Rome II: Threat to business in Europe?

United Kingdom
On Wednesday 18th July 2001, the DTI held a seminar to consider the impact on business of a proposed EU regulation on the choice of law rules for non-contractual obligations. Companies are concerned that the proposals will restrict their ability to sell goods and services and information across Europe.

The choice of law rules for contracts are already governed by the Rome Convention as enacted in the UK by the Contracts (Applicable Law) Act 1990. The aim of the new regulation (Rome II) will be to harmonise the choice of law rules in areas such as:

  • product liability
  • unfair competition
  • fraud and misrepresentation
  • intellectual property
  • defamation

Industry fears that if consumer claims in tort are to be governed by the law of the place where the injury occurs, businesses will have to carry out a risk analysis based on the law of every country where their products might be used; an expensive and uncertain exercise. The view of the panel of experts at the seminar however was that differences between national laws on tort are not generally so great or important as to constitute a major risk, and if there are differences, more effort should be put into achieving harmonisation.

Richard Fentiman of Cambridge University wondered whether Rome II was needed at all since the choice of law rules applying in EU member states were already broadly the same.

Chris Hodges, partner of CMS Cameron McKenna and Honorary Research Associate at Oxford University also commented that Rome II was likely to be something of a non-event in the field of product liability. Few product liability cases come to court, within Europe at least and the substantive laws on liability share much in common. More important are procedural issues such as whether the Claimant can instruct his lawyer on a no win no fee basis; does the loser pay the winners legal fees and the risk of punitive damages.

In the field of e-commerce, Professor Chris Reed of London University said that it had to be accepted that national governments were not going to allow businesses to dictate what law should apply to claims by consumers. Rather, companies selling goods and services over the internet should try to manage their risk by selling only to customers from targeted jurisdictions, though in practice this can be difficult.

Diana Wallis MEP said that the draft regulation would be published by the Commission later this year and would be subject to consultation. Her advice to anyone who wished to lobby for changes was to provide facts and anecdotes supported by evidence.

If you would like to receive a copy of the draft regulation when it is published, or any other information, please contact Charles Spragge by e-mail at charles.spragge@cmck or by telephone on +44 (0)20 7367 2525.