5 Law applicable to non-contractual obligations
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| Draft Regulation on the law applicable to non-contractual obligations ("Rome II")
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| Legal base | Article 61(c); co-decision; QMV
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| Department | Constitutional Affairs; Scottish Executive Justice Department
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| Basis of consideration | Minister's letter of 26 June 2007
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| Previous Committee Report | HC 41-iv (2006-07), para 5 (14 December 2006),
HC 41-xi (2006-07), para 7 (28 February 2007) and see (26326) 16231/04 and (27314) 6622/06: HC 34-xxx (2005-06), para 7 (24 May 2006)
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| To be discussed in Council | —
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| Committee's assessment | Legally and politically important
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| Committee's decision | Cleared (Decision reported on 14 December 2006)
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Background
5.1 The Regulation is intended to provide uniform choice of law
rules operating in the Member States to determine the law, which
is to apply to cases involving non-contractual liability, such
as liability for negligence and other breaches of duty not assumed
by contract. The normal rule under the Regulation would be that
the law to be applied is the law of the place where the damage
was suffered. The general rule is subject to exclusions which
include defamation, privacy law, the law of trusts and matrimonial
law. In addition, there are special rules governing product liability
cases and those arising from industrial action.
The document
5.2 We cleared the Common Position agreed by the Council and accepted
by the Commission as the basis for the proposed Regulation on
14th of December 2006 on the grounds that the amendments secured
by the Government, notably the exclusion of defamation and privacy
cases from the application of the Regulation, allayed significant
UK concerns, and, on balance, justified clearing the text notwithstanding
residual reservations we share with the Government. It was understood
that the Government would continue updating us on the proposal's
passage through the remainder of the legislative process.
The Minister's letter
5.3 Following the Council's agreement of a Common Position at
the end of September 2006 and subsequent updates by the Minister
on developments in negotiations, the then Parliamentary under-Secretary
of State at the Department for Constitutional Affairs (Baroness
Ashton) wrote again with a further update on legislative developments.
The full text of the letter of 26 June 2007 reads as follows:
" I am aware that your Committee has already cleared
the Regulation but thought it would be useful to inform you of
the outcome of the Conciliation Committee held on 15 May, which
met to resolve matters of disagreement on Rome II between with
the Council and the European Parliament. I attach a copy of the
latest text which, although still subject to legal linguistic
verification, reflects the final political agreement on this proposal.
"My general conclusion is that the Regulation
remains in most aspects as it was in the Council Common Position
reached last September. The final outcome is inevitably a compromise
with areas of difficulty for all Member States. Nevertheless,
I believe that it is in overall terms an acceptable outcome for
the UK and one that owes much to our positive engagement with
all three European institutions on all aspects of this dossier.
I am grateful to the Committee for your valuable input on Rome
II, which has also contributed to the present outcome.
"The following Articles of particular note
were considered in the conciliation process, and I have set out
below how each has been concluded in the text below:
- Violations of privacy and rights relating
to personality:
The Council, in its Common position paper,
had agreed that there should be an exclusion from scope for claims
based on violations of privacy and rights relating to personality,
including defamation. The European Parliament disagreed. Negotiations
in conciliation concluded that exclusion from scope should be
maintained but that a study on this issue should be undertaken
as part of the review clause. This would take account of the law
applicable to violations of privacy and rights relating to personality,
in addition to the rules relating to freedom of the press and
freedom of expression in the media.
Evidence and procedure:
The European Parliament had proposed an amendment to reflect their
proposal relating to damages. The Council disagreed with this
proposal and Conciliation concluded that Rome II should not apply
to evidence and procedure but that, as part of the review clause,
a study should be undertaken on the practical operation of the
1971 Hague Convention on the law applicable to road traffic accidents.
"Article 6— Unfair competition
and acts restricting free competition:
"The Commission was rightly concerned that
the rule in Article 6(3) would create problems for claimants bringing
private anti-trust actions and that these problems might deter
these claimants from doing so. This was because the rule in the
Council's Common Position would, in cases where damage caused
by a cartel is suffered in several countries, result in the application
of several different national laws, thereby greatly complicating
the resulting litigation. We shared these concerns and accordingly
welcome the new rule in Article 6(3)(b) which has emerged from
the Conciliation Committee. This is designed to minimise this
difficulty. It envisages that in many cases a claimant will be
able to choose as the single applicable law the law of the country
where the case is being heard.
"Article 26— Public policy of the
forum:
"Although there was agreement on the rule
on public policy, it was felt necessary to include a recital to
clarify its effect in relation to certain types of damages. The
recital concerns the application of a provision which would have
the effect of causing non-compensatory, exemplary or punitive
damages of an excessive nature to be awarded. Depending on the
circumstances of the case, this could be considered as contrary
to the public policy of the Member State where the case is being
determined.
"Article 27— Relationship with
other Community law:
"The European Parliament originally proposed
that Article 27 should also apply to provisions designed to contribute
to the proper functioning of the internal market in so far as
they could not be applied in conjunction with the law designated
by the rules of private international law. This amendment did
not receive the support of the majority of Member States in the
Council. A compromise, in a recital, was finally agreed in the
Conciliation Committee which should alleviate any concerns in
the electronic commercial sector. The recital is designed to ensure
that the application of provisions of the applicable law designated
by the rules of Rome II should not restrict the free circulation
of goods and services as regulated by Community instruments such
as the E-commerce Directive."
Conclusion
5.4 We thank the then Minister for her latest
update on legislative developments regarding this proposal. We
have no further questions, and are looking forward to further
Government updates on relevant developments as and when appropriate.
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