EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 15.12.2005 
COM(2005) 650 final 
2005/0261 (COD)   
Proposal for a 
REGULATION OF THE EUROPE AN PARLIAMENT AND THE COUNCIL 
on the law applicable to cont ractual obligations (Rome I) 
(presented by the Commission) 
 
EN 2   EN EXPLANATORY MEMORANDUM  
1. C ONTEXT OF THE PROPOSAL  
1.1. Background and objective  
The Brussels Convention of 1968 on jurisdicti on and the recognition and enforcement of 
judgments in civil and commercial matters cont ains options enabling a claimant to choose 
between specified courts, which generates the risk  that a party will choose the courts in one 
Member State rather than another simply because  the law is more favourable to his cause. To 
reduce the risk, the Member States, acting on the same legal basis, signed in 1980 the Rome 
Convention on the law applicable to contractual obligations.  
The Amsterdam Treaty gave a new impetus to pr ivate international law of Community origin. 
That was the legal basis on which the Community  adopted what is known as the ”Brussels I” 
Regulation1 to replace the Brussels Convention of 1968 in relations between Member States. 
On 22 July 2003 the Commission presented a propos al for a Regulation on the law applicable 
to non-contractual obl igations (Rome II).2 The Rome Convention is  now the only Community 
private international law instrument that remain s in international treaty form. The drawbacks 
that this represents are all th e less acceptable as Brussels I,  Rome II and the Rome Convention 
of 1980 form an indissoluble set of Community rules of private international law relating to 
contractual and non-contractual obliga tions civil and commercial matters. 
1.2. Grounds for the proposal 
The importance of compatibility between conflict- of-laws rules for achiev ing the objective of 
mutual recognition of judicial decisions was acknowledged in the Vienna Action Plan.3 The 
2000 Mutual Recognition Programme4 sets forth measures to harmonise the conflict-of-laws 
rules as accompanying measures to facilitate the implementation of the mutual recognition 
principle. More recently, in the Hague Programme, the European Council5 restated that work 
on the conflict-of-laws rules regarding cont ractual obligations (Rome I) should be “ actively 
pursued ”. The Council and Commission action plan to give effect to that programme provides 
for a Rome I proposal to be adopted by 2005.6 
                                                 
1 Council Regulation (CE) No 44/2001 of 22.12.2000, OJ L 12, 16.1.2001, p. 1. 
2 COM (2003) 427 final. 
3 OJ C 19, 23.1.1999, p. 1, point 40 (c). 
4 OJ C 12, 15.1.2001, p. 8. 
5 The Hague Programme, Presidency Conclusions, 5.11.2004, point 3.4.2. 
6 Point 4.3.c). 
 
EN 3   EN 2. O UTCOME OF CONSULTATIONS OF INTEREST ED PARTIES AND OTHER INSTITUTIONS 
- IMPACT ANALYSIS  
This proposal has been preceded by extensive consultation of the Memb er States, the other 
institutions and civil soci ety, in particular via the Green Paper of 14 January 20037 and the 
public hearing on it in Brussels  on 7 January 2004. The 80 or so replies to the Green Paper,8 
received from governments, un iversities, the legal professi ons and a variety of economic 
actors, confirmed that the Rome  Convention is not only a widely -known instrument but also 
highly appreciated in relevant ci rcles, who by a large majority supported its conversion into a 
Community Regulation while also confirming the n eed to modernise certain of its rules. On 4 
and 5 November 1999 the Commission also or ganised a public hear ing on Electronic 
Commerce: jurisdiction and applicable law,  receiving about 75 written contributions. 
In their Opinions dated 29 January9 and 12 February 200410 respectively, the European 
Economic and Social Committee and the Europ ean Parliament came out in favour of 
converting the Convention into a Commun ity Regulation and modernising it.  
On 17 February 2005, the Member States’ experts met to consider a pr eliminary draft Rome 
I Regulation prepared in the Commission.  
Given the limited impact of this proposal on the existing body of legislation and the relevant 
circles, the Commission has deci ded to refrain from making a formal impact assessment. The 
proposal does not set out to establish a new se t of legal rules but to  convert an existing 
convention into a Community instrument. But so me of the amendments made will help to 
modernise certain provisions of the Rome Convention and make them clearer and more 
precise, thus boosting certainty as to the law with out bringing in new elements such as would 
substantially change the existing legal situat ion. All the changes proposed here are based on 
the results of the Commission’s extensive consultations, which were widely accessible to the public. For further details of the nature and impact of the changes, see the specific 
commentaries on the individual articles (point 4.2 below). 
3. L
EGAL ASPECTS OF THE PROPOSAL  
3.1. Legal basis 
Since the Amsterdam Treaty entered into force,  the conflict-of-laws rules have come under 
Article 61(c) of the TEC. Under Article 67 of the TEC, as amended by the Treaty of Nice, the 
Regulation is to be adopted by the codecision procedure of Article 251 of the TEC. Article 
65(b) provides: “ Measures in the field of judicial cooperation in civil matters having cross-
                                                 
7 COM (2002) 654 final. 
8 Accessible at:  
http://europa.eu.int/comm/justice_home/news/cons ulting_public/rome_i/news_ summary_rome1_en.htm 
9 Opinion of the European Economic and Social Committee on the Green Paper on the conversion of the 
Rome Convention of 1980 on the law applicable to contractual obligations into a Community 
instrument and its modernisation. INT/176, 29.01.2004 
10 European Parliament Resolution on the prospects for approximating civil procedural law in the 
European Union (COM(2002) 654 - COM(2002) 746 – C5-0201/2003 – 2003/2087(INI)), A5-
0041/2004. 
 
EN 4   EN border implications, to be taken in accordance with Article 67 and in so  far as necessary for 
the proper functioning of the internal market, sh all include: … promoting the compatibility of 
the rules applicable in the Member States conc erning the conflict of laws and of jurisdiction ”. 
The Community legislature thus has some room  for manoeuvre in deciding whether a measure 
is necessary for the proper functioning of the internal market. Harmonisation of the conflict-
of-laws rules relating to contractual obligations  is necessary for the proper functioning of the 
internal market. 
Title IV of the TEC, which is the basis for the matters covered by this proposal, does not 
apply to Denmark by reason of the Protocol app licable to it. Nor does it apply to Ireland and 
the United Kingdom, unless those count ries exercise their right to opt into this initiative as 
provided by the Protocol annexed to the Treaty.  
3.2. Principles of subsidiarity and proportionality 
The objective of the proposal – the adoption of  uniform rules on the law applicable to 
contractual obligations to ma ke judicial decisions more easily foreseeable – cannot be 
adequately attained by the Member States, w ho cannot lay down uniform Community rules, 
and can therefore, by reason of its effects th roughout the Community, be better achieved at 
Community level, the Community  can take measures, in accord ance with the subsidiarity 
principle set out in Article 5 of the Treaty. And the measures respect the proportionality 
principle set out in that Ar ticle, by increasing certainty in the la w without requiring 
harmonisation of the substantive rules of domestic law. 
Point 6 of the Protocol on the application of th e principles of subsidia rity and proportionality 
provides that “ Other things being equal, directives should be preferre d to regulations. .”. For 
this proposal, however, the Regul ation would seem to be prefer able as its provisions lay down 
uniform rules on the applicable law that are de tailed, precise and uncondi tional and require no 
measures for their transposal into domestic law.  If the Member States enjoyed some room for 
manoeuvre in transposing, the uncertainty as to the law which the aim is to abolish would be 
restored.  
4. A RTICLE -BY-ARTICLE COMMENTARY  
4.1. Adaptations linked to the nature of the instrument 
Apart from the changes of substance (point 4.2 ), the obvious differenc es between the legal 
nature of the Rome Conventi on (the “Convention”) and the Re gulation warrant a number of 
adaptations: apart from the purely formal adapta tions, there are those that allowed contracting 
States to enter reservations (article 22), to  adopt new conflict rules after a notification 
procedure (article 23) or the limited duration of  the Convention (article 30). Likewise the two 
Protocols annexed to the Convention concerni ng interpretation by the Court of Justice are 
now superfluous.  
4.2. Adaptations to modernise the Rome Convention rules 
Given the similarity between the Convention and the proposed Regulation, only changes of 
substance from the Convention are considered here.  
Article 1 – Scope 
 
EN 5   EN The proposed changes seek to align the scope of the future Rome I instrument on that of the 
Brussels I Regulation and to reflect the work done by the Council and the European 
Parliament on the proposed Rome II Regulat ion. Point (e) confirms the exclusion of 
arbitration agreements and agreements on the choi ce of court as the majority of the replies to 
the Green Paper felt that the former was already covered by satis factory international 
regulations and that the question of the law ap plicable to the choice-of-forum clause should 
ultimately be settled by the Brussels I Regulation.  Point (f) combines the rules of point (e) and 
the company-law aspects of point (f) of the Conve ntion. The first senten ce of point (f) of the 
Convention has been deleted as there is a sp ecific rule on agency (A rticle 7). Point (i) 
proposes a specific rule for pre-contractual obl igations which, according to the contributions, 
confirms the analysis of the majority of legal systems in the Union and the restrictive concept of the contract adopted by the Court of Justice in its judgmen ts concerning Article 5(1) of 
the Brussels I Regulation: for the purposes of pr ivate international law, they would be treated 
as a matter of tort/delict and governed  by the future Rome II instrument. 
Article 2 – Application of law of non-member States 
The discussions of the Rome II draft revealed that the title of Article 2 of the 
Convention (“ Universal application ”) was a source of confusi on: it has therefore been 
changed for the sake of clarity. 
Article 3 – Freedom of choice 
The proposed changes to the second and third subpa ragraphs of paragraph 1 require the courts 
to ascertain the true tacit will of the parties rather than a pur ely hypothetical will: they suggest 
that the parties’ conduct be take n into account and seek to clarif y the impact of the choice of 
court, so as to reinforce the foreseeability of the law.  
To further boost the impact of the parties’ will , a key principle of the Convention, paragraph 2 
authorises the parties to choos e as the applicable law a non-S tate body of law. The form of 
words used would authorise the choi ce of the UNIDROIT principles, the Principles of 
European Contract Law  or a possible future optional Comm unity instrument, while excluding 
the lex mercatoria , which is not precise enough, or pr ivate codifications not adequately 
recognised by the international community. Like Article 7(2) of the Vi enna Convention on the 
international sale of goods, the text shows what  action should be taken when certain aspects 
of the law of contract are not expressly se ttled by the relevant body of non-State law.  
Paragraph 4 addresses the issue of  fraudulent evasion of the law,  referring not only to binding 
international provisions within the meaning of Article 8 but al so the mandatory provisions in 
the domestic law of a legal system. Paragrap h 5 aims to prevent fraudulent evasion of 
Community law. 
Article 4 –Applicable law in the absence of choice 
The rule in the Convention, whereby the applicable  law is the law of the place where the party 
performing the service characterising the contract  has his habitual residence, is preserved, but 
the proposed changes seek to  enhance certainty as to the law by converting mere 
presumptions into fixed rules and abolishing the exception clause. Since the cornerstone of 
the instrument is freedom of choice, the rules applicable in the absen ce of a choice should be 
as precise and foreseeable as possible so that th e parties can decide whet her or not to exercise 
their choice.  
 
EN 6   EN Regarding the solutions for the different categori es of contracts, only those proposed at points 
(g) and (h) have come up for discussion and prom pted court decisions in the Member States in 
relation to determination of the characteristic performance. The solutions are based on the fact 
that Community law seeks to protect the franchis ee and the distributor as the weaker parties.  
Paragraph 2 retains the characteristic performa nce criterion for contracts for which paragraph 
1 lays down no special rule, such as complex cont racts that are not easy to categorise or 
contracts involving mutual perf ormance by the parties in term s that can be regarded as 
characteristic on both sides. 
Article 5 – Consumer contracts 
Paragraph 1 proposes a new, simp le and foreseeable conflict rule consisting of applying only 
the law of the place of the consumer’s habitual residence, without affecting the substance of 
the professional’s room for manoeuvre in draw ing up his contracts. The solution adopted in 
the Convention was widely criticised in the re sponses to the Green Paper as it often produced 
hybrid solutions in which the la w applicable to the profession al and the mandatory provisions 
of the law applicable to the consumer were applie d in parallel. In the event of a dispute, this 
complex solution entails additiona l procedural costs that are all the less justified as the 
consumer’s claim will tend to be quite small. Th ere are two possible solutions to prevent this 
hybrid situation – full applica tion of the law applicable to  the professional or the law 
applicable to the consumer – only the latter would be truly compatible with the high level of protection for the consumer demanded by the Treat y. It also seems fair in economic terms: a 
consumer will make cross-border purchases only occasionally whereas most traders operating across borders will be able to spread the cost of learning about one or more legal systems over 
a large range of transactions. Finally, in practice this solutio n does not substantially modify 
the situation of the professional, for whom the initial difficulty in draf ting standard contracts 
is to comply with the mandatory provisions of  the law in the country of consumption; under 
the Convention, the mandatory provisions are alr eady those of the country of the consumer’s 
habitual residence. Regarding ot her clauses, which the parties ar e free to draft as they wish, 
the freedom of the parties to draf t their own contract is the rule  that continues to prevail; it 
therefore matters little whet her they are governed by the law of one or other party.  
Paragraph 2
 specifies the conditions for applying the special rule. The first subparagraph now 
recalls that the consumer’s cont racting partner, a concept defi ned in some detail by the Court 
of Justice, is a professional. As  requested in the great  majority of contributions in response to 
the Green Paper, the second subpa ragraph replaces the conditions of Article 5(2) and (4)(b) of 
the Convention by the targeted activity  criterion, already present in Article 15 of the Brussels 
I Regulation to take account of developments  in distance selling techniques without 
substantially changing the scope of the special  rule. When the Brussels I Regulation was 
adopted, a joint declaration by the Council and the Commission11 specified that, for the 
consumer protection provisions to be applicab le, it was not enough for a firm to target its 
activities on the Member State where the consum er was domiciled a contract must also have 
been concluded in the exercise of his trade or profession. “ The mere fact that an Internet site 
is accessible is not sufficient for Article 15 to be applicable, although a factor will be that this 
Internet site solicits th e conclusion of distance contracts and t hat a contract has actually been 
concluded at a distance, by whatever means. In this respect, the language or currency which 
a website uses does not constitute a relevant factor ”. The sites to which this declaration refers 
                                                 
11 Accessible at: http://europa.eu.int/comm/justi ce_home/unit/civil/justciv_conseil/justciv_en.pdf. 
 
EN 7   EN are not necessarily interactive sites: a site inviting buyers to fax an order aims to conclude 
distance contracts. On the other hand, a site wh ich offers information to potential consumers 
all over the world but refers them to local dist ributor or agent for the purposes of concluding 
the actual contract does not aim to conclude distance contracts.  Unlike Article 5(2) of the 
Convention, the proposed Regulation does not re quire the consumer to have done the acts 
needed to conclude the contract in the countr y of his habitual residence, as this is a 
superfluous condition in terms of contracts conc luded via the Internet. On the other hand, the 
last subparagraph of this  paragraph brings in a safeguard clau se to protect the professional, for 
example where he has agreed to enter into a co ntract with a consumer  who has lied about his 
habitual residence; for a contra ct concluded via the Internet, it will up to the professional to 
ensure that his standard form makes it possible to identify where the consumer lives. 
The proposed Regulation no longer  contains a list of contract s to which the special rule 
applies; its material scope is accordingly ex tended to all contracts with consumers except 
those expressly excluded by paragraph 3.  
Article 6 – Individual employment contracts  
The basic rule in paragraph 2( a) has been amplified and th e reference is now to the “ country 
in or from which …” to take account of the law as stated  by the Court of Jus tice in relation to 
Article 18 of the Brussels I Regulation and its broad interpretation of the habitual place of 
work. This change will make it possible to ap ply the rule to personnel working on board 
aircraft, if there is a fixed base from whic h work is organised and where the personnel 
perform other obligations in re lation to the employer (registration, safety checks). Paragraph 
2(b) will thus apply more rarely. The text then provides additional guidance as to whether an employee posted abroad is temporarily employe d there, though there is no rigid definition. 
The courts are to have regard to the intentions of the parties.  
Article 7 – Contracts concluded by an agent 
Among the three legal relationships that arise from a contract concluded by an agent – 
between principal and agent, between agent an d third party and between principal and third 
party – only the first two are covered by the Co nvention. The question of the agent’s powers 
is excluded by Article 1(2)(f); the reasons for the exclusion are the di versity of the national 
conflict rules when the Conven tion was negotiated and the exis tence of the Hague Convention 
of 14 March 1978 on the law applicable to agenc y. As only three Member States have signed 
and/or ratified the Convention and national solu tions have come closer into line with each 
other, the exclusion is no l onger warranted. The proposed Regul ation brings together in a 
single Article all the ru les governing legal relationship ar ising from agency contracts.  
Article 8 – Mandatory provisions 
Paragraph 1 proposes a definition of internatio nal mandatory provisions for the purposes of 
Article 8 which is inspired by th e Court of Justice’s judgment in Arblade .
12 Paragraph 31 of 
that judgment holds that the f act that national rules are cate gorised as mandatory provisions 
legislation does not mean that they are exempt  from compliance with the provisions of the 
Treaty: the considerations underlying such natio nal legislation can be taken into account by 
Community law only in terms of the exceptions  to Community freedom s expressly provided 
                                                 
12 Cases C-369/96 and C-374/96 (judgment given on 23.11.1999). 
 
EN 8   EN for by the Treaty. Paragraph 3 specifies the criter ia that may be used by the courts to decide 
whether it should apply the mandatory provisions of another Member State. The replies to the 
Green Paper having enabled decisions referri ng to the concept of foreign mandatory 
provisions, including those of the Member States that had entere d reservations on Article 7(1) 
of the Convention, to be identif ied, the utility of the rule w ould seem to be confirmed, 
especially as the Brussels I Regulation so metimes provides for alternative grounds of 
jurisdiction; it is therefore essential in a genuine European justice area for the courts to be able to have regard to another Member Stat e's mandatory provisions where there is a close 
connection with the case and wh ere a court action has already b een brought by the claimant.  
Article 10 – Formal validity 
Given the growing frequency of distance cont racts, the rules in the Convention governing 
formal validity of contracts are now  clearly too restrictive. To f acilitate the formal validity of 
contracts or unilateral acts, further alternativ e connecting factors are introduced. The specific 
rules for contracts concluded by an agent have been incorporated in paragraphs 1 and 2.  
Article 13 – Voluntary assignmen t and contractual subrogation 
Voluntary assignment and contractual subroga tion perform a similar economic function and 
are now covered by a single Article. Paragraph 3 introduces a new conflict rule relating to the 
possibility of pleading an assignment of a claim against a third party; the solution is the one 
recommended by the great majority of respon dents, which was also adopted in the 2001 
UNCITRAL Convention on the assignment of receivables in international trade. 
Article 14 – Statutory subrogation  
Voluntary subrogation is now covered by Article 13, so Article 14 applies solely to statutory 
subrogation as provided, for instance, where an insurer who has compensated a person who 
has suffered a loss is subrogated to the victim’s  rights against the person who caused the loss. 
The amendment reflects the work done by the Council and the European Parliament on the 
Rome II proposal to explain th is mechanism, unknown in certain legal systems, in terms that 
are easier to understand. 
Article 15 – Multiple debtors 
The amendment reflects the same work so as  to cover subrogation and multiple debtors by 
two separate provisions and present the conflict rules relating to multiple debtors in simpler 
terms. The final sentence clarifies the situa tion of a debtor enjoying special protection. 
Article 16 – Statutory offsetting 
The contributions confirmed the analysis in the Green Paper regarding the usefulness of a rule 
governing statutory offsetting, give n that contractual offsetting is  by definition subject to the 
general rules in Articles 3 and 4. The aim of th e solution adopted here is to make offsetting 
easier while respecting the legitim ate concerns of the person who did not take the initiative. 
Article 18 – Assimilation  to habitual residence 
Like the Rome II proposal, Article 18 contains  a definition of “habitual residence”, in 
particular for legal persons.  
 
EN 9   EN Article 21 – States with mo re than one legal system 
Where a State consists of several territorial  units each with its own substantive law of 
contractual obligations, this Re gulation must also apply to c onflicts of laws between those 
territorial units so as to ensure foreseeabi lity and certainty on th e law and the uniform 
application of European rules to all conflict situations. 
Article 22 – Relationship with other provisions of Community law 
Like Article 20 of the Convention, Article 22 determines the relationship with other 
provisions of Community law. Point a) covers the conflict-of-laws rules in instruments of 
Community secondary legislation in the specific subj ect-areas listed in Annex 1. The purpose 
of point b) is to secure consistency with a po ssible optional instrument in the context of the 
European Contract Law project. The relatio nship between the proposed Regulation and the 
rules to promote the smooth ope ration of the internal market is governed by point c). 
Article 23 – Relationship with existing international conventions  
The purpose of the proposed amendments is to strike a balance between compliance with the 
Member States’ international commitments and the objective of establishing a genuine 
European judicial area while enhancing the transparency of  the body of law in force by 
publishing the conventions to which the Member States are Parties. Paragraph 2 sets out the 
basic rule that intern ational conventions take preceden ce over the proposed Regulation. But 
there is an exception where at the time of conclusi on of the contract all ma terial aspects of the 
situation are located in one or more Member St ates. The co-existence of  two parallel schemes 
– application of conventions rule s for Member States which have  ratified and application of 
the proposed regulation elsewhere – would be contrary to the smooth operation of the internal 
market. Paragraph 3 specifically refers to bi lateral conventions conc luded between the new 
Member States.  
 
EN 10   EN 2005/0261 (COD) 
Proposal for a 
REGULATION OF THE EUROPE AN PARLIAMENT AND THE COUNCIL 
on the law applicable to cont ractual obligations (Rome I) 
THE EUROPEAN PARLIAMENT AND THE CO UNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the Eu ropean Community, and in particular Articles 
61(c) and the second indent of Article 67(5) thereof, 
Having regard to the proposal from the Commission13, 
Having regard to the Opinion of the European Economic and Social Committee14, 
Acting in accordance with the procedure provided for by Article 251 of the Treaty15, 
Whereas: (1) The Union has set itself the objective of es tablishing an area of freedom, security and 
justice. To that end the Community must  adopt measures relating to judicial 
cooperation in civil matters w ith a cross-border impact to the extent necessary for the 
proper functioning of the internal mark et, including measures promoting the 
compatibility of the rules applicable in th e Member States concerning the conflict of 
laws. 
(2) For the purposes of effectively impl ementing the relevant provisions of the 
Amsterdam Treaty, the Council (Justice a nd Home Affairs) on 3 December 1998 
adopted a plan of action on how best to implement the provisions of the Treaty of 
Amsterdam on an area of freedom, security and justice,
16 stressing the importance of 
promoting the compatibility of conflict-of-law rules in order to attain the objective of mutual recognition of judgments and calli ng for the revision, where necessary, of 
certain provisions of the Convention on the Law applicable to c ontractual obligations, 
taking into account special provisions on c onflict-of-law rules in other Community 
instruments. 
(3) The Tampere European Council on 15 and 16 October 1999 approved the principle of 
mutual recognition of judgments as a priority matter in the establishment of a European judicial- area. The programme of measures for implementation of the 
principle of mutual recognition of d ecisions in civil and commercial matters
17 
                                                 
13 OJ C , , p. . 
14 OJ C , , p. . 
15 OJ C , , p. . 
16 OJ C 19, 23.1.1999, p. 1. 
17 OJ C 12, 15.1.2001, p. 1. 
 
EN 11   EN specifies that the accompanying measures re lating to harmonisation of conflict-of-law 
rules actually do help facil itate the mutual recognition of judgments. In the Hague 
Programme,18 the European Council restated th at work on the conflict of laws 
regarding contractual obligations  should be actively pursued. 
(4) The proper functioning of the internal market creates a need, in order to improve the 
predictability of the outc ome of litigation, certainty as to the law and the free 
movement of judgments, for the rules of c onflict of laws in the Member States to 
designate the same national law irrespective of the country of th e court in which an 
action is brought. For the same reasons there is a need to achieve the greatest harmony 
between three instruments – this Regulati on, Council Regulation (EC) No 2001/44 of 
22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“Brussels I”)
19 and Parliament and Council 
Regulation (EC) No […] on th e law applicable to non-cont ractual obligations (“Rome 
II”). 
(5) The concern for transparency in Commun ity legislation is such that the largest 
possible number of conflict-of-laws rules should be brought together in a single 
instrument or at least that this Regulation should contain a list of special rules laid 
down by sectoral instruments. 
(6) The scope of the Regulation must be determin ed in such a way as to be consistent with 
Regulation (EC) No 44/2001 and Parliament and Council Regulation (EC) No […] on 
the law applicable to non-contractual obligations (“Rome II”). 
(7) Freedom for the parties to choose the appli cable law must be one of the cornerstone of 
the system of conflict-of-laws rules in  matters of contra ctual obligations.  
(8) To contribute to the general objective of the instrument – certainty as to the law in the 
European judicial area – the conflict rules must be highly foreseeable. But the courts 
must retain a degree of  discretion to determine the law that is most closely connected 
to the situation in a limite d number of hypothetical cases. 
(9) As regards contracts concl uded with parties regarded as  being weaker, those parties 
should be protected by conflict ru les that are more favourable to their intere sts than the 
general rules.  
(10) With more specific reference to consumer  contracts, the conflict rule must make it 
possible to cut the cost of settling dis putes on what are commonly relatively small 
claims and to take account of the deve lopment of distance-selling techniques. 
Harmony with Regulation (EC) No 44/2001 requires both that  there be a reference to 
the concept of “targeted activ ity” as a condition for applyi ng the consum er-protection 
rule and that the concept be interpreted ha rmoniously in the two instruments, bearing 
in mind that a joint declar ation by the Council and the Commission on Article 15 of 
Regulation No 44/200120 states that “ for Article 15(1)(c) to be applicable it is not 
sufficient for an undertak ing to target its activities at the Member State of the 
                                                 
18 Annex 1 to Presidency Conclusions, 5.11.2004. 
19 OJ L 12, 16.1.2001, p. 1. Regulation as last amended by Regulation (EC) No 2245/2004 (OJ L 381, 
28.12.2004, p. 10). 
20 Accessible at: http://europa.eu.int/comm/justi ce_home/unit/civil/justciv_conseil/justciv_en.pdf. 
 
EN 12   EN consumer’s residence, or at a number of Me mber States including that Member State; 
a contract must also be  concluded within the framework of its activities ”. The 
declaration also states that ” the mere fact that an Internet  site is accessible is not 
sufficient for Article 15 to be applicable, although a factor will be that this Internet 
site solicits the conclusion of distance cont racts and that a contract has actually been 
concluded at a distance, by whatever means. In this respect, the language or currency 
which a website uses does not constitute a relevant factor .” 
(11) Regarding individual employment contract s, the conflict rule should make it possible 
to identify the centre of gravity of the employment relations hip, looking beyond 
appearances. This rule does not prejudge the application of the ma ndatory rules of the 
country to which a worker is posted in accordance with Directive 96/71/EC of 16 
December 1996 concerning the posting of work ers in the framework of the provision 
of services.21 
(12) Regarding contracts concl uded by agents, conflict rules s hould be laid down to govern 
the three legal relationships between the pr incipal, the agent and the third party. A 
contract concluded between the principal a nd the third party would remain subject to 
the general rules of this Regulation. 
(13) Respect for the public policy ( ordre public ) of the Member States requires specific 
rules concerning mandatory rules and the exception on grounds of public policy. Such 
rules must be applied in a manner compatible with the Treaty. 
(14) For the sake of certainty as to the law there should be a clear definition of habitual 
residence, in particular for bodies corpor ate. Unlike Article 60(1)(c) of Regulation 
(EC) No 44/2001, which establishes three cr iteria, the conflict-of-laws rule should 
proceed on the basis of a single criterion;  otherwise, it would remain impossible for 
parties to foresee the law a pplicable to their situation. 
(15) The relationship between this Regulati on and certain other provisions of Community 
law should be spelled out. 
(16) Respect for international commitments en tered into by the Member States means that 
this Regulation should not affect conventions relating to specific matters to which the 
Member States are parties. However, where at the time of conclusion of the contract 
material aspects of the situation are loca ted in one or more Member States, the 
application of certain intern ational conventions to which only some of the Member 
States are Parties would be contrary to th e objective of a genuine  European judicial 
area. The rule set out in this Regulation should accordingly be applied. To make the 
rules easier to read, the Commission will publis h the list of the relevant conventions in 
the Official Journal of the European Union  on the basis of information supplied by the 
Member States. 
(17) Since the objective of the proposed ac tion, namely better foreseeability of court 
judgments requiring genuinely uniform rule s on the law applicable to contractual 
obligations determined by a mandatory a nd directly applicable Community legal 
instrument, cannot be adequately attained  by the Member States, who cannot lay down 
                                                 
21 OJ L 18, 21.1.1997, p. 1. 
 
EN 13   EN uniform Community rules, and can therefore,  by reason of its effects throughout the 
Community, be better achie ved at Community level, the Community can take 
measures, in accordance with the subsidiari ty principle set out in Article 5 of the 
Treaty. In accordance with the proportionality  principle set out in that Article, a 
Regulation, which increases certainty in the law without requiring harmonisation of 
the substantive rules of domestic law, doe s not go beyond what is necessary to attain 
that objective. 
(18) [In accordance with Article 3 of the Pr otocol on the position of the United Kingdom 
and Ireland, annexed to the Treaty on Europ ean Union and the Treaty establishing the 
European Community, these Member States have  stated their intention of participating 
in the adoption and application of this Regul ation. / In accordance with Articles 1 and 
2 of the Protocol on the position of the United Kingdom and Ireland, annexed to the 
Treaty on European Union and the Treaty establishing the European Community, 
these Member States are not participating in the adoption of this Regulation, which 
will accordingly not be binding on those Member States.] 
(19) In accordance with Articles 1 and 2 of  the Protocol on the position of Denmark, 
annexed to the Treaty on European Union a nd the Treaty establis hing the European 
Community, that Member State is not particip ating in the adoption of this Regulation, 
which will accordingly not be binding on that Member State, 
HAVE ADOPTED THIS REGULATION: 
Chapter One – Scope 
Article 1 – Scope 
1. This Regulation shall apply, in any situation involving a conflict of laws, to 
contractual obligations in ci vil and commercial matters.  
It shall not extend, in par ticular, to revenue, customs or administrative matters. 
2. The Regulation shall not apply to: (a) questions involving the stat us or legal capacity of natu ral persons, without prejudice 
to Article 12; 
(b) contractual obligations re lating to a family relationship or a relationship which, in 
accordance with the law applicable to it, ha s similar effects, including maintenance 
obligations; 
(c) obligations arising out a matrimonial re lationship or a proper ty ownership scheme 
which, under the law applicable to it, has similar effects to a marriage, wills and successions; 
(d) obligations arising under bi lls of exchange, cheques and promissory notes and other 
negotiable instruments to the extent that the obligations under such other negotiable 
instruments arise out of their negotiable character; 
 
EN 14   EN (e) arbitration agreements and agreements on the choice of court; 
(f) questions governed by the law of companies and other bodies corporate or 
unincorporate such as the creation, by re gistration or otherwise, legal capacity, 
internal organisation or winding up of companies and other bodies corporate or 
unincorporate, the personal liability of officers and members as such for the 
obligations of the company or body and th e question whether a management body of 
a company or other body corporate or uni ncorporated can bind the company or body 
in relation to third parties; 
(g) the constitution of trusts and the re lationship between settlers, trustees and 
beneficiaries; 
(h) evidence and procedure, w ithout prejudice to Article 17; 
(i) obligations arising out of a pre-contractual relationship. 
3. In this Regulation, the term “Member State” shall mean Member States with the 
exception of Denmark [,Ireland and the United Kingdom]. 
Article 2 – Application of law of non-member States 
Any law specified by this Convention shall be applied whether or not it is the law of a 
Member State. 
Chapter II –Uniform rules 
Article 3 – Freedom of choice 
1. Without prejudice to Articles 5, 6 and 7, a contract shall be governed by the law 
chosen by the parties. 
The choice must be expressed or  demonstrated with reasonable certainty by the terms of the 
contract behaviour of the parties or the circumstan ces of the case. If the parties have agreed to 
confer jurisdiction on one or more courts or  tribunals of a Member State to hear and 
determine disputes that have arisen or may ar ise out of the contract, they shall also be 
presumed to have chosen the law of that Member State. 
By their choice the parties can select the law a pplicable to the whole or  a part only of the 
contract. 
2. The parties may also choose as the appli cable law the principles and rules of the 
substantive law of contra ct recognised internationa lly or in the Community. 
However, questions relating to matters governe d by such principles or  rules which are not 
expressly settled by them shall be governed by  the general principles  underlying them or, 
failing such principles, in accordance with the la w applicable in the absence of a choice under 
this Regulation.  
 
EN 15   EN 3. The parties may at any time agree to subject the contract to a law other than that which 
previously governed it, whether as a result of an ear lier choice under this Ar ticle or of other 
provisions of this Regulation. Any change in th e law to be applied that is made after the 
conclusion of the contract shall not prejudice its formal validity under Article 10 or adversely 
affect the rights of third parties. 
4. The fact that the parties have chosen a foreign law in accordance with paragraphs 1 or 
2, whether or not accompanied by the choice of a foreign tribunal, shall not, where all the 
other elements relevant to th e situation at the tim e of the choice are connected with one 
country only, prejudice the appl ication of rules of the law of  that country which cannot be 
derogated from by contract, hereinafter called “mandatory rules”. 
5. Where the parties choose the law of a non-me mber State, that choice shall be without 
prejudice to the application of such mandatory rules of Commun ity law as are applicable to 
the case. 
6. The existence and validity of the consent of the parties as to  the choice of the 
applicable law shall be determined in accordan ce with the provisions of Articles 9, 10 and 12. 
Article 4 – Applicable la w in the absence of choice 
1. To the extent that the law applicable to the contract has not been chosen in accordance 
with Article 3, the contract shall be governed by the law determined as follows: 
(a) a contract of sale shall be governed by th e law of the country in which the seller has 
his habitual residence; 
(b) a contract for the provision of services sh all be governed by the law of the country in 
which the service provider has his habitual residence; 
(c) a contract of carriage sha ll be governed by the law of the country in which the carrier 
has his habitual residence; 
(d) a contract relating to a right in rem or right of user in immovable property shall be 
governed by the law of the country in  which the property is situated;  
(e) notwithstanding point (d), a lease for the temporary personal use of immovable 
property for a period of no more than six consecutive months shall be governed by 
the law of the country in which the owner has his habitual resi dence, provided the 
tenant is a natural person and has his habitual residence in  the same country; 
(f) a contract relating to inte llectual or industrial property rights shall be governed by the 
law of the country in which the person w ho transfers or assigns the rights has his 
habitual residence; 
(g) a franchise contract shall be governe d by the law of the country in which the 
franchised person has his habitual residence; 
(h) a distribution contract sh all be governed by the law of  the country in which the 
distributor has his ha bitual residence. 
 
EN 16   EN 2. Contracts not specified in paragraph 1 shal l be governed by the law of the country in 
which the party who is required to perform the service charac terising the contract has his 
habitual residence at the time of the conclusion of the contract. Where that service cannot be 
identified, the contract shall be governed by the law of the country with which it is most 
closely connected. 
Article 5 – Consumer contracts 
1. Consumer contracts within the meani ng and in the conditi ons provided for by 
paragraph 2 shall be governed by the law of th e Member State in which the consumer has his 
habitual residence. 
2. Paragraph 1 shall apply to contracts concluded by a natu ral person, the consumer, who 
has his habitual residence in a Member State for a purpose which can be regarded as being 
outside his trade or profession with another pers on, the professional, acting in the exercise of 
his trade or profession. 
It shall apply on condition that the contract has been  concluded with a person who pursues a 
trade or profession in the Member State in whic h the consumer has his habitual residence or, 
by any means, directs such activities to that Memb er State or to several States including that 
Member State, and the contract falls with in the scope of such activities, unless the 
professional did not know where the consumer ha d his habitual residenc e and this ignorance 
was not attributable to his negligence.  
3. Paragraph 1 shall not apply to: 
(a) a contract for the supply of services wher e the services are to  be supplied to the 
consumer exclusively in a country other th an that in which he  has his habitual 
residence; 
(b) contracts of carriage other than contracts relating to package travel within the 
meaning of Directive 90 /314/EEC of 13 June 1990; 
(c) contracts relating to a right in rem or ri ght of user in immo vable property other 
than contracts relating to a right of user on a timeshare basis within the 
meaning of Directive 94/ 47/EC of 26 October 1994. 
Article 6 – Individual employment contracts 
1. Notwithstanding the provisions of Article 3, in a contract of employment a choice of 
law made by the parties shall not have the resu lt of depriving the employee of the protection 
afforded him by the mandatory rules of the law which would be applicable under this Article 
in the absence of choice. 
2. A contract of employment shall, in the absence of choice in acco rdance with Article 3, 
be governed: 
(a) by the law of the country in or from wh ich the employee hab itually carries out 
his work in performance of the contract . The place of performance shall not be 
deemed to have changed if he is te mporarily employed in another country. 
 
EN 17   EN Work carried out in another country sh all be regarded as temporary if the 
employee is expected to resume working in the country of or igin after carrying 
out his tasks abroad. The conclusion of a new contract of employment with the 
original employer or an employer belongi ng to the same group of companies as 
the original employer does not preclude the employee from being regarded as 
carrying out his work in a nother country temporarily; 
(b) if the employee does not habitually carry out his work in or from any one 
country, or he habitually carries out his wo rk in or from a territory subject to no 
national sovereignty, by the law of the country in which the place of business 
through which he was engaged is situated. 
3. The law designated by paragraph 2 may be excluded where it appears from the 
circumstances as a whole that the contract is more closely connected with another country, in 
which case the contract shall be gov erned by the law of that country. 
Article 7 – Contracts concluded by an agent 
1. In the absence of a choice under Article 3, a contract between prin cipal and agent shall 
be governed by the law of the country in which th e agent has his habitual residence, unless the 
agent exercises or is to exercise his main activ ity in the country in which the principal has his 
habitual residence, in which case th e law of that country shall apply. 
2. The relationship between the principal and thir d parties arising out of the fact that the 
agent has acted in the exercise of his powers, in excess of hi s powers or without power, shall 
be governed by the law of the country in which the agent had his habitual residence when he 
acted. However, the applicable law shall be the law of the country in which the agent acted if either the principal on whose behalf he acted or  the third party has his habitual residence in 
that country or the agent acted at an exchange or auction.  
3. Notwithstanding paragraph 2, where the law applicable to a re lationship covered by 
that paragraph has been designated in writing by the principal or the agent and expressly 
accepted by the other party, the law thus designate d shall be applicable to these matters.  
4. The law designated by paragraph 2 shall also govern the relationship between the 
agent and the third party arising from the fact th at the agent has acted in the exercise of his 
powers, in excess of his powers or without power. 
Article 8 – Mandatory rules 
1. Mandatory rules are rules the respect for which is regarded as crucial by a country for 
safeguarding its political, social  or economic organisation to su ch an extent that they are 
applicable to any situation falling within their scope, irrespective of the law otherwise 
applicable to the contra ct under this Regulation. 
2. Nothing in this Regulation shall restrict the application of the rules of the law of the 
forum in a situation where they are mandatory.  
3. Effect may be given to the mandatory rule s of the law of another country with which 
the situation has a close connection. In consideri ng whether to give effect to these mandatory 
 
EN 18   EN rules, courts shall have regard to their nature  and purpose in accordance with the definition in 
paragraph 1 and to the consequences of their application or non-appli cation for the objective 
pursued by the relevant mandatory rules and for the parties. 
Article 9 – Consent and material validity 
1. The existence and validity of a contract, or of any term of a contract, shall be 
determined by the law which would govern it unde r this Regulation if th e contract or term 
were valid. 
2. Nevertheless a party may rely upon the law of  the country in which he has his habitual 
residence to establish that he did not consent if it appears from  the circumstances that it would 
not be reasonable to determine the effect of his c onduct in accordance with the law specified 
in the preceding paragraph. 
Article 10 – Formal validity 
1. A contract is formally valid if it satisfies the formal requirements of the law which 
governs it in substance u nder this Regulation or the law of the country in wh ich one or other 
of the parties or his agent is when it is conclu ded or the law of the country in which one or 
other of the parties has his habi tual residence at that time. 
2. A unilateral act intended to have legal eff ect relating to an exis ting or contemplated 
contract is formally valid if it satisfies the formal requirements of the law which governs or 
would govern the contract in s ubstance under this Regul ation or of the law of the country in 
which the act is performed or th e law of the country in which th e person who draf ted it has his 
habitual residence at that time. 
3. Paragraphs 1 and 2 of this Ar ticle shall not apply to contract s that fall within the scope 
of Article 5. The form of such  contracts shall be governed by the law of the country in which 
the consumer has his habitual residence. 
4. Notwithstanding paragraphs 1 to 3 of this Article, a c ontract the subject matter of 
which is a right in immovable property or a ri ght to use immovable prop erty shall be subject 
to the mandatory requirements of form of the la w of the country where the property is situated 
if by that law those requirements are mandatory  provisions within the meaning of Article 8. 
Article 11 – Scope of applicable law 
1. The law applicable to a cont ract by virtue of this Regula tion shall govern in particular: 
(a) interpretation; 
(b) performance; 
(c) within the limits of the powers conferred on the court by its procedural law, the 
consequences of the total or partial breach of obligations, including the assessment of damages in so far as it is governed by rules of law; 
 
EN 19   EN (d) the various ways of extinguishing oblig ations, and prescription and limitation 
of actions; 
(e) the consequences of nullity of the contract. 
2. In relation to the manner of performance and the steps to be taken in the event of 
defective performance regard sh all be had to the law of the country in which performance 
takes place. 
Article 12 – Incapacity 
In a contract concluded between persons who are in the same country, a natural person who 
would have capacity unde r the law of that country may inv oke his incapacity resulting from 
another law only if the ot her party to the contract was aware of this incapacity at the time of 
the conclusion of the contract or was not aware thereof as a result of negligence. 
Article 13 – Voluntary assignmen t and contractual subrogation  
1. The mutual obligations of assignor a nd assignee under a volunt ary assignment or 
contractual subrogation of a ri ght against another person sha ll be governed by the law which 
under this Regulation applies to the contract between th e assignor and assignee. 
2. The law governing the orig inal contract shall determ ine the effectiveness of 
contractual limitations on assignment as between  the assignee and the debtor, the relationship 
between the assignee and the debtor, the conditions under which the assignment can be 
invoked against the debtor and whether the de btor’s obligations have been discharged. 
3. The question whether the assignment or s ubrogation may be relied on against third 
parties shall be governed by the law of the countr y in which the assignor or the author of the 
subrogation has his habitual resi dence at the material time. 
Article 14 – Statutory subrogation  
Where a person has a contractual claim upon anot her and a third person has a duty to satisfy 
the creditor, the law which governs the third person’s duty to satisfy the creditor shall 
determine whether the third person is en titled to proceed against the debtor. 
Article 15 – Multiple liability 
Where a creditor has a claim upon several debtors who are jointly  liable and one of those 
debtors has in fact satisfied th e creditor, the law of the obliga tion of this debtor towards the 
creditor governs the right of this debtor to claim against the other debtors. Where the law 
applicable to a debtor’s oblig ation to the creditor provides fo r rules to protect him against 
actions to ascertain his liability, he may also rely on them against other debtors. 
 
EN 20   EN Article 16 – Statutory offsetting 
1. Statutory offsetting shall be governed by the law applicable to the obligation in 
relation to which the right to offset is asserted. 
Article 17 – Burden of proof 
1. The law governing the contract  under this Regulation shall apply to the extent that it 
contains, in the law of contr act, rules which raise presumptions of law or determine the 
burden of proof. 
2. A contract or an act intended to have lega l effect may be proved by any mode of proof 
recognized by the law of the forum or by any of the laws referred to in Article 10 under which 
that contract or act is formally  valid, provided that such mode of proof can be administered by 
the forum. 
Chapter III – Other provisions 
Article 18 – Assimilation  to habitual residence 
1. For companies or firms and other bodies or incorporate or unincor porate, the principal 
establishment shall be considered to be the habitual residence for the purposes of this Regulation. 
Where the contract is concluded in the course of operation of a subsidiary, a branch or any 
other establishment, or if, under the contract, pe rformance is the responsibility of such an 
establishment, this establishment shall be considered the habitual residence. 
2. For the purposes of this Regulation, where th e contract is concluded in the course of 
the business activity of a natural person, that  natural person’s establishment shall be 
considered the habitual residence. 
Article 19 – Exclusion of renvoi 
The application of the law of any country specified by this Regulation means the application 
of the rules of law in force in that country other than its rules of private international law. 
Article 20 – Ordre public 
The application of a rule of the law of any country specified by this Regulation may be 
refused only if such application is manifestly  incompatible with the public policy (“ordre 
public”) of the forum.  
 
EN 21   EN Article 21 – States with mo re than one legal system 
Where a State comprises several territorial units  each of which has it s own rules of law in 
respect of contractual obligations , each territorial unit shall be considered as a country for the 
purposes of identifying the law applicable under this Regulation. 
Article 22 – Relationship with other provisions of Community law 
This Regulation shall not prejudice the applicati on or adoption of acts of the institutions of the 
European Communities which: 
(a) in relation to particular matters, la y down choice-of-law rules relating to 
contractual obligations; a list of such acts currently in force is provided in Annex 1; or 
(b) govern contractual obligations and which, by virtue of the w ill of the parties, 
apply in conflict-of-law situations; or 
(c) lay down rules to promote the smooth opera tion of the internal market, where 
such rules cannot apply at the same time as the law designated by the rules of private international law. 
Article 23 – Relationship with existing international conventions 
1. The Member States shall notify the Comm ission, no later than six months after the 
entry into force of this Regulation, of the lis t of multilateral conventions governing conflicts 
of laws in specific matters relating to contract ual obligations to which they are Parties. The 
Commission shall publish the list in the Official Journal of the European Union within six 
months thereafter. 
After that date, the Member States shall notif y the Commission of all denunciations of such 
conventions, which the Commission shall publish in the Official Journal of the European 
Union within six months after receiving them. 
2. This Regulation shall not prejudice the application of international conventions 
referred to in paragraph 1. However, where, at the time of conclusion of the contract, material 
aspects of the situation are located in one or more Member States, this Regulation shall take 
precedence over the following Conventions: 
- the Hague Convention of 15 June 1955 on the la w applicable to international sales of 
goods; 
- the Hague Convention of 14 March 1978 on the law applicable to agency. 3. This Regulation shall take precedence over bilateral intern ational conventions 
concluded between Member States  and listed in Annex II if they concern matters governed by 
this Regulation. 
 
EN 22   EN Chapter IV – Final provisions 
Article 24 – Entry into fo rce and application in time 
This Regulation shall enter into force on the twentieth day following its publication in the 
Official Journal of the European Union . 
This Regulation shall apply from [o ne year after en try into force]. 
It shall apply to contractual obligations arising after its entry into application. However, for 
contractual obligations arising before its entry into applica tion, this Regulation shall apply 
where its provisions have the effect of making the same law applicable as would have been 
applicable under the Rome Convention of 1980. 
This Regulation shall be binding in  its entirety and directly applicable in all Member States. 
Done at Brussels,  
For the European Parliament For the Council 
The President The President   
 
EN 23   EN ANNEX 1: List of instrument s mentioned in Article 22(a)  
– Directive on the return of cultural objects unlawfully removed from the territory of a 
Member State (Directive 7/1993/EC of 15.3.1993) 
– Directive concerning the posting of workers in the framework of the provision of services 
(Directive 71/1996/EC of 16.12.1996) 
– Second non-life insurance Directive (Directive 357/1988/ EEC of 22.6.1988, as amplified 
and amended by Directives 49/1992/EC and 13/2002/EC) 
– Second life assurance Direct ive (Directive 619/1990/EEC of 8.1.1990 as amplified and 
amended by Directives 96/1992/EC and 12/2002/EC) 
 
EN 24   EN ANNEX II: List of bilateral conv entions mentioned in Article 23(3)  
[…]