Saturday, September 20th, 2008
The Government has decided that Britain should opt in to new EU regulations for dealing with cross border contract disputes.
Such disputes are currently governed by the 1980 Rome Convention on the Law Applicable to Contractual Obligations. The EU Council of Ministers has now agreed new rules known as the Rome I Regulation.
The existing Convention does not harmonise contract law across the EU but it allows courts to determine which country’s law should apply if the parties have not already reached an agreement in advance.
Rome I has several subtle differences. For example, courts would be able to apply the law of the country “with which the situation has its closest connection”. This could apply even where the parties involved had chosen the laws of a different country.
The UK Government had originally opted out of Rome I but now it says it plans to seek permission to opt in. The Ministry of Justice believes the “Rome I proposal will provide clarity over which law applies if a dispute arises over a contract made between people or businesses from different countries, allowing cross border trade to continue with confidence”.
The Government undertook a consultation on the issue and says the overwhelming response was that Britain should opt in.
Rome I comes into effect on 17th December next year. The Government will now seek consent from the European Commission to see if Britain can opt in at the same time.
© Copyright 2008 Burt Brill and Cardens Solicitors