COMMUNICATION FROM THE COMMISSION
on the law of non-contractual obligations
[Note to translators: the proposed regulations have been converted into a Communication from the Commission]
PURPOSE OF THE COMMUNICATION
The purpose of the present communication is to instigate an open debate on the law of non-contractual obligations.
It explains the general context of the debate and presents a number of options, while reflecting the discussions which the Council has had in this field since July 1998.
The Commission will take account of responses to the present communication when drawing up draft regulations on the subject in the first half of the year 2000.
Interested parties are invited to submit their comments in writing by 31st March 2000, to the address below:
Directorate general of Justice and Internal Affairs
The Commission of the European Communities
Rue de la Loi, 200
Fax (+32 2) 296 7481
DG JAI D(99)495
(Please see original for circulation list)
Re: Interdepartmental consultations — 12th January 2000
Draft communication on law of non-contractual obligations (Rome II)
Please find enclosed the draft communication on the law of non-contractual obligations.
This initiative marks a relaunch of the initiative of the draft proposed regulations launched in June 1999. That initiative was suspended because some Director-Generals thought that it did not fall within the scope of current affairs and also because the necessary public consultation process had not taken place.
In the meantime, hearings were held on the 4th and 5th November 1999, part of which was devoted to the question of the law of non-contractual obligations. Given that the hearing was intended mainly to deal with matters of e-commerce, however, a wider public consultation process is called for. It is with this in mind that the draft proposed regulations have been converted to a communication.
I would be grateful if you could let me have your comments by 12th January 2000 at the latest.
COMMUNICATION FROM THE COMMISSION
On the law of non-contractual obligations
1.1 General context: the role of international private law
One of the effects of the increasing level of cross-border exchanges and movements within the European Union is that there is an increasing risk that European citizens will be involved in disputes which are not contained within the State in which they are normally resident.
They may buy products from abroad which give them food-poisoning, for example, or be involved in a road traffic accident while on holiday abroad. Disputes are difficult enough; but cross-border aspects make them worse.
How can one tell what country will have jurisdiction over such disputes? Can we be sure that judgments will be enforced abroad? What national law will be applied by the courts hearing a dispute?
One of these problems has already been settled, in fact. As far as the question of jurisdiction over cross-border disputes and enforcement of judgments is concerned, there are the provisions of the Brussels Convention of 1968 (see below).
If a dispute is contractual, (such as if a purchaser buys a television from a foreign vendor, and the television then explodes), the provisions of the Rome Convention (see below) will determine what national law must be applied to the dispute and the courts of which country are to hear it. If the action is in tort, on the other hand (such as if the purchaser does not sue the vendor, but the manufacturer of the television in question), the question as to which national law applies is only settled by the rules of international private law. This leads to uncertainty amongst the citizens on the one hand and may affect the outcome of the dispute, depending on which courts it is referred to.
This initiative is designed to remedy that gap.
1.2 Current provisions of international private law as adopted by the Member States
1.2.1 Provisions on the recognisance and enforcement of court judgments
The Convention on judicial competence and enforcement of judgments in civil and commercial matters of 27th September 1968 (the 'Brussels Convention') and the Protocol concerning the interpretation of the Convention on judicial competence and enforcement of judgments in civil and commercial matters of 27th September 1968 by the Court of Justice of 3rd June 1971 (the 'Luxembourg Protocol') entered into force on 1st February 1973, signed and ratified by the six original members of the Communities.
The Brussels Convention was adopted under Article 293 (formerly Article 220) of the Treaty of Rome, and was intended to facilitate the 'free movement of judgments' within the Community. To that end, it laid down uniform rules on the jurisdiction of the contracting Member States in respect of civil and commercial matters.
On the other hand, the formalities for recognising and enforcing judgments were simplified, and the reasons for non-recognition harmonised and reduced to a minimum.
Although based on Article 293 of the Treaty of Rome, the Brussels Convention is not a Community instrument in the strict sense of the word, but an international convention. Nor did new Member States ratify it automatically when they joined; and it proved necessary to renegotiate the Brussels Convention with each wave of new Member States (in 1978 for the UK, Denmark and Ireland, in 1982 for Greece, in 1989 for Spain and Portugal, and in 1996 for Sweden, Austria and Finland), although only minor changes were made to the original 1968 text in each case.
The high contracting states to the Brussels Convention, and the members of the EFTA (except Liechtenstein) also signed the Lugano Convention in 1988, which was intended to extend the provisions of the Brussels Convention to those countries.
Negotiations with a view to revising the Brussels and Lugano Conventions were opened in 1998. These negotiations are intended to modernise the provisions of those conventions and to bring the provisions of the Lugano Convention within the ambit of those of the Brussels Convention.
On the 23rd of April 1999, those negotiations resulted in agreement amongst the ad-hoc group charged with considering the two conventions. That agreement was confirmed by the Council of Justice and Internal Affairs on the 26th and 27th of May 1999. The Commission has presented draft regulations on this subject.
1.2.2 Instruments in force in the field of determining the law applicable to contractual obligations
Work on unifying the rules of conflict of laws dates back to 1967, when the Benelux countries invited the Commission to collaborate with the experts of the Member States, with a view to unifying international private law and codifying the conflict of laws provisions within the Community. That suggestion was made with a view to solving the problems created by the diversity of the conflict of law rules.
The Commission then invited the Member States to an expert meeting to decide if, and if so, to what extent, international private law should be unified within the Community. Two meetings were held in 1969, at which the delegations declared that they agreed that it would be useful to undertake work in this field. It was recognised that it would be useful, in the first instance, to deal with the areas which were the most closely linked to the proper working of the common market, that is, the law of tangible and intangible property, the law of contractual and non-contractual obligations, the law of procedural formalities and general questions in those fields.
In the course of that work, the group of experts appointed completed a preliminary draft convention on the law of contractual and non-contractual obligations by the 21st/23rd of June 1972. The expert committee was expanded in 1973, after the United Kingdom, Ireland and Denmark joined the Community; but the committee's operations were then reduced considerably for nearly three years, until the end of 1975. To ensure that the negotiations produced results within a reasonable time, the committee decided in March 1978 to restrict itself to looking at contracts only, and not to start negotiations on a second convention on non-contractual obligations until the first was complete. Work on non-contractual obligations was therefore put on hold, but there was no question that this work was necessary.
The convention on the law of contractual obligations (the "Rome Convention") was opened for signature on the 19th of June 1980; it entered into force on the 1st of April 1991.
In essence, the Rome Convention lays down uniform rules for determining what law governs a contractual obligation in situations where there is a conflict of laws. It is said to be 'universal', in that it applies even if the law it imposes is not that of a high contracting state.
As there was no judicial basis for the Treaty of Rome at the time it was signed, the Rome Convention is a classical international convention. On the other hand, it was conceived as being complementary to the Brussels Convention, as the preamble itself emphasises.
1.3 Summary of work to date on an instrument on the law of non-contractual obligations
By resolution of the 14th of October 1996, setting priorities for cooperation in the fields of justice and internal affairs for the period from the 1st of July 1996 to the 30th of June 1998 (OJ C319 of 26th October 1996, p.1), the Council of the European Union stated that it intended to pursue the objectives as laid down by the Council of Europe, by concentrating on certain subjects between the 1st of July 1996 and the 30th of June 1998.
In particular, those subjects included "launching work on the necessity and possibility of drawing up …. a convention on the law of non-contractual obligations."
As part of this work, the Council sent the Member States a questionnaire in February 1998, on a draft convention on the law of non-contractual obligations. Austria, which held the Presidency of the Union at the time, then organised four working meetings (which were held on the 22nd and 23rd of July 1998, the 10th and 11th of September 1998, the 7th and 8th of October 1998 and the 5th and 6th of November 1998) to consider the Member States' responses to that questionnaire.
At these working meetings, it emerged that the Member States were in principle in favour of an instrument on the law of non-contractual obligations. Those meetings also enabled the Member States to raise their wishes and their concerns, about such a convention. For the fourth working group meeting, the Austrian Presidency drew up a draft convention at its own initiative and presented it to the group.
In parallel with the work of the Council, the Commission, as part of the Grotius programme, financed a project (GR/97/051) presented by the European Group on International Private Law [GEDIP ]. The project was intended to assess the feasibility of a European Convention on the law of non-contractual obligations, and was based on a questionnaire sent to members of the group. Following the responses to the questionnaire, the group met as a working party in plenary session to draw up the draft convention on the law of non-contractual obligations. The Commission was fully involved in the work of the group, and a representative attended both plenary meetings devoted to drawing up the text, which were held at The Hague on the 26th to the 28th of September 1997 and in Luxembourg from the 25th to the 27th of September. After the second meeting, GEDIP was in a position to complete the text of the draft, which it then sent to the Commission. The text was then sent out to the Council.
The ad hoc group continued its work during the German and Finnish presidencies. In fact, the group considered the text drawn up by Austria during its presidency and that which GEDIP had drawn up at the meetings held on the 7th and 8th of January, the 29th and 30th of June, the 7th and 8th of September and the 12th and 13th of October 1999.
The Treaty of Amsterdam finally entered into force on the 1st of May 1999. This treaty adds a new Title IV to the Treaty of Rome, which includes Article 65, which provides amongst other things that "the measures arising out of the field of judicial cooperation in civil matters of a cross-border nature which must be taken … insofar as is necessary for the proper operation of the single market, are intended amongst other things to … promote the harmonisation of the rules on conflict of laws applicable in Member States…"
With a view to the effective implementation of the pertinent provisions of the Treaty of Amsterdam, the Council of Justice and Internal Affairs adopted the plan of action of the Council and the Commission on the optimum modalities for implementing the provisions of the Treaty of Amsterdam on the establishment of a field of liberty, security and justice on the 3rd of December 1998 (OJ C 19 of 23rd January 1999, p.1). Paragraph 40 states that "the following measures should be taken within two years of the Treaty entering into force:… b) the elaboration of a legal instrument on the law of non-contractual obligations (Rome II)".
1.4 Foundations of a proposition in the light of the principles of subsidiarity and proportionality
a) On the principle of a Community instrument on the law of non-contractual obligations
Harmonising the law concerned and unifying the rules of conflict of laws will enable the rules applicable to a given relation to be determined with certainty. They will therefore assist the proper operation of the single market by increasing certainty in law.
Harmonising the rules of substantive law is different from unifying the rules of conflict of laws, in that the latter approach merely harmonises the rules for deciding what law governs a particular obligation. This approach has proved particularly suitable when it comes to resolving cross-border disputes as, by stating which law applies to the obligation in question with certainty, independently of the forum seised, it may reduce the risk of the plaintiff (insofar as the Brussels Convention allows it that option) referring matters to the courts of the country which is liable to apply the law most in its favour, and not the courts which are in the best position to judge the dispute, objectively speaking, that risk being known as 'forum shopping'. It may also reduce the costs of any proceedings and even encourage the parties to seek an amicable settlement. At the same time, as it does not in any way require the rules of internal law to be harmonised, this approach respects the principles of subsidiarity and proportionality fully.
These general remarks apply particularly to criminal liability. In the first instance, in fact, as far as civil and commercial matters are concerned, the competence of the courts of the Member States is governed by the Brussels Convention if the defendant is domiciled in any of the Member States. As well as the basic competence provided for under Article 2 of the Convention, i.e. that of the "courts of the State in which the defendant is domiciled, Article 5 point 3 of the Convention provides for special competence in criminal and tort matters, i.e. that of the courts of the place where the injurious act occurred". The Court of Justice has stated repeatedly that, in cases where the place where the facts liable to create criminal liability and that where those acts caused injury are not identical, the defendant may be summoned, at the plaintiff's discretion, before the courts of either the place of the causal event or of the place where the injury occurred (cf. judgment in Bier v. Mines de Potasse d'Alsace, judgment of 30th November 1976, 21/76, Rec. p. 1735). If the act injures the victim directly in more than one country, action may be brought before the courts of any of those countries for damages caused in that country (see Shevill v. Presse Alliance s.a., judgment of 7th March 1995, C 68/93, Rec. p. 0415). (This case law is not affected by the minor amendment made to the wording of Article 5 point 3 in the course of the review.)
While it is true that the Court has pointed out that these two places could form a significant link in terms of jurisdiction, as each of them is liable to provide particularly useful guidance in terms of proof and organisation of the proceedings, it is still a fact that the number of forums open to a plaintiff, who is the victim of a cross-border crime, mean there is a risk of 'forum-shopping'.
Unifying the rules of conflict of laws applicable in such cases, while ensuring with reasonable certainty that the same law would apply to any given dispute, whatever forum the plaintiff opted for, would at least reduce the risk of forum-shopping.
In the second place, a proposition would be complementary to the Rome Convention on the law of contractual obligations, such that the whole scope of the law of contracts (with some well-defined exceptions) could be made subject to uniform conflict of law rules throughout the Community.
As things now stand, a contractual obligation is subject to uniform regulations laid down by the Rome Convention, whereas criminal liability or liability in tort is subject to different conflict of laws rules in force in each of the Member States, which creates uncertainty as to the risk of solutions differing, depending on the forum seised. That uncertainty is aggravated by the fact that the Rome Convention does not actually define what 'contractual liability' is. Which means that there is no guarantee of an act being defined in the same way in all the contracting states, all the more so given that, at present, the protocol enabling national courts to refer matters relating to the interpretation of the Convention to the Court of Justice on appeal by way of case stated has not yet entered into force. A situation might therefore conceivably arise in which a matter might be defined as contractual by a given state, and subject as such to the Rome Convention, while another state might define it as tort and hence subject to national conflict of laws rules.
An instrument in parallel with the Rome Convention, applicable to non-contractual liability, and including a detailed definition of its scope of application, would enable the dividing line between the concepts of contract and tort to be defined more precisely, and hence would promote a more consistent application of the rules of conflicts of law, all the more so given that, once the instrument under Article 68 of the Treaty of Amsterdam enters into force, the Court of Justice would have the competence to rule on questions of construction of the instrument.
b) On the substance of the rules as proposed
In accordance with the objectives as stated, the present communication is not putting forward any revolutionary solutions. On the other hand, it is founded on concepts which will be familiar from the judicial systems of the Member States.
1.5 Justification of the choice of legal foundations
A proposition would be based on Article 61 c) of the Treaty of Rome as amended by the Treaty of Amsterdam, in conjunction with Article 65 of that same treaty.
It meets the conditions which govern the application of Article 65, and in particular that under which the measures taken are limited to those necessary to the proper functioning of the single market.
Indeed, as was shown above, unifying the rules of conflict of laws in non-contractual matters enables the governing law in a cross-border dispute to be determined with more certainty, which would encourage the parties to look for an out of court solution or, if proceedings go ahead, to ensure that the outcome is the same, independently of the forum adopted, reduce the costs of proceedings and, finally, promote the recognition and enforcement of judgments given by courts in other Member States under the Brussels Convention.
Title IV of the Treaty of Rome, from which Articles 61 to 68 derive, does not apply to the United Kingdom or Ireland, unless those states exercise their "opt-in", subject to the terms laid down by the protocol to the Treaty.
Nor does Title IV apply to Denmark under the protocol concerning it, although it may renounce that at any time.
The present text has been drawn up in the light of current conditions, and will have to be amended accordingly, if the rules should become applicable to one or other of those States.
1.6 Justification for the choice of rules
Point 6 of the protocol on the application of the principles of subsidiarity and proportionality states that, "All things being equal … directives should be preferred over regulations."
Regulations would still appear to be the most appropriate instrument when it comes to the present initiative, however. Indeed, the provisions lay down uniform rules for selecting the governing law. Those rules are highly detailed, precise and unconditional and, by their very nature, do not require Member States to take any action to implement them in national law. They are self-executing by nature; so it is essential that they take the form of regulations to ensure that Member States apply them consistently.
1.7 The relationship between conflict of laws rules and substantive rules of Community law
The Commission has noted that some misunderstandings have arisen, and sometimes quite serious ones, as to the role and scope of an instrument on governing law, and on the relationship between conflicts of laws and substantive rules of Community law in particular. There are some who think that it would be best, as far as 'intra-Community' disputes are concerned (i.e. cross-border situations, where all the elements are contained within the Community), that it would be best to adopt an approach which differs from the 'traditional' one, which only lends itself to 'extra-Community' disputes (i.e. the rules governing relations where some elements relate to one or more non-member states). Others even claim that the principles and rules of Community law, and the so-called principle of the country 'of origin' in particular, renders the application of 'traditional' conflict of laws rules superfluous, or even contrary to Community law, insofar as they could specify a law other than that of the country of origin or a seller of goods or provider of services as the governing law.
In the Commission's opinion, this second argument derives from a confusion between the objectives of conflict of laws rules, on the one hand, and those of Community law, and the rules on the 'country of origin' in particular, on the other. The concept of 'control by the country of origin' can be interpreted in two ways.
The first meaning concerns the application of Articles 28 (formerly 30) and 49 (formerly 59) of the Treaty of Rome in particular.
Article 28 stipulates that "quantitative restrictions on imports and any measures of equivalent effect are prohibited as between Member States". The courts seised must therefore first examine whether the rule of national law is a quantitative restriction or equivalent measure for the purpose of the rule in Keck and Mithouard in particular (judgment of 24th November 1993, C-267/91 and C-268/91, Rec. I-6097). On this point, it should be noted in particular that a rule which is not intended to regulate the exchange of goods between Member States does not necessarily amount to such a measure, even if it is liable to restrict the volume of sales originating from other Member States.
Even if the rule at issue is actually an obstacle to intra-Community trade, it is not incompatible with Article 28 of the Treaty of Rome, insofar as it applies indifferently and is justified by considerations of public interest which are liable by their very nature to outweigh the demands of free circulation of goods, such as public health, consumer protection or the bona fides of commercial transactions.
Similar provisions apply in cases where it is alleged that the rule at issue is incompatible with Article 49 of the Treaty.
What this analysis shows is that these articles make no claim to providing rules for determining the law governing a dispute in private law.
In the first place, indeed, a universal conflict of law rule is unlikely to constitute an obstacle to the free circulation of goods or free performance of services insofar as it selects that governing law in an abstract manner. The essential question which the courts must ask is whether one or more rules of the specified law are tantamount to an obstacle (SEC(97)1.193 of 20.06.97). This has to be done after the governing law is determined. As the Commission has already stated in its communication on the free performance of services and the public interest in the second banking directive, the conflict of laws mechanisms are not themselves tantamount to restrictions. It is not the mechanism for determining the governing law which is the obstacle, but the result to which it might lead, having regard for the substantive law as specified.
In the second place, while it is true that it is not excluded a priori that a rule of private law might constitute an obstacle, it is important to note that the Court has never made a ruling to that effect to date, insofar as this was a non-discriminatory rule.
In the third place, it should be remembered that, even if Article 28 or 49 are opposed to the application of national law, the courts are not obliged to overturn that rule except insofar as it is an obstacle. They are not obliged to throw out all the governing law in favour of the law of the service provider's country of origin.
In the fourth place, prohibiting obstacles to intra-Community commerce is also liable to take precedence over the rules of the country of origin. Indeed, Article 29 prohibits quantitative restrictions on exports, and case law has interpreted Article 49 to mean that a rule of the service provider's country of origin may also amount to an obstacle to the free performance of services (see judgment in Alpine Investments - judgment of 10th May 1995, C-384/93, Rec. I-1141).
What this analysis shows is that conflict of laws rules which are applied universally are not stipulated as such by articles 28 and 49 and that those articles are not capable of providing clear, precise conflict of laws rules either.
The correct approach, on the other hand, is for the courts first to determine the governing law in accordance with their rules on the conflict of laws (whether these originate in the law of contract, common law or otherwise) and then to consider how the rules of the law so decided apply in the light of Community law.
The second way of understanding the concept of the principle of control by the country of origin goes back to the fact that some directives state that questions of approval, etc. depend on the service provider's country of origin. The Court of Justice has stated that the principle of control of the Member State of origin is not a principle of the Treaty of Rome and that Community legislation may henceforth depart from it (judgment of 13th May 1997, Germany v. Parliament and Council, C-233/94). In any case, it goes without saying that the principle as derived from these directives has no effect on the question of civil liability, or on criminal liability in particular.
2. The draft regulations
The draft regulations as attached are based on the debates which have been held in the working group of the Council and on the work of GEDIP, together with that carried out independently by the Commission. The text proposes alternative wordings in some cases.
The positions adopted in the text are only provisional at this stage, and comments received when drawing up the draft regulations will be taken into account.
On a general note: with a few exceptions, which are listed in paragraph 2, the regulations will have to cover all non-contractual liability. The vast majority of civil liability will therefore be subject to uniform conflict of laws rules, contractual liability by the Rome Convention and non-contractual obligations by the present regulations.
Non-contractual obligations can be divided into two categories: first, liability in respect of unlawful acts, and second, those in respect of any other act.
The first category includes criminal liability, while the second covers the field known as 'tort' or 'implied contractual' in some jurisdictions, and covering in particular such things as improper enrichment, negotiorum gestio and recovery of payments made in error.
Paragraph I. It should be noted that the regulations apply to all situations in which a conflict of laws exists, i.e. if there is an extraneous element. The rules therefore apply, even in situations where all the facts occurred in the country of the courts in question, as soon as there is any element which might render the matter subject to a foreign body of law (such as where the parties are resident or where the parties have chosen the governing law themselves).
Opting for some fields to be excepted does not present a problem, as the fields involved have nothing to do with criminal or tortious liability, although some of the exceptions are much less obvious.
- This paragraph states that the regulations do not apply to non-contractual relations arising out of family relations or associated relations deriving from family law. The regulations therefore exclude liability for maintenance to a spouse or children, for example.
- This paragraph deals with non-contractual obligations arising out of the law of inheritance.
- This paragraph repeats Article 1a, paragraph 2 point c of the Rome Convention, and is included for the same reasons, mutatis mutandis, as listed in the Giuliano-Lagarde report: firstly, that is, that the provisions of the regulations are not suited to obligations of this kind, that the Geneva Conventions of the 7th of June 1930 and 19th March 1931 cover many of these fields and that not all Member States define these obligations in the same way.
- This paragraph states that the regulations do not apply to personal liability for the debts of a company on the part of persons responsible for auditing documents of account, which comes under company law.
- This paragraph states that the regulations do not apply to liability arising out of the exercise of public authority. It should be noted that this article does not apply to the liability on the part of the State or public law organisation, arising out of any activities other than those involved in the exercise of public authority. On the other hand, anything done in the exercise of public authority, even by a private law personality, comes under the provisions of paragraph 4.
- The question of whether nuclear damage should be excluded from the regulations is proving a problem. On the one hand, there are certain conventions in this field (and the Paris Convention in particular) which most Member States have already ratified, which have established a particular regime of liability. On the other hand, not all Member States have ratified them.
- The question of whether industrial and intellectual property should also be excluded is also difficult. It is proposed to exclude them because, when it comes to infringements of rights in this field, the essential questions relate to the existence of rights to be protected, which cannot be settled under the present regulations.
- Trusts being sui generis, they should be excluded from the scope of the regulations, as was the case under the Rome Convention.
- The exception in this paragraph reiterates the normal principle, whereby the proof and proceedings are those of the lex fori. While it is true that this exception is out of place in Article 1, the same structure has been used as in the Rome Convention, in the interests of symmetry. The scope of the reservations are explained in the comments on Article 13 below.
Article 2. Universal nature
Article 2 emphasises the universal nature of the uniform rules laid down in the present proposals, in the sense that the conflict of laws rules which they lay down may result in the law of a non-member state being applied. The rules will not, therefore, as such be limited to situations in which there is an objective connection with any of the contracting states or the obligations governed by the law of a Member State.
This approach was also used in the Rome Convention and most of the Hague Conventions, and it would be difficult to find reasons not to follow it when it comes to non-contractual liability. First, it would be hard to find a criterion on which the rules of the regulations could be based. If this were conditional on one of the parties being habitually resident in a Member State, the instrument might still result in the law of a non-member state being applied. If, on the other hand, the regulations would have to be overturned, if applying their rules would result in the law of a non-member state being designated, the courts would still be bound to apply the regulations, to determine if they would lead to the law of a Member State being applied. Second, there would not be any benefit in excluding 'extra-Community' disputes: this would mean that those situations would remain subject to the rules of common law of the Member States, which would run contrary to the principles of certainty in law and foreseeability.
Article 3. Law governing non-contractual liability arising out of an unlawful act
Without denying the parties some freedom of choice (see Article 6 below), Article 3 has to lay down rules for determining the governing law in criminal matters.
At present, most Member States regard the lex loci delicti as being of primary importance, that is, the law of the country where the unlawful act took place. But the problems with applying this rule arise when the elements are scattered, (i.e. where the unlawful act is committed in one country,,, while the injury it causes occurs in one or more other countries).
In Germany, the basic rule under the new law in force is that of the country in which the offender acted. If the elements are scattered, the plaintiff may opt (unilaterally) to adopt the law of the country in which the injury (effects) were felt. If the parties are habitually resident in that same State, the law of that State applies.
In Austria, the basic rule is the law of the country in which the offender committed the act. If the elements are scattered, the doctrine allows for the law of the place where the injury was incurred to be applied, if the offender should have foreseen that this would occur beyond the frontiers of the country in which he committed the offence.
Belgium applies the rule of the lex loci delicti. If the elements are scattered, some of the doctrine gives precedence to the law of the place where the injury occurred.
Danish case law comes down generally in favour of the lex loci delicti, although some decided cases show a preference for using the approach of the closest connections, especially in cases where the parties share a common domicile.
In Spain, the Civil Code states that non-contractual obligations are governed by the law of the causative act. This rule is not overturned if there are closer links with another country, but there are a number of exceptions, in which the country in which the injury occurred takes precedence.
In Finland, it would seem that the rule which normally applies is that of the lex loci delicti. Whether that rule applies if the elements are scattered, or whether it may be overturned in any given case in favour of another body of law, is rather uncertain. The doctrine allows for making the application of the lex loci more flexible.
In France, the general rule is still the lex loci delicti; that may mean the law of the country in which the injury occurred applies, especially if the elements are scattered.
In Greece, criminal liability is governed by the law of the country where the offence was committed. A number of different theories have been followed, in cases where the elements are scattered.
In Ireland, the situation is uncertain, but it would seem that the rule of 'double actionability' is still the basic rule. This rule requires the plaintiff to establish the defendant's liability under the lex fori and the lex loci delicti before being able to proceed. There have been many objections to this rule, and some obiter dicta give reason to believe that the courts may depart from this general rule in the interests of justice in appropriate cases.
In Italy, the new law on international private law provides that non-contractual liability is governed by the law of the country,, in which the injury is incurred, although the victim may require that the law of the country in which the act which caused that injury was committed, be applied. And, if all the protagonists are nationals of one and the same country, the law of that country applies.
In the Netherlands, the basic rule is the law of the country in which the unlawful act took place; but if an unlawful act results in physical injury, damage to property or environmental damage in another country, the law of that country applies, unless the party responsible could not have foreseen it.
In Portugal, the law governing non-contractual liability is that of the country in which the act which caused the injury was committed. If the elements are dispersed, the law of the country in which the injury was suffered applies, although the law of the state in which the injury was suffered will be applied if it is more favourable to the injured party, and if the offender should have foreseen that that injury would occur in the country in question. If the parties are all nationals of or resident in one country, the law of that country applies.
In Sweden, non-contractual liability is governed by the lex loci delicti. If the elements are dispersed, it is not certain whether this rule applies. Some people give precedence to the law of the country which is at the centre of gravity of the circumstances, while others argue in favour of the law which is most favourable to the plaintiff.
In the United Kingdom, the old rule was that of "double actionability", with the option to overturn one or other arm of the rule in appropriate cases. This rule still applies to anything done prior to the 1st of May 1996 and to libel. A new rule applies to unlawful acts (other than libel) committed since that date. Under the new law, the governing law in criminal cases is that of the country in which the causal events occurred. The problem of cross-border offences is approached in a very precise manner. In cases of personal injury or damage to property, it is the law of the country in which that injury occurred; in all other cases, it is the law of the country in which the most significant elements of the events occurred which applies. This general rule may be set aside if it emerges that, in the individual circumstances, the situation shows closer links with a country other than that whose law would apply under the general rule.
What this analysis shows is that Member States do not all take the same approach when it comes to cross-border offences. In some Member States, it is the law of the country, in which the acts which gave rise to the injury were committed, which applies; in others, it is the law of the country in which the injury occurred which applies. In a third category, the plaintiff may opt for whichever law is most favourable to it. In a fourth, the situation is unclear, and there are discrepancies between case law and doctrine. Be that as it may, there is a clear trend emerging to the effect that the states which have reformed their rules of international private law in recent years have tended to give preference to the law of the country in which the injury occurred or to allow the injured party to choose whichever body of law is most favourable to them.
Using the basic rule (the lex loci delicti) may prove to be inappropriate if the situation does not show any connection with the country in which the acts were committed or in which the injury arose (such as a road traffic accident involving only one vehicle, all the occupants of which are resident in a country other than that in which the accident took place). In view of this, some countries vary the basic rule one way or another in appropriate circumstances (such as the law of the country of which all the parties involved are nationals or in which they are habitually resident).
Even if this basic rule is varied, however, it has to be noted that there is some liability which does not arise in any given country, such as offences committed on the high seas, in airspace or on the Internet.
It is essential to provide clear, precise rules which enable the citizens and courts to determine the governing law.
Two alternative wordings are offered in the text attached.
The first retains, as the basic rule, the law of the country which is most closely connected to the non-contractual liability, as the Rome Convention does for contractual liability. This basic rule comes subject to presumptions.
The second starts from the lex loci delicti, but provides an 'escape' clause which enables the basic rule to be varied in exceptional circumstances. The Commission does not believe that these differences in approach are liable to be of any practical significance.
A more thorny question is which law should apply in cases where the elements are scattered. What is necessary here is to find the right balance between the interests of the injured party and those of the party which caused the injury.
There are a number of possible solutions here. The first would be to use the lex loci delicti as the basic rule, stripped of all qualifications, as the preliminary draft of 1972 did. The problem with this is that it does not offer any solutions precisely in those cases where the greatest problems arise. The same applies to the second option, that is, the rule of the closest connections, without any qualifications in cases where the elements are dispersed.
The third possibility would be to opt for the law of the country in which the causal act was committed, i.e. that in which the party which caused the injury acted. There are some who prefer this on the grounds that it is most likely to promote the single market, in that the lex loci delicti is that of the 'country of origin' of the party responsible.
In legal terms, however, this argument could not be more wrong. Indeed, as was shown in section 1.7 above, it confuses the role of the rules of conflict of laws and that of the 'country of origin', which involves overturning the rules of national law applied by the courts if they represent an obstacle to the free movement of goods or services. Such obstacles might exist, for example, if the rules of the country 'of destination' are more restrictive on trade than those of the 'country of origin'.
Adopting the law of the country of origin as the rule of conflict of laws would go far beyond the demands of Articles 28 and 49, and would favour unduly the parties which caused the injury. In the first instance, in fact, this approach would be tantamount to universal disarmament towards defendants domiciled in a non-member state, where there would be no guarantee that the law would protect the victims. In the second place, even if the defendant were domiciled in the Community, what it did might be outside the scope of the single market (libel, river pollution, etc.). There is no reason in principle to extend the rules of the single market to such cases. Thirdly, making the law of the country of origin the governing law automatically would per se overturn any other law, even if the latter's rules were not an obstacle, or if they pursued a legitimate interest which was not guaranteed by the law of the country of origin and met the requirements of proportionality. In summary, such a rule would enable players to overturn the balance sought and safeguards laid down by the Court of Justice in the case of Keck above.
In the fourth place, it is essential not to lose sight of the fact that the courts seised would in any case be bound by articles 28, 29 and 49 of the Treaty of Rome, so that they would be bound to overturn the rules of the law of the country of origin itself if they were an obstacle (see the Alpine Investments case above). This would mean that defendants would have the right not to have action taken against them other than under the rules of that country of origin, while at the same time being able to overturn them if they proved to be an obstacle.
The Commission believes that the most reasonable approach would be to use the law of the country in which the injury occurs. The victim is always the passive party; and it would be unreasonable to impose a law on it which, as far as it knows, has no objective connection with it. The party which caused the injury is also better placed than the victim to protect itself against the adverse effects of a 'foreign' law by way of an insurance policy. It should also be remembered that, under Article 5 (3) of the Brussels Convention, the victim always has the option to take action against the party which caused the injury in the country in which the injury occurred. The guilty party is already exposed to such a risk, and the additional risk of finding itself subject to the law of that country should not be a considerable additional burden. Finally, the modern tendency in substantive law in the field of criminal law is to put the accent less on punishing the shortcomings in the conduct of the guilty party and more on protecting and compensating the victims of injurious acts. It would be logical for that tendency to be reflected in the field of conflict of laws.
It should be noted that we are talking about the initial injury here, the violation of the protected rights, and not the indirect consequences. So, if someone is bitten by a dog in country A, but is treated in country B and then suffers a relapse in country C, it is the law of country A which applies. The same principle should also apply if the causative act is committed in one country, but the injury occurs in another.
Another problem area concerns the opportunity of providing special rules filling out the basic rules in certain cases to make it easier to identify where the injury occurred. For example, it might be difficult to identify the place where the injury occurred in cases of libel or invasion of privacy or personality.
This kind of case is also always liable to present some thorny problems, as the laws in force in each country reflect a delicate balance between the protection of privacy and reputation and the right to personality on the one hand and freedom of expression on the other. And, in strictly practical terms, modern media enable potentially prejudicial 'publications' to be distributed extremely widely or even globally.
There are a number of potential solutions here.
In the first place, the place of publication (or transmission) would undoubtedly enable a single body of law to be used. On the other hand, there is no guarantee that that place would have any real connection with the 'centre of gravity' of the libel (the publication might have been printed in one country but distributed mainly in another); and choosing that law might lead publishers to set themselves up, or publish their works, in a country where the law is in their favour.
In the second place, the place in which the injured party is habitually resident would undoubtedly represent a connection with a definite link to the injured party, and it would enable the entire publication at issue to be subject to a single body of law. On the other hand, this law would present the same kind of problems as that of the place of publication: first, the publication may not be distributed in the country in which the plaintiff is resident, and second the plaintiff may be led to live in a country whose laws are highly protective of reputation and privacy.
The third solution would be to opt for the law of the country or countries in which the publication is distributed in respect of the injury caused in that country or countries. It is true that there is a problem with this approach, namely that criminal liability for a publication which is distributed in a number of countries would be subject to as many different bodies of national law. If the victim took action against the defendant in the country where the distribution took place, on the other hand, under Article 5 (3) of the Brussels Convention, the competence of the courts to which the matter was referred would be limited to the injury inflicted in that country in any case (see judgment of 7th March 1995, Shevill). On this assumption, the courts of the forum would apply the law of their country,, insofar as they were competent to hear the dispute; which would not be the case if the victim brought proceedings against the defendant before the courts which were competent to hear the case of all the injury caused (such as those of the defendant's place of domicile (Article 2) or of publication (Article 5 point 3), where the courts would find themselves obliged to apply a number of bodies of law to determine the full extent of the defendant's liability.
Similar questions arise when it comes to the field of product liability. In cases where a product causes injury, it may be that the connections between that injury and the country in which it occurs are extremely tenuous. Let us suppose, for example, that a Dutch tourist is in France and buys a food product made in Germany, which he eats in Luxembourg, then comes down with food poisoning in Belgium and goes for treatment in the Netherlands. In this particular case, it would be difficult to determine whether the injury occurred in Luxembourg or Belgium; and the connection between that country and the injury is purely coincidental in any case. We must therefore ask ourselves whether it would not be better to provide for a special rule, such as that contained in the Hague Convention of 1973, which gives precedence to the law of the victim's country of residence, or whether, on the other hand, the general rules are sufficient.
The Commission also believes that it would be appropriate to provide a mechanism, enabling the courts to vary the basic rules if it would be manifestly more appropriate to apply the law of another country.
On this point, it should be noted that using this facility must be subject to two conditions. Not only must there not be any significant connection between the non-contractual liability and the country whose laws would normally apply; the circumstances must also present an overwhelming connection with another country. One example of a situation, in which the national courts might apply the provisions of this paragraph, might be if a non-contractual obligation were created arising out of a contractual relationship between the parties. The courts would then have to decide, in the individual case, whether the non-contractual obligation was so closely connected with the contract that the law which would normally be applied should give way to the law governing the contract. It goes without saying that these provisions should only be used in exceptional circumstances.
Given how many possible approaches there are to determine the governing law, finally, it cannot be ruled out that a single causative act would cause injury to a number of victims, and that the provisions of Article 1 would result in there being a choice of governing laws. It would be appropriate to state that, in this case, the law applicable to each victim would be determined separately.
Article 4. Scope of law governing non-contractual obligations arising out of an injurious act
This article is intended to define the scope of the governing law, and is similar to the equivalent articles of the Hague Convention on the law governing road traffic accidents of 4th May 1971 and that on product liability of 2nd October 1973.
In accordance with the wish to ensure that the outcome is the same whatever the forum as far as possible, this article allows the lex causae as much scope as possible. On the other hand, it should be noted that the list of questions as to the governing law in article 4 is not exhaustive.
Point 1 refers to 'the conditions and extent of liability'. The expression 'conditions of liability' refers to the intrinsic elements of liability, and in particular to whether liability is strict or fault-based, how the latter is defined, including whether an omission can be tantamount to a fault, the cause and effect relationship between the causative act and the injury, determining who is liable, etc.
The expression 'extent of liability' refers to its limits in law, including the ceiling of liability. It also covers the division of liability where parties are jointly liable.
Point 2 refers to the 'grounds for exoneration, and any limitation or division of liability', i.e. the extrinsic elements of liability. The grounds for exoneration include force majeure, necessity, acts by third parties and exclusive fault on the part of the victim. This concept also includes the inadmissibility of action between spouses, which still applies in some countries, and exclusions of liability on the part of the author towards certain classes of person.
The concept of division of liability applies in particular to cases in which there is contributory negligence on the part of the victim, if the governing law provides that the author's liability may be reduced as a function of the severity or causal effect of the faults committed.
Point 3 refers to the 'existence and nature of the injury which is eligible to be remedied'. This provision covers determining the prejudice which may give rise to civil liability and prejudices for which relief may be obtained, such as personal injury, damage to property, moral injury, financial losses and loss of profits.
Point 4 covers the measures which the courts seised may take. It is more specific than the corresponding provisions of the Hague Conventions and the preliminary draft of 1972, which use the expression "the modalities… of relief". It covers the types of relief available: if the prejudice is to be remedied in kind, for example, or by way of damages, and ways of preventing or ceasing injury, such as an injunction by a judge in chambers, without however obliging the courts to take measures which are unknown in the procedural law of the forum concerned.
Point 5: quantification of the injury insofar as the rules of law allow. If the governing law lays down rules for quantifying the injury, the courts must follow them. The question of any ceiling of relief is also subject to the governing law.
Point 6 covers the transmissibility of the right to relief, by succession or assignment. In the case of succession, the governing law governs the question as to whether proceedings may be brought by one of the victim's assigns: not on personal grounds, with a view to obtaining relief for the injury caused to them on the rebound by the death of the victim, which comes under point 7, but as an heir with a view to obtaining relief for the initial injury suffered by the victim physically or via their assets.
It goes without saying, however, that the law governing the victim's succession must be recognised as competent to determine the capacity of heir. This is a question which must be settled before any proceedings can be brought.
As far as transmissibility by assignment is concerned, it has been noted that the law governing non-contractual obligations merely governs whether they are assignable and relations between assignee and debtor. The obligations between the assignor and assignee are governed by the law governing the relationship between them.
Point 7: under this point, the law which is designated the governing law also governs who is entitled to seek relief for the injury they themselves have suffered. In particular, this provision covers the question as to whether someone other than the 'immediate victim' can obtain relief for injury caused to them 'on the rebound', in the wake of the injury which the victim incurred. This injury may be moral, such as hardship caused by the death of a close relative, or financial, such as that caused to the children or spouse of the deceased.
Point 8 covers all cases where the governing law lays down that a person is liable for the fault of another. It is not limited to cases where there is a subordinate relationship between the author and the person responsible: it also includes the question of parental liability for offences committed by their children.
Point 9. Under Article 4 point 9, the law governing liability governs prescriptions and limitations as to time, including the starting point, interruptions and suspensions of time allowed. The term 'prescription' means extinctive prescription and 'opposition', acquisitive prescription, and which may, generally speaking, be referred to as the ways in which a right may be extinguished as a result of its not being exercised before the expiry of a period of time laid down by law. It must be interpreted in the wider sense, to cover short prescriptions.
In support of this broad interpretation, the convention also refers to forfeitures. The concept of forfeiture, as it is known in legal systems based on civil codes, refers to the loss of a right or action if it is not exercised in time, and subject to the conditions laid down by the courts, the law or custom. The text refers only to forfeiture as the result of being out of time, and does not cover the cases where rights can be forfeited other than by being out of time.
Article 5. Determining the law governing non-contractual obligations arising out of non-injurious acts
The first question which should be asked is whether it is appropriate, even necessary, to provide conflict of law rules for implied contractual matters or, conversely, whether the rules should be limited to unlawful acts.
The factors which argue against including the field of implied contracts are, firstly, the fact that, in practice, there would seem to be very few cases where problems of conflict of laws would arise in this field, and the difficulty of laying down uniform rules in a field which is so heterogenous. On the other hand, the desire not to leave any gaps argues in favour of including this field, all the more so since, under some systems of law, the question of the effects of nullity of a contract (such as the obligation to restitution) is a matter of implied contract and not of contract proper, and is already governed by the Rome Convention. Which is why the present draft includes rules in this field.
This article attempts to lay down the rules for determining the governing law in cases of implied contracts, although it avoids using technical language, for the reasons above.
As with obligations arising out of injurious acts, the question arises as to whether the basic rule to be adopted should be that of the closest connection, with presumptions, or more concrete rules and escape clauses.
It would be difficult to provide for presumptions common to each category, however, given how heterogeneous these obligations are.
The first possible situation is one in which the obligation derives from an existing relationship between the parties. In this case, the country whose law governs that relationship is presumed to be that which is most closely connected to the obligation. That relationship could be, but is not limited to, a contract.
It should be noted that this is not a matter of modifying Article 10 (1) (e) of the Rome Convention, (which stipulates that the effects of nullity of a contract are governed by the law governing that contract) or to provide for an overlap with it; on the contrary, the scope of Article 5 goes beyond that of Article 10 (1) (e) of the Rome Convention.
Paragraph 3 covers the situation in which the parties are habitually resident in the same country.
Paragraph 4 deals with unjustified enrichment where there is no existing relationship between the parties. In this case, the country in which the enrichment occurs is deemed to be the most closely connected.
Paragraph 5 covers negotiorum gestio. The law of the country in which the management was conducted applies.
Paragraph 6 has the same function as the corresponding paragraph of Article 3 (q.v.).
The alternative wording presents the same ideas, but in a different structure.
Please note that the provisions of chapter three apply to all non-contractual obligations.
This article is intended to allow parties to choose the applicable law, subject to certain controls. Unlike contractual obligations, where the parties are largely autonomous, they are less at liberty when it comes to non-contractual obligations.
Even if the cases in which the parties would avail themselves of this option are fairly rare, there is still a need to provide safeguards along the lines of those provided in the Rome Convention. The choice must also be explicit, and must not be to the detriment of third parties.
Paragraph 2 is modelled on Article 3 paragraph 3 of the Rome Convention, and applies if all the circumstances (except the choice of governing law) are located in a country other than that whose law has been adopted. In this case, the parties' choice is not overturned, but cannot override the application of any possible overriding provisions of the law which would otherwise be applicable.
Paragraph 3 represents an extension by analogy of the paragraph to cases in which all the circumstances (other than the choice of law) are located in two or more Member States of the Community. But the objective is the same, that is, to prevent the parties evading the application of overriding rules of Community law by opting for the law of a non-member state.
Two other questions arise. Should this option be limited to enabling the parties to make their choice after the event? Should there be additional safeguards for specific categories of actionable acts which are thought to be weaker?
Article 7. Policy laws
This article states a standard principle of international private law, whereby the courts seised can always apply the rules of the lex fori which govern the situation overridingly, even if the lex causae is that of another country.
On the other hand, it would not appear necessary in the case of non-contractual obligations to make provisions analogous to those provided under Article 7, para. 1 of the Rome Convention, which enable the courts to apply overriding provisions of a law other than the lex fori or the lex causae. Indeed, the circumstances under which it would be appropriate to provide for certain rules of law other than the lex fori or the lex causae are already dealt with elsewhere in the regulations.
In the first place, as far as the choice of governing law by the parties is concerned, this problem has already been dealt with under article 6 of the present regulations (above).
In the second place, assuming that the governing law is not the law of the country where the act which created the liability was committed (such as cross-border disputes, or the lex loci being overturned in favour of the law of the place where the parties are habitually resident), Article 9 (below) requires the courts to take account of the rules of safety or conduct in force in that country.
Under these circumstances, and given that the fact that the courts may in general have to apply the overriding provisions of a law which is neither the lex fori nor the lex causae adds an element of uncertainty, which would undermine the aims of the regulations, it would seem that this possibility must be removed.
The other provisions of the draft regulations do not seem to be controversial, and so attract less comment.
Article 8. Relations with other provisions of Community law
Article 8 is intended to specify the relations between the provisions of the present draft regulations and other provisions of primary or secondary Community law. It should be remembered that the present draft regulations lay down uniform rules on the conflict of laws. In other words, they govern the selection of the national law governing a given case. On the other hand, they are not intended to govern the relations between national and Community law. On this point, it goes without saying that, if the lex causae is the law of the forum or that of another Member State, the national courts will apply the substantive provisions of Community law as being part of that law.
But we must not lose sight of the fact that some of the provisions of Community law apply explicitly or implicitly, whatever the governing law. Such provisions, as laid down in the first bullet point, may be defined as overriding rules of Community origin and assimilated in the rules covered by Article 7 of the present regulations, the only difference being that Community law obliges the courts to apply overriding rules of Community origin, whereas that law only allows the national courts to apply the overriding rules of national origin. The question as to whether a rule of primary or secondary law must apply, even if the governing law is that of a non-member state, is exclusively a matter of interpretation of Community instruments under the supervision of the Court of Justice in question, and cannot in any way be imposed by regulation.
The second bullet point deals with what might be called sectorial rules of conflict per se, in the sense that the provisions as proposed govern the choice of governing national law.
Finally, it must be recalled, ex abundante cautela, that, where a dispute arises out of the exercise of the freedoms guaranteed by the Treaty of Rome, the national courts must examine the provisions of the lex causae in the light of the principles of Community law and disregard those provisions which are not in accordance with those principles.
Article 9. Safety and conduct rules
This Article is based on the corresponding articles of the Hague Conventions on road traffic accidents and product liability. In particular, they cover the relevant provisions of public law, and penalties if any.
It will be obvious that this article only applies if the governing law is not that of the country, in which the circumstances which gave rise to the injury arose.
Article 10. Direct action against the insurers of the party at fault
Like the equivalent article of the Hague Conventions on road traffic accidents, Article 10 lays down rules governing direct action against the insurers of the party at fault, in the sense that if the lex causae provides for the possibility of initiating proceedings against those insurers directly, it is that law which governs the existence and exercise of those rights.
The injured party can only avail themselves of the latter law if the lex causae does not provide for such an option, but the law governing the insurance policy does. The scope of the insurers' liability must be governed by the law governing the policy in any case.
Article 11. Subrogation
The scope of this article is the same as that which appears in the Rome Convention (Article 13). It will in particular be invoked in cases where injuries are insured to determine if the insurers can be subrogated in the action against the guilty party.
It could also be applied to payments made by one of a number of joint and several liable parties.
Article 12. Formalities
Article 12 is inspired by Article 9 of the Rome Convention. Now, it is obvious that the concept of formal requirements plays an extremely minor role in the creation of non-contractual obligations.
On the other hand, it cannot be ruled out that a non-contractual obligation might be created or extinguished as a result of an act by one party or another. It is therefore necessary to make provision for these circumstances.
The system for which this article provides is the same as that provided for in Article 9 of the Rome Convention, to wit, the alternative application of the law of the place where the act was done and the lex causae.
The provisions of this article take up the same ideas as appear in Article 14 of the Rome Convention. As far as the burden of proof is concerned, in fact, paragraph 1 does not cover the general rules of procedural law. Rather, it covers the rules which allocate the burden of proof in matters of non-contractual liability which, by their very nature, cannot be separated from the lex causae and which constitute in fact the basic rules.
Paragraph 2 covers the admissibility of means of proof of the transactions in law laid down in article 12. It does not adopt any position on the facts of the case per se, the proof of which is generally subject to the law of the forum. The system adopted is very similar to the very liberal one of Article 14 (2) of the Rome Convention, that is, the option to choose between the law of the forum or that which governs formalities under Article 12 of the present draft.
This article defines the concept of habitual residence for companies, associations and organisations. This concept is material to the choice of law as a function of the common place of residence of the parties, as provided for by Articles 3 and 5.
The provisions of the article are similar to those of Article 4, paragraph 2 of the Rome Convention. It should be noted that, where business is conducted in more than one country, the country of habitual residence is deemed to be that where the establishment, in the operation of which the injury was caused (the culpable act) or incurred, as the case may be.
Article 15. Exclusion of referrals
This article lays down that the 'law', the application of which is prescribed by the provisions of the regulation, means the internal rules of law of the country in question, and not its rules of international private law. In doing so, the article follows the example of the Rome Convention and the Hague Conventions. This rule is justified by the fact that the provisions of the regulations recognise that a non-contractual obligation may be more closely connected with a country other than the locus delicti and thus implicitly employ the referral which might have arisen from the conflict of law rules of the locus delicti.
Article 16. Public order
The provisions of this article are identical to those of article 16 of the Rome Convention.
It should be remembered that the application of the provisions of a law designated by the regulations cannot simply be overturned if the foreign law in question is contrary to the public order of the forum in abstracto. The public order of the forum can only play a role if the actual application of the rule in question in the case concerned which has been referred to the forum would give a result which was 'manifestly incompatible' with the public order of that forum.
Article 17. Application as to time
The provisions of Article 17 exclude the regulations from having any retrospective effect. Member States may however, if they so wish, apply the provisions of the regulations to circumstances which arose before the regulations took effect as internal law.
Article 18. Non-unified systems
Under the terms of paragraph 1, if a State consists of a number of territorial units, each with its own rules, each unit will be regarded as a country for the purposes of the present regulations. Examples of such States are the United Kingdom and Australia. If an accident occurs in New South Wales, for example, the law of that territory (and not that of Australia as such) will apply.
Paragraph 2 involves the United Kingdom in particular, and covers circumstances where, for example, an accident occurs in Northern Ireland involving a party domiciled in England and another in Scotland. This situation involves a conflict of laws but, given that the situation is purely internal to the United Kingdom, that country is not under any obligation to apply the regulations in resolving it.
Article 19. Relations with existing international conventions
Article 19 allows the Member States to continue to apply the conflict of law rules as contained in the international conventions of which they are members at the time the regulations enter into force.
This applies in particular to the Hague Conventions on road traffic accidents and product liability.
This is designed to avoid a conflict between the rules which these Hague Conventions lay down and those provided for in the draft. It enables the states which are already party to those conventions not to revoke them.
There is one definite problem with this approach, in that it enables those states to use rules which might differ from those laid down by Community instruments; but the risk is mitigated insofar as, on the one hand, the substance of those rules is completely transparent and, on the other hand, where the option available to Member States to ratify those conventions, or similar conventions, unilaterally, will cease to apply once the Community instrument to be proposed is adopted.
REGULATION (EC) No. / OF THE COUNCIL
on the law of non-contractual obligations
THE COUNCIL OF THE EUROPEAN UNION
Having regard to the Treaty establishing the European Community, and Article 61 (c) of that Treaty in particular,
Having regard to the proposals of the Commission,
Having regard to the views of the European Parliament,
acting under the procedure laid down in Article 67 of the Treaty of Rome,
(1) Whereas, under Article 2 of the Treaty of Rome, the Union set itself the objective of maintaining and developing an area of liberty, security and justice; that, under Articles 61 and 65 of the Treaty of Rome, to create that space, the Council enacts measures concerning the field of judicial cooperation in civil matters with cross-border effects, insofar as is necessary to the proper operation of the single market; that, amongst other things, those measures are intended to promote the compatibility of rules applicable in Member States on conflicts of laws,
(2) And whereas, to assist in promoting the foreseeability of the outcome of disputes, the proper operation of the single market requires legal certainty and free circulation of judgments, that the conflict of law rules in force in Member States stipulate that the courts in each Member State apply the same national law, irrespective of the country to whose courts disputes are referred,
(3) And whereas the convention on the judicial competence and enforcement of judgments in civil and commercial proceedings of 26th September 1968 provides a choice of competent forums in certain cases; that that convention does not in any way affect the conflict of law rules applied by the courts referred to by virtue of its provisions,
(4) And whereas the convention on the law applicable to contractual obligations of 19th June 1980 lays down uniform rules on the law of contractual obligations, and that it is appropriate to provide uniform rules in the field of non-contractual obligations also,
(5) And whereas, on the 3rd of December 1998, the Council of Justice and Internal Affairs adopted the plan of action on the optimum modalities for the implementation of the provisions of the Treaty of Amsterdam on establishing an area of liberty, security and justice; and that it is stated therein that devising a legal instrument on the law of non-contractual obligations will be amongst the measures which would have to be taken within two years of the Treaty of Amsterdam entering into force.
(6) And whereas there is a need to provide uniform rules which apply,, irrespective of the law they designate
(7) And whereas, in criminal matters, the common law of the conflict of law rules of Member States takes the rule of the lex loci delicti commissi as the basic principle; and that, in situations where the elements are scattered amongst a number of countries, the interpretation of that rule is liable to produce varying results; and that there is a need to provide uniform rules applicable to such cross-border situations,
(8) And whereas there is a need to give the governing law a scope of application which is as wide as possible,
(9) And whereas there is a need to provide analogue rules in matters of tort,
(10) And whereas there is a need, in the interests of the autonomy of the parties, to enable them to choose the law governing a non-contractual obligation, and that there is a need to provide safeguards for the weakest parties in this respect,
(11) And whereas there is a need to state that the conflict of laws rules do not affect the application of the rules and principles of substantive Community law,
(12) And whereas there is a need to enable Member States which are party to international conventions, governing the conflict of laws in matters of non-contractual obligations in particular matters, to continue applying the provisions of those conventions,
(13) And whereas, under Articles 1 and 2 of the protocols on the position of the United Kingdom and Ireland and on the position of Denmark, those States are not involved in adopting the present regulations; and that, in consequence, the present regulations are not binding on the United Kingdom or Ireland or Denmark and do not apply in respect of them,
HAS ENACTED THE PRESENT REGULATIONS AS FOLLOWS:
Title one – scope of application
Article one – scope of application
1. The provisions of the present regulations apply to situations where there is a conflict of laws, to non-contractual obligations.
2. They do not apply:
a. To non-contractual obligations arising out of family or associated relations, including maintenance obligations insofar as there are specific rules governing them;
b. To non-contractual obligations arising out of the law of succession;
c. To obligations arising out of bills, cheques, bills to order and other negotiable instruments, insofar as the obligations arising out of those other instruments stem from their negotiable nature;
d. To the statutory personal liability of partners, executive bodies and statutory auditors of accounting documents, for the debts of a company, association or organisation;
e. To liability arising out of the exercise of public power;
f. [In respect of injury in the field of nuclear energy;]
g. [To industrial or intellectual property;]
h. To non-contractual obligations as between the settlors, trustees and beneficiaries of a trust;
i. To evidence or procedure, subject to the provisions of Article 13.
Article 2 – Universality
The law designated by the present regulations shall apply, even if it is not the law of a Member State.
Title II – Uniform rules
Non-contractual obligations arising out
of an injurious act
Article 3 – Determining the governing law
1. Non-contractual obligations arising out of injurious acts are governed by the law of the country with which they are most closely connected.
2. If the party which committed the injurious act and the injured party are habitually resident in the same country at the time the injury occurs, the presumption will be that the obligation is most closely connected with that country.
3. If the party which committed the injurious act and the injured party are habitually resident in different countries at the time the injury occurs, it is presumed that the obligation is most closely connected with the country in which the injurious act occurred or is likely to occur.
4. Without prejudice to the application of paragraph 2, if the causative act and injury do not occur in the same country, the presumption will be that the obligation is most closely connected with the country in which the injury occurred or is likely to occur.
5. If, taking the circumstances as a whole, the result is that there is no significant connection between the non-contractual obligation and the country, of which the law would be applicable under these paragraphs and, second, that there is an overwhelming connection between the obligation and another country, the presumptions of paragraphs 2 to 7 will be overturned.
6. If there is more than one injured party, the governing law will be determined separately in respect of each of them.
1. If the perpetrator of the injurious act and the injured party are habitually resident in the same country at the time the injury occurs, the law governing an unlawful act will be that of the country concerned.
2. If the perpetrator of the injurious act and the injured party are not habitually resident in the same country at that time, the law governing an unlawful act will be that of the country in which the injury occurred, irrespective of which country the act which caused the injury occurred in, and in which country or countries the indirect effects of the injury occurred.
3. If, on the other hand, the circumstances as a whole indicate that an unlawful act is more closely connected with another country, and there is no significant link between the unlawful act and the country whose law would apply under paragraphs 1 and 2, the law of that other country will apply.
A substantially closer link with another country may in particular be founded on a pre-existing relationship between the parties, such as a contract which is connected to the unlawful act in question.
4. If there is more than one injured party, the governing law will be determined separately in respect of each of them.
Article 4 – Scope of law governing non-contractual
obligations deriving from an injurious act
The law governing a non-contractual obligation under Article 3 of the present regulations will in particular govern:
1. The foundations, conditions and extent of liability, including establishing the persons liable for the acts they commit;
2. Grounds for exoneration and any limitation and distribution of liability;
3. The existence and nature of injury to be remedied;
4. Subject to the limits of the powers attributed to the courts by their procedural law, the measures which the courts can take to prevent an injury, cause it to cease or be remedied;
5. To assess the injury insofar as this is governed by the rules of law;
6. Transmitting the entitlement to relief;
7. The persons entitled to relief for the injury they have incurred;
8. Liability for the acts of another;
9. The prescriptions and forfeitures founded on the expiry of periods of limitation, including the starting time, interruption and suspension of periods of limitation.
Non-contractual obligations deriving from an act
other than an injurious act
Article 5 – Determining the governing law
1. A non-contractual obligation, arising out of an act other than an injurious act, is governed by the law of the country to which it demonstrates the closest connections.
2. If a non-contractual obligation, arising out of an act other than an injurious act, is connected to an existing relationship between the parties, the presumption is that that obligation is most closely connected to the country whose law governs that relationship.
3. Subject to the provisions of paragraph 2, if the parties are habitually resident in the same country at the time the non-contractual obligation is created, the presumption is that the latter will be most closely connected to that country.
4. Subject to the provisions of paragraphs 2 and 3, the presumption is that a non-contractual obligation founded on unjust enrichment will be most closely connected to the country in which that enrichment occurred.
5. Subject to the provisions of paragraphs 2 and 3, the presumption is that a non-contractual obligation arising out of the management of business will be most closely connected to the country in which that management was conducted.
6. The presumptions of paragraphs 2, 3, 4 and 5 will not apply if the circumstances as a whole indicate that, firstly, there is no significant connection between the non-contractual obligation and the country whose law would apply under these paragraphs and, secondly, that the obligation is overwhelmingly connected to another country.
1. If a non-contractual obligation, arising out of an act other than an injurious act, is connected to an existing relationship between the parties, it will be governed by the law of the country whose law governs that relationship.
2. Subject to the provisions of paragraph 1, a non-contractual obligation arising out of unjust enrichment will be governed by the law of the country in which that enrichment occurred.
3. Subject to the provisions of paragraph 1, an obligation arising out of the management of business will be governed by the law of the country in which that management was conducted.
4. Without prejudice to the provisions of paragraphs 2 and 3, and subject to the provisions of paragraph 1, if the parties are habitually resident in the same country at the time the non-contractual obligation is created, that obligation will be governed by the law of that country.
5. The provisions of paragraphs 1, 2, 3 and 4 will not apply if the circumstances as a whole indicate that, firstly, there is no significant connection between the non-contractual obligation and the country whose law would apply under these paragraphs and, secondly, that the obligation is overwhelmingly connected to another country.
Rules common to non-contractual obligations
arising out of an injurious act and
those arising out of an act other than an injurious act
Article 6 – Freedom of choice
1. The parties may choose the law governing a non-contractual obligation. That choice must be express, and may not affect the rights of third parties.
2. If all the other circumstances of the case were localised in a country other than that whose law was chosen at the time the obligation arose, the parties’ choice of law may not affect the application of the provisions which the law of that country does not allow to be derogated by agreement, referred to hereinafter as ‘overriding provisions’.
3. If all the other circumstances of the case were localised in one or more Member States of the European Community at the time the obligation arose, the choice of the law of a non-member state by the parties may not affect the application of the overriding provisions of Community law.
Article 7 – Policy laws
The provisions of the present regulations may not affect the application of the rules of the law of the courts governing the case, whatever the law applicable to non-contractual obligations.
Article 8 – Relations with other provisions of Community law
The present regulations do not affect the application of the provisions which are or will be contained in the Treaties establishing the European Communities or in the deeds emanating from the institutions of the European Communities and which:
- Lay down rules which apply, irrespective of which national body of law governs the non-contractual obligation in question, under these present regulations;
- Govern the conflict of laws in respect of non-contractual obligations in particular matters;
- Prevent the application of a provision or provisions of the law of the forum or the law designated by the present regulations.
Article 9 – Rules of safety and conduct
Whatever the governing law, in determining liability, account must be taken of the rules of safety and conduct in force at the place and time where the act which gave rise to the non-contractual liability occurred.
Article 10 – Direct recourse against the liable party’s insurers
1. The injured party may take action directly against the liable party’s insurers if such a right is recognised by the law governing the non-contractual obligation.
2. If that law does not admit such a right, it may be exercised if it is admitted by the law applicable to the policy.
Article 11 – Subrogation
1. If, under a non-contractual obligation, one party (the creditor) has rights in respect of another party (the debtor), and a third party is bound to disinterest the creditor or that third party has disinterested the creditor in the performance of that obligation, the law governing that third party’s obligation will determine whether that third party may exercise any or all of the rights which the creditor has over the debtor under the law governing the relations between them.
2. The same rule applies if more than one person is bound by the same obligation and the creditor was disinterested by one of them.
Article 12 – Formalities
A unilateral transaction in law in respect of a non-contractual obligation will be binding if it satisfies the formalities of the law governing the non-contractual obligation in question or of the law in which that order was given.
Article 13 – Proof
1. The law governing a non-contractual obligation under the present regulations will apply insofar as it establishes presumptions in law or allocates the burden of proof in respect of non-contractual obligations.
2. Transactions in law may be proven by any means of proof admitted by the law of the forum, or by any of the laws referred to in Article 12 under which the transaction is valid in terms of formalities, insofar as proof can be furnished by that means.
Title III – General provisions
Article 14 – Presumption of habitual residence
1. In the case of companies, associations and moral persons, their place of habitual residence will be deemed to be their head offices.
2. In cases where the act which gave rise to the non-contractual obligation was done or suffered in the course of exercising a business, the place of habitual residence will be deemed to be the principal establishment [of that business]. If there is more than one establishment, the establishment in the use of which the injurious act was done or suffered will be deemed to be the place of habitual residence.
Article 15 – Exclusion of postponement
If the present regulations prescribe that the law of a country applies, this shall be taken to mean the rules of law in force in that country, excluding the rules of international private law.
Article 16 – Public order
The application of a provision of the law designated by the present regulations may not be varied unless that application is manifestly incompatible with the public order of the forum.
Article 17 – Application as to time
The present regulations apply to non-contractual obligations arising out of acts committed after it enters into force.
Article 18 – Non-unified systems
1. If a State consists of a number of territorial entities, each of which has its own rules in respect of non-contractual obligations, each territorial entity will be deemed to be a country for the purposes of determining the governing law for the purposes of these regulations.
2. Any State in which different territorial entities have their own rules of law in respect of non-contractual obligations will not be bound to apply the present regulations to conflicts of laws involving those territorial entities alone.
Article 19 – Relations with existing international conventions
The present regulations do not affect the application of international conventions to which Member States are party at the time the present regulations are adopted and which govern conflicts of laws in respect of non-contractual obligations in specific matters.
Title IV – Miscellaneous
The present regulations will enter into force 20 days after they are adopted.
The present regulations are mandatory in all respects and applicable directly in each Member State.
Given at Brussels, the
By the Council