International Construction Law Review
CHOICE OF LAW: A HAPPY ENDING?
PHILIP BRITTON*
LLB, BCL, Visiting Professor, Centre of Construction Law and Dispute Resolution King’s College London
As readers of this Review will be aware from the article at [2008] ICLR 347 and its update at [2008] ICLR 518,1 the EC recently adopted two Regulations on choice of law under Article 65b of Title IV of the EC Treaty: Rome II (2007) on non-contractual obligations2 and Rome I (2008) on contractual obligations.3 Both are due to come into force during 2009. Rome I will supersede the Rome Convention of 1980, which became part of the law of the UK via the Contracts (Applicable Law) Act 1990.4 These new measures are of real relevance to construction, in the frequent situation where the project, works or parties have factual links with more than one legal system; and though only relevant EC Member-State courts and tribunals will be bound to apply them, they have “universal” application, so no legal system in the frame need be European. They are specially important where parties fail (or are unable) to make their own choices of applicable law, so that the default rules in the relevant Regulation come into play.
The special post-Maastricht position of the United Kingdom allows it to choose whether or not to take part in such measures. From the start its representatives opted in to Rome II but initially chose not to do so for Rome I, participating in the lengthy discussions on the text but having no vote in the Council and so not being bound by the outcome. Under the terms of the “Maastricht compromise”, such a failure to participate is never definitive; but for Rome I to become part of our law the Government had to have second thoughts and opt in after the event. In April 2008—after the Rome I text had in effect been agreed between the Council and Parliament, but before it had been formally adopted—the Ministry of Justice in London, together with its counterparts in Edinburgh and Belfast, put out for public consultation Rome I—Should the UK Opt In?
5 The paper claimed
that failing to opt in at the adoption stage allowed the UK’s representatives to influence the final text to such an extent that it was now in the UK’s interests to sign up to it: in the topsy-turvy world of diplomatic horse-trading in Brussels, this might just be true.
* Philip Britton, LLB, BCL, is a former Director, now Visiting Professor, Centre of Construction Law and Dispute Resolution, King’s College London.
1 For an updated and consolidated version of both ICLR articles, see Philip Britton, “The Right Law for Construction? Choice of Law: Rome I and Rome II” (Society of Construction Law Paper 148, 2008).
2 Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the Law applicable to Non-Contractual Obligations (Rome II), OJ 2007 L199/40 (31 July 2007).
3 Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the Law applicable to Contractual Obligations (Rome I), OJ 2008 L177/6 (4 July 2008).
4 In full, the Convention on the Law Applicable to Contractual Obligations, implemented for the UK ten years later, but in time for the coming into force of the Convention in 1991, by the Contracts (Applicable Law) Act 1990, which includes the Rome Convention text.
5 Ministry of Justice, Consultation Paper CP 05/08, “Rome I—Should the UK Opt In?” (April 2008), downloadable from www.justice.gov.uk. Contract law is a devolved matter—hence the involvement of Belfast and Edinburgh.
In July 2008, after the responses to the consultation were in, but less than a month after Rome I had been adopted, the UK Government gave formal notice that it wished to participate in the Regulation; in response, on 22 December 2008 the Commission adopted a Decision to extend the Regulation’s application accordingly.6 The Regulation will therefore come into force in English, Scots and Northern Irish law on 17 December 2009, the same date as in all other participating Member States. As a result, only Denmark will remain on the outside looking in, continuing to apply the Rome Convention.7
In January 2009 the Ministry of Justice published a summary of the responses to the UK consultation, showing a clear consensus supporting the Government’s decision: not just to opt in to the core of Rome I but also to use the option to extend its application to intra-UK conflicts, just like the earlier Rome Convention and (presumably) Rome II also.8 Some of the rather few reported UK construction cases on choice of law have concerned a choice between English and Scots law, in tort or delict as well as in contract9; so the Government stance on this extension will have a real impact on how frequently issues on both the new Regulations get before the UK courts—and, derivatively, to Luxembourg and back via the “preliminary ruling” procedure before the European Court of Justice.10
6 Commission Decision 2009/26/EC of 22 December 2008 on the request from the United Kingdom to accept Regulation (EC) No 593/2008 of the European Parliament and the Council on the Law applicable to Contractual Obligations (Rome I) (notified under document number C(2008) 8554), OJ 2009 L10/22 (15 January 2009).
7 Although the main operative provisions of the Regulation cannot apply to Denmark, references to Member States in its Articles 3(4) and 7 mean all Member States. If Denmark wished to align its law with Rome I, it could adopt a “copy-statute” approach, legislating domestically in the same terms, omitting or modifying any Rome I provisions which it finds unacceptable. Such a move would ensure that Danish courts and tribunals apply in parallel the same substantive principles (more or less) as judges do in the rest of the EU. However, national legislation could not unilaterally create the procedural links from Danish courts and tribunals to the ECJ (and back again) which are an integral part of the Regulation’s machinery, though Denmark could direct its own judges to “take account of” relevant ECJ case law. Full implementation of Rome I (or II) in Denmark would require a separate agreement between Denmark and the EC, as is already in place for Brussels I (Council Regulation (EC) 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, OJ 2001 L12/1, 16 January 2001).
8 Ministry of Justice, “Response to Consultation CP(R) 05/08, ‘Rome I—Should the UK Opt In?”’ (January 2009), downloadable from www.justice.gov.uk
9 E.g. Ennstone Building Products Ltd v. Stanger Ltd [2002] EWCA Civ 916, [2002] 1 WLR 3059, [2002] BLR 347, discussed in “The Right Law for Construction? Choice of Law and European Reform” [2008] ICLR 347 at pp 364–369; also Whitworth Street Estates (Manchester) Ltd v. Miller [1970] AC 583 (HL), a pre-Rome Convention case discussed in Britton, “Choice of Law in Construction Contracts: the View from England” [2002] ICLR 242 at p. 258.
10 Under Article 234 of the Treaty Establishing the EC (TEC), Measures like Rome I and Rome II, adopted under Title IV powers, at present enjoy reduced scope for review or interpretation by the ECJ by way of preliminary ruling, Article 68 (1) of the TEC permitting only national courts or tribunals “against whose decisions there is no judicial remedy under national law” to refer questions to Luxembourg. This restriction will end if (when?) the Treaty of Lisbon is implemented.