ROME II: LAW APPLICABLE TO NON-CONTRACTUAL
OBLIGATIONS (16231/04, 6622/06)
Letter from Rt Hon Baroness Ashton of
Upholland, Parliamentary Under Secretary of State, Department
for Constitutional Affairs to the Chairman
I am writing to bring your Committee up to date
with recent developments on this draft Regulation.
On 25 September the Council agreed a Common
Position which has been subsequently accepted by the Commission
(copy enclosed (not printed)). The file has therefore returned
to the European Parliament and in the first instance to the JURI
Committee. I expect that the report of that Committee will be
published in December and a completed Second Reading from the
Parliament as a whole early in the New Year. If, as seems likely,
the Parliament proposes some amendments to the Common Position,
these proposals will be referred back to the Council to decide
which of them should be accepted.
Accordingly this stage in the procedure represents
an opportunity for the Government to attempt to persuade the JURI
Committee of the merits of some amendments that would improve
the text of the Common Position. The scope for so doing is limited
in that the Parliament is in principle only able at this stage
to propose amendments in areas where it has previously proposed
amendments.
On this basis I intend to put forward amendments
in two areas. The first concerns product liability cases. These
are covered by Article 5 in the Common Position text and my proposal
is that this provision should be deleted. In the Government's
view no special rules are required for cases of this kind which
could indeed be dealt with adequately under the general rules
in Article 3. Any special rules would inevitably create complexity
and legal uncertainty as to whether a particular case falls within
their scope. Article 4 in its current form is particularly unsatisfactory;
its cascade approach and rules of exception make it excessively
complex and likely to prove difficult to operate satisfactorily
in practice.
The second area concerns torts which result
purely economic damage in different countries. These cases might
be anti-trust claims which presently fall under Article 6; they
might also be claims falling under Article 4 which might, for
example, relate to the giving of negligent financial advice and
information.
In such cases the current rules in the Common
Position give rise to the application of several, perhaps many,
different national laws, with each such law applicable only to
the damage which has been suffered in one particular country.
This will be the situation notwithstanding the fact that all the
damage caused arises out of a single sequence of events which
takes place largely or entirely in one country. This would be
an unduly complex outcome that would be likely to result in increased
costs of ligitation.
Perhaps it would be helpful if I gave an example
of the sort of case with which we are concerned. A company is
floated on the London stock market. In connection with that floatation
the company provides information about itself for potential investors.
After the floatation problems emerge with the company and the
investors, who may be situated in many different countries, suffer
financial losses as a result. They bring proceedings in London
on the basis that the information provided by the company was
inaccurate in certain important respects and that they were induced
to invest in the company on the basis of this inaccurate information.
Under Article 4(1) the applicable law is that of "the country
in which the damage occurs irrespective of the country in which
the event giving rise to the damage occurred". This produces
the application of all the national laws of the many countries
where the economic damage has been inflicted and in respect of
which claims have been brought. Such a result would greatly, and
I would argue unnecessarily, complicate the litigation.
In the light of the prospect of difficult cases
of this kind we are proposing amendments that would seek to identify
a single applicable law. In broad terms these would reflect the
current position in this country under Part III of the Private
International Law (Miscellaneous Provisions) Act 1995 which has
generally worked well in practice. For these cases we envisage
the application of the law of the country where the tort occurs
or, in more complex cases where elements of the tort occur in
different countries, the application of the law of the country
where the most significant elements of the tort occur. An amendment
of this kind to Article 4 would also enable Article 6(3) to be
deleted, thereby achieving a welcome simplification of that provision.
I should also provide some further background
information about Article 9, which is a special rule for industrial
action. This rule, which was strongly lobbied for by two member
states in particular, would displace the general rule in Article
4(1). In general terms this would mean that in respect of a claim
relating to liability arising out of an industrial action the
law applicable is to be that of the country where the action took
place rather than that of the country where the damage occurred.
The rationale behind this special rule is that it would be inappropriate
for the lawfulness of a strike in one country to be challenged
under the law of another country. The Member States generally
accepted that this was an area of particular sensitivity that
justified a special rule. An example of the kind of case which
would be subject to this rule is where a port in country A is
blockaded as a result of strike action and the ship carrying the
claimant's goods is prevented from unloading those goods, thereby
causing economic damage in country B where the claimant has his
business. Claims in tort relating to this strike would be subject
to the law of country A, and not to the law of country B.
22 November 2006
Letter from the Chairman to Rt Hon Baroness
Ashton of Upholland
Thank you for your letter of 22 November which
was considered by Sub-Committee E at its meeting on 13 December.
The Committee is grateful for your providing a copy of the final
version of the Common Position and for setting out the current
procedural position relating to the negotiation of this Regulation.
We are pleased to see that violations of privacy
and rights relating to personality are to be excluded by Article
1(2)(g) and to learn that the Government are putting forward a
proposal to delete the special rule relating to product liability.
The reduction in the number of special rules is to be encouraged
as the Committee indicated in its 2004 Report.
We support the amendment being proposed in relation
to torts resulting in purely economic damage in different countries.
We agree that such a measure would improve legal certainty and
simplify litigation. It would also render Article 6, itself a
problematic provision, largely redundant. The general rule in
Article 4, together with the Government's amendment to deal with
the "mosaic" problem, should suffice.
We also believe that Article 7 remains problematic.
The reference to Article 174 of the EC Treaty (in Recital 22)
could encourage much argument as to what is embraced by this special
rule. We believe that if any special rule is needed it should
be balanced as between claimants and defendants and much clearer
in its terms.
Finally, we are grateful for your explanation
of Article 9 (industrial action). We note that this rule has been
introduced at the behest of two Member States in particular.
The Committee decided to retain the proposal
under scrutiny but at the same time to clear Document 16231/04
which contains an outdated text. We would be grateful if you could
keep us informed of developments. As you indicate, the next step
will be the response of the European Parliament at the end of
its Second Reading.
14 December 2006
Letter from Rt Hon Baroness Ashton of
Upholland to the Chairman
Thank you for your letter of 14 December. I
am writing to you now to update you on the further developments
in the European Parliament on this draft Regulation.
As you know, following the Council's agreement
of a Common Position in September last year, the file was initially
considered by the JURI Committee of the Parliament in late December.
That Committee agreed a significant number of amendments to the
Common Position, the majority of which were agreed by the Parliament
as a whole on 18 January. I enclose a copy of the Parliament's
Second Reading Report which will be considered by the Council
at a meeting of the Working Group on 12 February. It, as seems
likely, the Council agrees to reject all the Parliament's amendments,
the concilation procedure would then take place to attempt to
reach an agreement between the Parliament and the Council and
I will update the Committee again at the end of this process.
In order to facilitate such agreement, we intend
to urge the Council to accept the Parliament's amendments, albeit
with modifications, in two areas. Firstly, in the area of unfair
competition (Article 6 of the Common Position), the Parliament
agreed to accept Diana Wallis, the Rapporteur's, proposal that
the Council's special rule for these types of cases was unnecessary
and should be deleted. As I outlined in my previous letter, we
intend to continue to support deletion of Article 6. We will also
put forward a modification to the general rule in Article 4 to
deal with torts which result in purely economic damage in different
countries. However, we are aware that there is likely to be little
support in the Council for these measures, particularly any amendment
to the general rule, at this stage in the negotiations.
Secondly, the Parliament agreed an amended clause
that would provide for a review of Rome II after it had been in
force for some time. The review clause may become crucial in the
conciliation process as a means of achieving agreement between
the Parliament and Council and we intend to continue to express
support for an appropriately-worded clause.
There are however a number of areas where we
cannot support the Parliament's amendments. These include defamation
where the Parliament voted to reintroduce the Rapporteur's original
solution. We welcomed the Council's decision to exclude defamation
and the scope of Rome II and we do not believe that the Rapporteur's
solution, which in our view is unduly complex, presents any viable
alternative to this.
Of our remaining areas of concern, the UK previously
urged the deletion of the special rule for product liability cases
(Article 5 of the Common Position) but this was not subject to
amendment by the Parliament. We also supported the Rapporteur's
proposed deletion of the special rule for cases involving environmental
damage which was accepted by JURI but not by the full Parliament.
It is therefore almost certain that the final instrument will
contain special rules for both these types of cases as agreed
in the Council Common Position.
15 February 2007
Letter from the Chairman to Rt Hon Baroness
Ashton of Upholland
Thank you for your letter of 15 February which
was considered by Sub-Committee E at its meeting on 7 March. We
are grateful for your keeping us informed of developments. We
note that there is little support for removing the special rules
relating to product liability and to environmental damage. On
the other hand we hope that we will be able to retain support
for the exclusion of defamation and privacy cases from the scope
of the Regulation.
As you know there is a substantial degree of
common ground between the Committee and the Government in this
matter and we wish you and your officials every success in the
final stages of the negotiation.
The Committee decided to retain the proposal
under scrutiny.
8 March 2007
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