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A matter of jurisdiction
Apr 1, 2010
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Litigating in a foreign
jurisdiction can be inconvenient, uncertain and generally unattractive.
Paul Gordon gives a run-down on the regulations,
known as Rome I and Rome II, recently introduced with the aim of
harmonising the rules that determine
what law is applied to disputes.
Contractual obligations
Rome I sets out the rules for
determining which country’s law should be applied when resolving contractual
disputes. The provisions apply to all contracts concluded on or after 17
December 2009. It closely follows previous law, namely that in the absence of
party choice, the applicable law is the law of the country where the party
performing the service categorised in the contract has his habitual residence.
While
it is not a revolutionary change, it clarifies the rule and continues to
respect the parties’ freedom of choice.
Non-contractual (tortious) obligations
Rome II sets out the rules for
determining disputes arising in ‘civil and commercial matters’.
It is the
general rule that the applicable law is the law of the country in which the
damage occurs (or is likely to occur). This will be the country where the
harmful physical impact occurs, irrespective of where the event giving rise to it
occurs or where the indirect consequences of it are felt.
Until now, under English law, non-contractual
obligations were generally determined under the law of the country in which the
wrongdoing itself occurred. Now the emphasis has shifted from the place of the
event to the place where the damage occurs.
One of the key changes brought
about by Rome II is that the parties can now agree contractually on which law will
govern their non-contractual obligations. Previously, it was not clear to what extent
English courts would take into account a pre-agreed choice of law by the
parties. Rome II therefore brings some clarity.
Allowing the parties to choose
a governing law for their non-contractual obligations provides them with much
greater certainty as to the precise nature and scope of their legal
relationships, which can be hugely valuable.
Businesses will want to ensure
that their terms and conditions are in keeping with these changes. Any jurisdiction
clause needs to ensure as far as possible that any disputes will be determined
applying the law and in the jurisdiction that are most convenient.
Litigation partner Paul Gordon regularly advises on high-value
disputes involving commercial contracts, copyright and intellectual property.
He is accustomed to dealing with complex High Court litigation as well as
lower-value matters. paul.gordon@willans.co.uk