated by Art 220 (now Art 293) of the EEC (now EC) Treaty. Although that provision made no specific mention of wider harmonization or unification of private international law rules, such coordination was in the view of the Benelux delegations a matter of some urgency having regard to likely reforms in ‘some Member States’ and the ‘danger that existing divergences would become more marked’.¹⁵⁰

1.46  As a result, the Commission engaged in a study as to the possible benefits of greater uniformity in private international law rules. Having reached a favourable conclusion in this study, it invited a group of experts to meet to consider possible future action, and circulated a questionnaire to facilitate the discussion. That meeting took place from 26 to 28 February 1969. In his opening address, the Commission’s representative, Mr T Vogelaar, stated:¹⁵¹

This proposal should bring about a complete unification of the rules of conflict. Thus in each of our six countries, instead of the existing rules of conflict and apart from cases of application of international agreements binding any Member State, identical rules of conflict would enter into force both in Member States’ relations inter se‎ and in relations with non-Community States. Such a development would give rise to a common corpus of unified legal rules covering the territory of the Community’s Member 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 fortifi ed, agreements on jurisdiction according to the applicable law facilitated, and the protection of rights acquired over the whole field of private law augmented.

(p. 25) He continued:

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]¹⁵² 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.¹⁵³

1.47  Pausing there, it may be noted that these arguments are strikingly similar to those that would be adopted by the Commission almost thirty-five years later to support its Rome II Proposal and that were subsequently carried (p. 26) forward into the recitals of the Rome II Regulation.¹⁵⁴ Although Mr Vogelaar and his colleagues did not, of course, have the opportunity to consider the way in which the legislative competence of the Community in the field of civil justice would develop as a result, in particular, of the 1997 Treaty of Amsterdam,¹⁵⁵ the influence of their work in relating private international law rules to the economic objectives of the EEC is evident in the Regulation in its final form.

1.48  At their second meeting, the group of experts recommended that followup work should focus on areas that they considered to be closely involved in the proper functioning of the common market, i.e. (a) the law applicable to corporeal and incorporeal property, (b) the law applicable to contractual and non-contractual obligations, (c) the law applicable to the form of legal transactions and evidence, and (d) general matters of private international law relevant to the foregoing topics (renvoi‎, characterization, application of foreign law, acquired rights, public policy, capacity, representation).¹⁵⁶ In October 1970, the Committee of Permanent Representatives (COREPER) mandated the group to continue its work on this basis. As regards the second subject area, with one element of which this book is concerned, the group of experts (led by Paul Jenard, of the Belgian Ministry of Foreign Affairs, and the author of the official report on the Brussels Convention) appointed Professor Mario Giuliano of the University of Milan as rapporteur. He was assisted on this project by Professor Paul Lagarde (University of Paris), rapporteur on the subject of legal transactions and evidence, and Mr Th van Sasse van Ysselt (Netherlands Ministry of Justice), rapporteur on the general topics. Their work, and that of the group of experts, in the period from 1970 to 1972 resulted in the submission to the Member States of the preliminary draft EEC convention on the law applicable to contractual and non-contractual obligations¹⁵⁷ and the accompanying report of Professors Giuliano and Lagarde and Mr van Sasse van Ysselt.¹⁵⁸

1.49  So far as non-contractual obligations are concerned, the key features of the preliminary draft convention were as follows:¹⁵⁹

1. 1. The draft convention contained separate rules for (a) non-contractual liability resulting from ‘an event which has resulted in damage or (p. 27) injury’¹⁶⁰ (in the French original, un fait dommageable‎¹⁶¹), and (b) noncontractual obligations resulting from ‘an event which does not result in damage or injury’ (un fait autre qu’un fait dommageable‎).¹⁶²

2. 2. For category (a) (including torts), there was a general rule that the law of the country in which the relevant event ‘occurred’¹⁶³ should apply,¹⁶⁴ subject to a rule of displacement in favour of another country with which the situation has a closer connection, provided that the situation has no significant link with the former country.¹⁶⁵

3. 3. During their discussions leading to the 1972 draft convention, the group of experts posed the question: ‘If the event entailing damage occurs in a country other than that in which its damaging effects are felt, which shall be considered the one in which the event occurs?’, but declined to give an answer ‘in order not to impede ongoing developments in the jurisprudence of the Community countries’.¹⁶⁶

4. 4. For category (b) (encompassing, at least, negotiorum gestio‎, unjust enrichment, and the payment of money not owed),¹⁶⁷ the draft convention provided that the law of the country in which the relevant event occurred should again govern, subject again to displacement in favour of the law of another country with which there is a closer connection by reason of a connecting factor common to the interested parties.¹⁶⁸

5. (p. 28) 5. Matters excluded from the scope of the draft convention, or the rules concerning non-contractual obligations, included (a) nuclear damage,¹⁶⁹ and (b) liability of the State or other legal persons governed by public law, or the liability of their organs or agents, for acts of public authority performed by the organs or agents in the exercise of their official functions.¹⁷⁰

1.50  Overall, particularly when compared to the provisions of the draft convention concerning contractual obligations and to the Rome II Regulation itself, the approach to non-contractual obligations in the 1972 draft seems awkward and to lack sophistication, although this may be explained by economic priorities at the time as well as the underdeveloped state of the private international law of non-contractual obligations. Whatever the explanation, this aspect of the draft was strongly criticized.¹⁷¹ Perhaps unsurprisingly, in March 1978 (following the accession to the EEC of Denmark, Ireland, and the UK), the group of experts decided ‘for reasons of time’¹⁷² to focus their work on the area of contractual obligations. The resulting (Rome) Convention on the law applicable to contractual obligations was opened for signature on 19 June 1980.¹⁷³ For the time being, the project for the harmonization of rules relating to non-contractual obligations lay dormant. Even so, the close historical link with the Rome Convention would lead to it being branded with the short title ‘Rome II’.¹⁷⁴

1.51  Twenty years after submission of the draft convention, the project was reinvigorated by the Treaty on European Union, signed at Maastricht on 7 February 1992 and coming into force on 1 January the following year. This Treaty created, albeit outside the framework of what would be redesignated as the EC Treaty, a framework for cooperation between the Member States in, among other areas, matters of civil justice.¹⁷⁵ (p. 29) Subsequently, by a resolution dated 14 October 1996 laying down priorities for cooperation in this area, the Council stated that it intended to launch discussions on the possibility of a convention on the law applicable to ‘extra-contractual obligations’.¹⁷⁶

1.52  Before work could begin in earnest, however, the constitutional pendulum had swung away from collaborative action of the Member States and towards the competence of the European Community and its institutions. An inter-governmental conference, launched at the Turin European Council in March 1996, led to agreement the following summer in Amsterdam on the text of an amending treaty, signed on 2 October 1997 by the foreign Ministers of the (then) fifteen Member States. Arguably, the most significant initiative in the Treaty was the transfer of competence with respect to certain aspects of the area of justice and home affairs from the TEU framework into the main body (Title IV) of the EC Treaty, conferring on the European Community the specific power to adopt rules in this area, including rules of private international law.¹⁷⁷ The surrender was not, however, total. Art 65 (initially Art 73m) of the EC Treaty, which refers to measures to promote the compatibility of rules applicable in the Member States concerning the conflict of laws and of jurisdiction, contains a number of restrictions on the legislative power of the European Community in this area. The nature and scope of these restrictions on the Community’s legislative power in this area will be examined further in Chapter 2 below. At the same time, Denmark declined to be bound by the new Title IV of the EC Treaty,¹⁷⁸ and the UK and Ireland hedged their position by means of a protocol preserving the right to opt-in or not to particular proposals on a case-by-case basis.¹⁷⁹

1.53  In February 1998, the Commission circulated among the Member States a questionnaire asking them to identify their applicable national rules of private international law concerning non-contractual obligations. Based on the replies of the Member States,¹⁸⁰ the Austrian Presidency circulated (p. 30) a document setting out initial views on the principal questions to be addressed by any convention,¹⁸¹ and organized four working group meetings to discuss the issues. This document was first discussed at the meeting of the working group in November 1998.

1.54  The Commission had also funded through the GROTIUS programme a study on the feasibility of a convention by the European Group for Private International Law (GEDIP). Subsequently, GEDIP adopted the final version of its proposal for a convention on the law applicable to non-contractual obligations in June 1998. Its principal features were as follows:¹⁸²

1. 1. Separate rules for (a) non-contractual obligations ‘arising out of a harmful event,’¹⁸³ and (b) non-contractual obligations ‘arising out of an event other than a harmful event’.¹⁸⁴

2. 2. For non-contractual obligations arising out of a harmful event, a general rule that the applicable law should be the law of the country with which the non-contractual obligation is most closely connected,¹⁸⁵ combined with (a) rebuttable¹⁸⁶ presumptions in favour of (i) the law of the country of common habitual residence of the author of the damage and the person who suffers damage at the time of the harmful event,¹⁸⁷ alternatively (ii) the law of the country where both the event causing the damage and the damage occurred,¹⁸⁸ and (b) special presumptions in cases of (i) invasion of privacy or rights in personality,¹⁸⁹ (ii) unfair competition or restrictive trade practices,¹⁹⁰ and (iii) environmental damage.¹⁹¹

3. (p. 31) 3. For non-contractual obligations arising out of an event other than a harm ful event, an identical general rule,¹⁹² with rebuttable¹⁹³ presumptions in favour of (a) the law which governs or which would govern a preexisting or contemplated relationship to which the non-contractual obligation is connected,¹⁹⁴ alternatively (b) in the case of an obligation to make restitution based on unjust enrichment, the law of the country in which the enrichment occurs,¹⁹⁵ and (c) in the case of an obligation relating to management of the affairs of another (negotiorum gestio‎), the law of the country of the beneficiary’s habitual residence at the relevant time or (in the case of protection of the person or tangible property) of the country where the person or property was situated at the relevant time.¹⁹⁶

4. 4. The parties would be allowed to choose the law applicable to a noncontractual obligation, but only by an express agreement entered into after the dispute had arisen and without prejudice to the rights of third parties.¹⁹⁷

5. 5. Matters excluded from the scope of the proposed convention included (a) non-contractual obligations arising out of a family or analogous relationship, (b) the personal liability of officers, members, and auditors of statutory accounts for the obligations of a company or other body, (c) liability arising out of events resulting from the exercise of public authority, and (d) nuclear damage.¹⁹⁸

1.55  The GEDIP proposal has been described by Professor Symeonides as ‘an elegant, sophisticated, flexible document which has influenced the general content and coverage of Rome II, although not where it matters most’.¹⁹⁹ He also suggests that:²⁰⁰

The proposal was a sophisticated document drafted for sophisticated judges capable of, and entrusted with the discretion necessary for making the fine balancing the proposal envisioned. In contrast, Rome II is a pragmatic document that aims (p. 32) for simplicity and uniformity and primarily seeks to preserve the status quo rather than dramatically to alter it.

Overall, however, the differences between the approach of the GEDIP proposal and that of the Rome II Regulation do not appear as significant as Professor Symeonides suggests. Further, although the Regulation is undoubtedly conditioned to a large degree by the demands of legal certainty, the description of it as seeking to preserve the status quo seems questionable. Professor Symeonides recognizes elsewhere the divergences in the Member States’ pre-existing rules of private international law and describes the Regulation as a ‘dramatic step’ and as part of the ‘European conflicts revolution’. In the final analysis, whether it is considered superior to the final text of the Rome II Regulation or not, the GEDIP proposal marks one of a number of reference points in the legislative history of the Regulation, but it cannot be said to have been nearly as influential as might have been expected given its provenance.

1.56  Before the Amsterdam Treaty came into force, representatives of the European institutions set about making plans for the exercise of their new powers. In October 1998, the Council adopted (in Vienna) a joint Action Plan of the Commission and the Council on how best to implement Title IV of the Amsterdam Treaty.²⁰¹ Ambitiously, given the project’s prior history, the drawing up of a legal instrument on the law applicable to non-contractual obligations was identified as a priority measure, to be taken within two years after the entry into force of the Treaty.²⁰² Perhaps predictably, when that deadline passed in May 2001, the Commission had not even got as far as publishing a text for consultation.²⁰³

1.57  Subsequently, political weight was added to these plans by the declarations of the Member States at the 1999 Tampere European Council, endorsing the principle of mutual recognition as the cornerstone of judicial cooperation in both civil and criminal matters within the European Union.²⁰⁴ In the following year, the programme of measures for the implementation of that (p. 33) principle suggested a link, albeit not a compelling one, to measures for the harmonization of conflict of law rules, stating that:²⁰⁵

The measures relating to harmonisation of conflict-of-law rules … actually do help facilitate the mutual recognition of judgments.

Lastly, implementation of the mutual recognition principle may be facilitated through harmonisation of conflict-of-law rules.

1.58  In the midst these developments, and despite the coming into force of the Treaty of Amsterdam on 1 May 1999, the Council’s working group continued to discuss the text of the proposed convention in further meetings throughout 1999. A heavily annotated, internal ‘state of play’ draft dated 9 December 1999²⁰⁶ reveals the grainy, embryonic form of what was to emerge as the Rome II Regulation. In particular:²⁰⁷

1. 1. The draft instrument categorizes non-contractual obligations using the terms ‘tort or delict’,²⁰⁸ ‘unjust enrichment’,²⁰⁹ and ‘negotiorum gestio‎’,²¹⁰ all of which appear in the Rome II Regulation, as well as ‘actio pauliana‎’²¹¹ which does not.²¹²

2. 2. The general rule for tort/delict refers to ‘the law of the country where the injury occurs irrespective of where the consequences of that injury arose’ (the lex loci damni‎ or lex laesionis‎).²¹³ This accords with Art 4(1) of the Rome II Regulation.²¹⁴

3. 3. (p. 34) The generally applicable law is subject to a rule of ‘exceptional displacement’ if, having regard among other matters to the parties’ common habitual residence at the time when the injury occurred or a special relationship between the parties, it appears that the tort or delict is substantially more closely connected with another country, in which case the law of that other country would apply.²¹⁵ In contrast, Art 4(2) of the Rome II Regulation contains a separate rule of displacement for the habitual residence of the parties.²¹⁶

4. 4. Freedom of choice would be permitted, but only after the occurrence of the event giving rise to injury and without prejudice to the rights and obligations of third parties or to non-derogable rules of the law of the country with which the situation is otherwise (ignoring also any choice of forum) exclusively connected.²¹⁷

5. 5. Special rules are proposed for product liability²¹⁸ and unfair competition and unfair practices.²¹⁹ In contrast to the Regulation in its final form, however, there is no special rule for environmental damage and intellectual property is (tentatively) excluded from scope.²²⁰ Defamation appears only as a heading.²²¹

6. 6. Other areas excluded (in some cases, tentatively) from scope include wills and succession, matrimonial property rights, rights and duties arising out of a family or analogous relationship, bills of exchange, cheques, promissory notes and other negotiable instruments, obligations governed by the law of companies and other similar bodies, trust obligations, matters of evidence and procedure not specifically brought within scope,²²² liability for acts and omissions performed in the exercise of public authority and nuclear injury.²²³

(p. 35) 1.59  Shortly after, the Council suspended its activities pending the submission of a Community legislative proposal.²²⁴ In fact, during 1999, the Commission had been considering whether to pre-empt the coming into force of the Treaty of Amsterdam and to seize the initiative from the Council by publishing its own legislative proposal.²²⁵ A draft text was produced²²⁶ and circulated by DG Justice and Home Affairs (since renamed Freedom, Security and Justice (JLS)) to other Directorates General within the Commission in 1999. Comments received included that (a) the document should take the form of a Green Paper and should consult on the necessity of a Community instrument regulating the law applicable to non-contractual obligation, (b) the text should be more open and analytical, (c) a section should be added dealing with electronic commerce, and (d) the text should note that private international law could not override ‘internal market clauses’ in certain Directives. This last point, raised specifically by DG Internal Market and Services (Markt), was based on the idea that relevant Directives,²²⁷ as well as the Treaty provisions concerning the free movement of goods, persons, and services, required application of the law of the ‘country of origin’ as a rule of private international law. That view, shared by some other Directorates General (notably DG Information Society (INFSO), DG Enterprise and Industry (ENTR), and DG Education and Culture (EAC)) was opposed by DG JLS and DG Health and Consumers (SANCO). As appears below, debate as to the so-called ‘country of origin’ principle would dominate discussions within the Commission, and would almost de-rail the entire process.

1.60  In response to these criticisms, DG JLS briefly considered whether to defer to the Member States’ right of initiative. Having decided to press ahead, DG JLS prepared a draft Green Paper on a possible instrument concerning the law applicable to non-contractual obligations. At a meeting of the (p. 36) Council’s Committee on Civil Law Matters in June 2000, the Commission’s representative announced the forthcoming publication of that Paper.²²⁸ Thereafter, however, the train hit the buffers. In response to an informal internal consultation, DG Markt raised almost exactly the same objections to the content of the draft Green Paper as it had made to the earlier draft proposal (1.59 above), focusing its attention on the role of the ‘country of origin’.

1.61  In January 2001, a formal Commission inter-service consultation was launched on a revised draft.²²⁹ Among other elements, the draft contained questions as to the necessity of adopting an instrument laying down uniform rules of private international law on non-contractual obligations²³⁰ and the approach to be adopted for non-contractual obligations arising in connection with computers etc.,²³¹ as well as an annex containing a short summary of the Member States’ existing rules of applicable law for torts and delicts.²³² Two months later, the Commission reported to the Council’s Committee on Civil Law Matters that it intended to prepare and publish a Green Paper during the first quarter of the year.²³³ The Green Paper never appeared. In their responses to the inter-service consultation, DGs EAC, INFSO, and ENTR took the point that the E-Commerce Directive, adopted in June 2000,²³⁴ regulated the law applicable in relation to the information society services. Similar comments were made with respect to other Directives. DG Markt also requested significant changes to the Green Paper to give what it saw as a more balanced explanation of the relationship between private international law and EC law. In the face of an apparent deadlock, DG JLS again considered whether to abandon the dossier and instead leave the right of initiative to the Member States.

1.62  By May 2001, the Commission had once again changed tack, telling the Council’s Committee on Civil Law Matters that it had instead decided to create a proposal for an instrument on the law applicable to extra-contractual obligations.²³⁵ The UK delegation queried this, concerned by the lack of consultation of practitioners concerned with this area of work.²³⁶ At the (p. 37) following meeting of the committee, the UK formally recorded its objection to the Commission’s conduct, in the following terms:²³⁷

The United Kingdom delegation expressed surprise at the fact that the Commission had announced the presentation of a Regulation concerning the law applicable to non-contractual obligations (Rome II) without first preparing a green paper. This would have allowed interested parties at all levels to contribute to the discussions which concerned them very directly.

The Commission, on the other hand, appeared to consider that sufficient consultation with interested parties had already taken place.

1.63  During the remainder of 2002, discussions within the Commission centred on the relationship between the proposed Rome II instrument and internal market instruments, particularly the E-Commerce Directive. Views remained polarized, but the Directorates General eventually agreed to patch up their differences on the basis that clarification of the E-Commerce Directive should be left to the ECJ and should not be a matter for the Rome II Regulation.

1.64  In announcing its plan to move forward to a proposal without a Green Paper, DG JLS had explained that it intended to consult on the text with stakeholders. Eventually, it agreed to make a draft available on the Internet. On 3 May 2002, three years after it had first attempted to formulate a proposal, DG JLS published what it described as a ‘preliminary draft proposal’ for a Regulation on the law applicable to non-contractual obligations,²³⁸ without any explanatory memorandum. In the words of the Commission, the draft was ‘no more than a Commission staff working paper for the sole purpose of consulting interested parties’. In its detailed response to the document, the UK Government raised the following objection to the form of the consultation:²³⁹

The United Kingdom Government welcomes the opportunity to comment on draft proposals from the European Commission before any formal proposal is made. It is important that such an opportunity should always be made available. However it is also important that consultation should not be only on the basis of a draft instrument without any accompanying memorandum explaining the (p. 38) policy behind that draft. This is likely to give rise to difficulty and misunderstanding where provisions in the draft text can reasonably be understood in different ways. It would have been better at this stage if the Commission’s consultation had been focused more clearly on the underlying policy considerations in this technically complex area of private international law; this should be a standard part of the consultation procedure… .

The absence of any explanatory material means that the Commission has not made any attempt to justify the need for any harmonised rules in this area. In the view of the United Kingdom there has not so far been any demonstrated need for such an instrument which in order to comply with the requirements of Article 65 must be ‘necessary for the proper functioning of the internal market’. In order to satisfy this requirement, and to justify the allocation of resources, the Commission should present evidence of difficulties currently arising in this context which constitute practical obstacles to cross-border trade and the movement of persons. It should only be on the basis of sufficient evidence of this kind that the Commission should proceed with a formal proposal for a draft Council Regulation.

1.65  In substance, the preliminary draft proposal marks a further stage in the development of the Rome II Regulation. In particular, the structure (if not the language) of the general rule for tort/delict in Art 3 is aligned to that in Art 4 of the Regulation,²⁴⁰ combining a basic preference for application of the lex loci damni‎²⁴¹ with rules of displacement in favour of (a) the law of the parties’ country of common habitual residence,²⁴² and (b) the law of another country with which the situation has a substantially closer connection, but only if there is no significant connection with the country whose law would be applicable under the preceding elements of the rule.²⁴³ That general rule is combined with special rules for product liability,²⁴⁴ unfair competition and other unfair practices,²⁴⁵ violation of the environment,²⁴⁶ and (most controversially) defamation/privacy,²⁴⁷ the latter rule favouring the law of the country where the victim is habitually resident at the time of the tort. For other non-contractual obligations, a series of rules set out in Art 10, giving priority to the law applicable to a prior relationship between the parties (p. 39) out of which the obligation arose, is followed by separate rules for unjust enrichment²⁴⁸ and ‘actions performed without due authority in connection with the affairs of another person’ (negotiorum gestio‎),²⁴⁹ the law applicable under these latter rules being capable of being displaced only in favour of the law of the parties’ common habitual residence at the time that the obligation arose.²⁵⁰ Significantly, for the first time, Art 11 would allow that the parties should be permitted to choose the law applicable to a non-contractual obligation without any limit in time, so as to permit a choice before the obligation arose (ex ante‎).²⁵¹ Matters excluded from the scope of the preliminary draft Regulation include (a) non-contractual obligations arising out of a family or equivalent relationship, (b) succession, (c) obligations arising under bills of exchange, cheques, promissory notes, and other negotiable instruments,²⁵² (d) the personal liability of officers, members, and auditors of statutory accounts for the obligations of a company or other body, (e) liability incurred in the exercise of public authority, (f) trust obligations, and (g) matters of evidence and procedure not specifically brought within scope.²⁵³

1.66  The Commission invited written comments on the document by September 2002. In its follow-up document,²⁵⁴ the Commission noted that around 80 contributions were received from academics, governments, business, and practitioners²⁵⁵ and that:

The reaction ranged from blunt refusal of the draft Regulation as a whole to approval with some points of criticism. It is worth noting that business was more critical of the draft than representatives of legal professions, academics and Member States, who in general welcomed the draft.^[256]

(p. 40) 1.67  The second stage of the Commission’s consultation process, a public hearing, took place in Brussels on 7 January 2003. The items on the agenda²⁵⁷ did not include any assessment of the treaty basis or desirability of the proposed Regulation. It became evident that the Commission’s position was that these matters had already been determined for it by the political declarations of the Member States in the Vienna Action Plan and the Tampere conclusions.²⁵⁸ On other issues, the delegates were sharply divided, with representatives of business generally strongly critical of the proposal and consumer organizations generally in favour, but advocating greater victim protection.

1.68  On 1 February 2003, the Treaty of Nice came into force.²⁵⁹ From that date, it was required that all measures in the field of judicial cooperation in civil and commercial matters within EC Treaty, Art 65 be taken in accordance with the co-decision procedure set out in Art 251 of that Treaty, giving the European Parliament joint legislative competence with the Council, as opposed to a mere right to be consulted.²⁶⁰ As will be seen, that increase in the Parliament’s powers would have a significant effect on the legislative process leading to the adoption of the Rome II Regulation, as it was the first instrument in this area to reach conciliation, the final stage of the co-decision procedure.²⁶¹

1.69  Having reflected on the outcome of the consultation process, the Commission published its proposal for a Regulation on the law applicable to noncontractual obligations (Rome II) on 22 July 2003. This was accompanied by a detailed explanatory memorandum. The Commission explained the general purpose of its proposal as follows:²⁶²

The purpose of this proposal for a regulation is to standardise the Member States’ rules of conflict of laws regarding non-contractual obligations and thus extend the (p. 41) harmonisation of private international law in relation to civil and commercial obligations which is already well advanced in the Community with the ‘Brussels I’ Regulation²⁶³ and the Rome Convention of 1980.

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 crossborder disputes, as, by stating 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 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.

…

This proposal for a Regulation would allow parties to determine the rule applicable to a given legal relationship in advance, and with reasonable certainty, especially as the proposed uniform rules will receive a uniform interpretation from the Court of Justice. This initiative would accordingly help to boost certainty in the law and promote the proper functioning of the internal market. It is also in the Commission’s programme of measures to facilitate the extra-judicial settlement of disputes, since the fact that the parties have a clear vision of their situation makes it all the easier to come to an amicable agreement.

1.70  The Proposal contained a number of significant changes, both in terminology and substance, from the preliminary draft proposal. In particular:²⁶⁴

1. 1. In the general rule for tort/delict (Commission Proposal, Art 3), the term ‘loss’ was replaced by ‘damage’²⁶⁵ and the rule of displacement in Art 3(3) of the proposal now appeared, more or less, in the form which it would (p. 42) take in Art 4(3) of the final Regulation,²⁶⁶ without the requirement that there be no significant connection between the non-contractual obligation and the law which would otherwise govern under paragraph 1 or 2.

2. 2. The special rules for product liability,²⁶⁷ unfair competition,²⁶⁸ violations of privacy/personality rights (defamation),²⁶⁹ and violation of the environment²⁷⁰ had been re-written, and a new special rule introduced for infringement of intellectual property rights.²⁷¹

3. 3. The rules for non-contractual obligations other than those arising out of tort/delict were made more flexible by the introduction of a rule of displacement referring to the law of a country with which the noncontractual obligation was manifestly more closely connected.²⁷²

4. 4. The right of parties to choose the law applicable to non-contractual obligations was restricted to agreements entered into after the dispute arose, and was excluded in the case of intellectual property rights.²⁷³

5. 5. A new provision (Commission Proposal, Art 12(1)) was inserted, reflecting Art 7(1) of the Rome Convention, allowing discretionary application of overriding mandatory rules of a third country (i.e. other than the forum and that whose law would apply to the non-contractual obligation under the general or specific rules of applicable law) with which the situation had a close connection.²⁷⁴

6. 6. Art 24 of the proposal provided that ‘[t]he application of a provision of the law designated by this Regulation which has the effect of causing noncompensatory damages, such as exemplary or punitive damages, to be awarded shall be contrary to Community public policy’. Not only was the concept of non-compensatory damages potentially very broad (including, for example, restitutionary and nominal damages), but also the concept of ‘Community public policy’, at least in the area of private law, was unprecedented and unwelcome. Happily, it was also short-lived.²⁷⁵

7. (p. 43) 7. Consistently with the Brussels I Regulation, the proposed Regulation was restricted to ‘civil and commercial matters’.²⁷⁶ Revenue, customs and administrative matters,²⁷⁷ matrimonial property regimes,²⁷⁸ and non-contractual obligations arising out of nuclear damage²⁷⁹ were added to the list of excluded matters. The specific exclusions of liability incurred in the exercise of public authority²⁸⁰ and evidence and procedure²⁸¹ were removed.

1.71  In early 2004, before any of the European institutions had formally responded, the European Union Committee of the UK House of Lords launched a public consultation to support its scrutiny of the Commission Proposal. In the following two months, it received several written contributions²⁸² and heard oral evidence from representatives of the Commission,²⁸³ professional²⁸⁴ and senior academic²⁸⁵ lawyers, representatives of the media,²⁸⁶ and of the UK Government.²⁸⁷ The reaction to the Commission’s proposal was generally, if not universally, hostile. Most significantly, two leading experts, the senior editors of the leading (p. 44) general English works on private international law, expressed their strong opposition to the proposal. Sir Peter North²⁸⁸ concluded that:²⁸⁹

[N]o clear and convincing need for this proposed Regulation had been identified by the Commission in terms of the operation of the internal market. It looks rather like harmonisation on the basis of tidiness. Furthermore, no convincing case has been made or justification given for the scope of any Regulation to be world wide. That said, a new Regulation limited in territorial scope could be regarded as acceptable, not least in the broader context of European co-operation, if it was well drafted and did not raise significant concerns as to its substance, even though its acceptance would mean a further change in our tort choice of law rules… . [M]y personal conclusion is that the current text is neither clear enough nor, substantively, satisfactory enough, however, for the proposed Regulation to be acceptable.

In similar fashion, Sir Lawrence Collins²⁹⁰ commented:²⁹¹

The arguments for adoption of a Regulation are wholly unconvincing. The Commission’s website on harmonisation makes it clear that its aim is the ultimate harmonisation of rules relating to applicable law. Although the effect of the revised EC Treaty is that the Community has the power to take measures harmonising rules of private international law, it is fanciful to suppose … that a regulation to harmonise private international rules for non-contractual obligations is ‘necessary for the proper functioning of the internal market’… .

1.72  The Committee, in its final report, did not pull any punches. Its main conclusions were as follows:²⁹²

The Regulation raises a serious question of vires‎. The Commission has not shown a convincing case of ‘necessity’ within the meaning of Article 65 TEC. Further, on any construction of Articles 61 and 65 of the EC Treaty there must be the most serious doubts that the proposal can have universal application and can be used to harmonise substantive rules of damages (Articles 2 and 24 respectively). We urge both the Council and the Parliament to give the most careful consideration to the issue …

There is no evidence of which we are aware that there are such problems in the application of the Member States’ conflicts rules in this area as require the introduction of a Community measure. The justification provided by the Commission in its Explanatory Memorandum is unconvincing and fails to pay due regard to (p. 45) the views of industry, commerce, the media and legal practitioners. We invite the Council and the Parliament to look critically at the question whether there is a real practical need for the Regulation… .

1.73  The Committee also recommended deletion, or substantial revision, of several provisions of the Commission’s proposal.²⁹³

1.74  As a result of the Treaty of Nice, the European Parliament would enjoy, constitutionally at least, equal billing with the Council in the adoption of the proposed Regulation. After some discussion as to whether the Committee on Civil Liberties, Justice and Home Affairs (LIBE) or the Committee on Legal Affairs and the Internal Market (JURI) would take the lead, the latter claimed the prize and in late 2003 appointed Diana Wallis MEP²⁹⁴ as rapporteur for the proposal.²⁹⁵ Within a short timeframe, the rapporteur produced a working document in two parts²⁹⁶ followed, in March 2004, by a draft report.²⁹⁷ That report went through several further drafts²⁹⁸ before being adopted by the JURI Committee on 21 June 2005.²⁹⁹

(p. 46) 1.75  With relatively minor amendments in the plenary session,³⁰⁰ the report formed the basis of the European Parliament’s position at first reading on 6 July 2005.³⁰¹ By that time, clear water had emerged between the Parliament’s position and the position of the Commission, towards which the Council would also ultimately steer. In particular,³⁰² the Parliament favoured greater flexibility in the general rule for torts/delict, with less reliance on special rules for particular torts.³⁰³ Indeed, at one point,³⁰⁴ the rapporteur recommended that the general rule should refer to the law of the country with which the non-contractual obligation is most closely connected, coupled with a series of rebuttable presumptions. She subsequently returned to the place of damage as a starting point, but substantially modified the Commission’s rules of displacement. The significance of the parties’ common habitual residence was downgraded from a factor of displacement in its own right³⁰⁵ to an element in the more flexible ‘escape clause’ requiring a manifestly closer connection with another country.³⁰⁶ The factors cited as potentially supporting the application of this flexible rule of displacement were greatly expanded by the Parliament to include:

1. (a)  as far as loss-distribution and legal capacity are concerned, the fact that the person claimed to be liable and the person sustaining loss or damage have their habitual residence in the same country or that the relevant laws of the country of habitual residence of the person claimed (p. 47) to be liable and of the country of habitual residence of the person sustaining loss or damage are substantially identical;

2. (b)  a pre-existing legal or de facto‎ relationship between the parties, such as, for example, a contract, that is closely connected with the noncontractual obligation in question;

3. (c)  the need for certainty, predictability, and uniformity of result;

4. (d)  protection of legitimate expectations;

5. (e)  the policies underlying the foreign law to be applied and the consequences of applying that law.

The rapporteur explained:³⁰⁷

Your rapporteur takes the view that the complexity of many cases is such that a flexible regime is more appropriate than rigid rules for each class of non-contractual obligation. Small factual differences in cases can substantially alter the parties’ expectations and the policy considerations at stake.

In this approach, the rapporteur was undoubtedly influenced by developments in American choice of law theory, and it would appear to be no coincidence that two weeks before publication of a new draft of her report in March 2005,³⁰⁸ the rapporteur had organized a working group entitled ‘Rome II—the international perspective’, the speakers at which had included prominent modern US conflict of laws theorists.³⁰⁹ The role envisaged for ‘governmental interest analysis’, which had previously been rejected as a basis for reform of the UK applicable law regime for torts³¹⁰ and was widely thought to be antithetical to the continental approach to conflict of laws,³¹¹ was the most striking, and objectionable, element of the European Parliament’s 1st Reading Position. Particularly when coupled with the universal application of the Regulation³¹² and the Parliament’s (p. 48) proposed reforms to pleading and proof of the applicable law,³¹³ the requirement that Member State courts consider the policies underlying the potentially relevant rules of all connected systems to determine whether the connection was or was not ‘manifestly closer’ than that to the system whose law would otherwise apply was open to criticism as being liable to increase the burden on judges as well as the costs of litigation, at the same time as reducing significantly the foreseeability of legal decisions, the primary stated objective of the Rome II Proposal.³¹⁴ It was, it is submitted, at least one step too far in the rapporteur’s global search to find suitable models for the Rome II regime.³¹⁵

1.76  Other key aspects of the EP 1st Reading Position include the following:

1. 1. The flexibility of the general rule was further increased by recognizing the possibility of more than one applicable law, each issue being potentially subject to a separate analysis to determine its applicable law.³¹⁶ According to the rapporteur:³¹⁷

   [I]n disputes which take place in a Community of States without borders, all having different legal systems but sharing a common heritage of human rights provisions and Community law, justice will often be served by applying dépeçage‎. It is for this reason, that Article 3(3) provides that the court seised must, where necessary, subject each issue of the dispute to separate analysis. This may prove necessary, inter alia‎, in order to avoid having to apply statuta odiosa‎ of non-Community countries. What is essential is that courts are provided with a clear instrument which allows them the necessary flexibility in order to do justice to the parties in individual cases.

2. 2. In commercial contracts, the possibility of a valid ex ante‎ choice of the law applicable to non-contractual obligations was recognized, subject to certain restrictions.³¹⁸

3. 3. Special rules were introduced to protect the victim in the case of traffic accidents.³¹⁹ Thus, Art 4(2) and Art 7(2) of the Parliament’s 1st Reading (p. 49) Position recommended that the individual victim’s place of habitual residence should govern both the type of claim for damages (heads of damage) and quantification of damages, ‘unless it would be inequitable [to the victim³²⁰] to do so’.³²¹

4. 4. It was proposed to harmonize Member State rules concerning the introduction and ascertainment of foreign law, by requiring (a) the claiming party to identify the law(s) which he claimed to apply to his claim, and (b) the Member State court seised of the dispute to establish the content of the foreign law of its own motion, with the parties’ collaboration if required.³²²

5. 5. The concept of ‘Community public policy’³²³ in Art 24 of the Commission Proposal was rejected in favour of a clarification of the public policy exception, to the effect that an award of non-compensatory damages may be regarded as being contrary to public policy.³²⁴

1.77  The rapporteur did not attempt to hide the motivation behind some of these amendments. In a comment written in August 2005, she stated:³²⁵

Historically we have been used to these types of proposals being worked on by the Commission and in Council working groups in a very technical way; Rome II is historic because it is the first time that the European Parliament has had the power of co-decision in such an area as private international law in a field with no preexisting Convention. It was therefore important that Parliament should challenge and question some of the Commission’s basic suggestions and also seek to extend the ambit of the text where the results will touch so directly on the daily lives of our citizens such as with damages in cross-border road traffic and other personal injury accidents.

(p. 50) However the European Parliament is not challenging or raising a debate merely to justify its own existence but rather to add a very different dimension to the legislative process; as private international law becomes communitarised, so it must come out of the technical working groups and into the political debating chamber. Some will argue that politicians should not interfere in ‘technical’ law, but unless law is grounded in a political process with full and open debate, it will never be acceptable to our citizens. At this difficult time in the European Union’s development,³²⁶ this is surely acceptable.

1.78  In June 2004, following a request by the Council on 8 September 2003, the European Economic and Social Committee (EESC)³²⁷ delivered its opinion on the Rome II Proposal.³²⁸ The EESC Opinion was largely favourable, both as to the lawfulness of the proposed Regulation³²⁹ and the overall substance of the Commission Proposal.³³⁰ The EESC recommended certain adjustments to the text put forward³³¹ but otherwise urged the Commission ‘to complete its initiative as rapidly as possible’³³² on the basis that the proposed Regulation would ‘bring inestimable benefits in terms of simpler application of the law’ and that ‘instead of having to establish in each individual case which system of rules on conflict of laws will apply and familiarise themselves with these rules which, at least in detail, differ from one Member State to another, users of the law will in future be able to use a single set of rules …’.³³³

1.79  The Council was taking longer than its legislative partner to deliberate on the merits of the proposed Regulation. Between the Commission Proposal in July 2003 and September 2006, when the Council adopted its common position,³³⁴ the Council was presided over by seven Member States.³³⁵ (p. 51) From 2004, the work programme of every Presidency specifically identifi ed the Rome II proposal as an item requiring attention, yet progress was evidently slow.³³⁶

1.80  The Council’s Committee on Civil Law Matters (Rome II)³³⁷ first met to discuss the proposal in September 2003. Most delegations expressed support, at least in principle, for the Regulation.³³⁸ There were two significant early developments. First, in October 2003, both the United Kingdom³³⁹ and Ireland³⁴⁰ chose to opt-in to the Regulation in accordance with the Protocol arrangements governing their participation in Title IV measures under the Treaty of Amsterdam.³⁴¹ Secondly, in March 2004, the Council Legal Service presented to the Council’s Rome II Committee an opinion on the legal basis for the proposed Regulation.³⁴² That advice, and its consequences in terms of the discussions in Council, will be examined more closely as part of the discussion of treaty basis in the following chapter.³⁴³

1.81  At the invitation of the General Secretariat of the Council,³⁴⁴ 18 Member States submitted written comments on the Commission Proposal.³⁴⁵ In light of these comments, and the Rome II Committee’s discussion at its early meetings, the outgoing Irish and incoming Dutch Presidencies prepared a revised text, with modest amendments to the Commission Proposal.³⁴⁶ A further draft from the Dutch Presidency followed in September 2004,³⁴⁷ in which the principal innovation was the tentative insertion, for discussion purposes, of a separate rule of applicable law for non-contractual obligations arising from industrial action. This was the result of a proposal by the Swedish delegation.³⁴⁸

(p. 52) 1.82  On 5 November 2004, the Council endorsed the so-called ‘Hague Programme’, sub-titled ‘Strengthening Freedom Security and Justice in the European Union’, setting out priorities in that policy area.³⁴⁹ The Programme required work on the Rome II proposal to be actively pursued as part of the programme of measures on mutual recognition.

1.83  In December 2004, the outgoing Dutch and incoming Luxembourg Presidency produced a joint revised text³⁵⁰ in the light of comments made during meetings of the Rome II Committee on civil law in the preceding two months.³⁵¹ This document was in the nature of a discussion draft, setting out alternative proposals for addressing such matters as the scope of the Regulation,³⁵² product liability,³⁵³ violations of privacy and defamation,³⁵⁴ and violation of the environment.³⁵⁵

1.84  During the United Kingdom Presidency in the second half of 2005, the Council’s Rome II Committee considered the amendments proposed by the European Parliament at first reading, accepting some but rejecting many of the novel aspects of the Parliament’s position, including (a) the more flexible rules for tort/delict generally, (b) the proposed deletion of the special rules for product liability, unfair competition, and violations of the environment, (c) the compromise proposal for violations of privacy and defamation, (d) the proposed special rules for traffic accidents, and (e) the rules concerning introduction and ascertainment of foreign law.³⁵⁶ A further draft, reflecting those discussions, was circulated by the outgoing UK and incoming Austrian Presidencies in December 2005.³⁵⁷

1.85  In the meantime, the debate that had already taken place within the Commission³⁵⁸ as to the relationship between private international law (p. 53) and EC law was played out before a wider audience. The course of that debate, centred on the so called ‘country of origin principle’, will be considered in Chapter 16 below.³⁵⁹ For present purposes, it suffices to note that the ‘principle’, which at the time of the Commission’s proposed Directive on services in the internal market threatened to reduce the Rome II Regulation to a subordinate role in determining the law applicable to non-contractual obligations in intra-Community cases, met with strong opposition and was ultimately shut firmly back in its box.