FAQ: What law applies?

This question is largely governed by two European legislative instruments, which apply to contractual and non-contractual claims respectively.

What if I have a contractual claim?

Regulation (EC) 593/2008 (“the Rome I Regulation”) governs the law applicable to contracts entered into after 17 December 2009 in “civil and commercial matters” in all EU member states except Denmark.  Contracts entered into before that date are governed by the EEC Convention on the Law Applicable to Contractual Obligations (‘‘the Rome Convention’’), which was incorporated in the law of the United Kingdom by the Contracts (Applicable Law) Act 1990.

In broad terms, the Rome I Regulation prioritises the parties’ intentions and gives force to party autonomy.  This is reflected in the basic principle that a contract is governed by the law chosen by the parties (Art.3(1)).  That choice must either be made “expressly” or be “clearly demonstrated by the terms of the contract or the circumstances of the case”.

Where there is no choice of law, the Rome I Regulation provides guidelines for determining the applicable law in particular types of contracts (for example, a contract for the sale of goods shall be governed by the law of the country where the seller has his habitual residence).  Article 4(3) further provides a ‘catch-all’ provision, which states that where a contract is “manifestly more closely connected” with a country other than that indicated by other Article 4 provisions, the law of that country will apply.

What if I have a non-contractual claim?

As for non-contractual claims, the applicable law is governed by Regulations (EC) No 864/2007 (“the Rome II Regulation”).  That regulation applies to events giving rise to damage occurring after 11 January 2009 (prior to which English common law rules, as modified by domestic statute, apply).  It, too, applies to “civil and commercial matters”, with certain exclusions. It applies in all EU member states, with the exception of Denmark.

Article 4 of the Rome II Regulation sets out the general rule, which is that the law applicable to a tort is the law of the country in which the damage occurs.  This is subject to several exceptions, which may be engaged where (i) the victim and the tortfeasor habitually reside in another country at the material time, or (ii) the tort is manifestly more closely connected to another country (to which a pre-existing contractual relationship may be relevant).  The regulation also makes specific provision for the law applicable to particular disputes (e.g., product liability and environmental damage).

Article 14 also provides scope for the parties to agree to submit their dispute to the law of their choosing.

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