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A matter of jurisdiction

01 April 2010

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.

Comments

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

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