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
Date: 2003-01-14
Institutions: European Commission
Subjects: European judicial area, Intergovernmental Convention (EU), application of the law, contract, drafting of EU law, insurance contract, private international law

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 14.1.2003
COM(2002) 654 final

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

(presented by the Commission)

TABLE OF CONTENTS

List of the questions ................................................................................................................... 6

1.1.

1.2.

1.3.

1.4.

1.5.

1.6.

1.7.

2.

2.1.

2.2.

2.3.

2.4.

2.5.

3.

The creation of an area of freedom, security and justice ............................................. 8

The role of private international law in the creation of a European judicial area........ 8

The Rome Convention, the Brussels I Regulation and the future Rome II instrument -
three complementary instruments ................................................................................ 9

Objectives of the rules concerning conflict of laws as regards contracts .................. 10

Outline of the rules of the Rome Convention ............................................................ 10

Connection with the “European contract law” project............................................... 11

Initiatives already taken ............................................................................................. 12

CONVERTING THE ROME CONVENTION OF 1980 INTO A COMMUNITY
INSTRUMENT .......................................................................................................... 13

A new legal basis: Article 61 c) of the EC Treaty as amended at Amsterdam gave a
new impetus to Community-based private international law..................................... 13

Consistency of Community legislation as regards private international law............. 14

Interpretation of the Convention by the Court of Justice........................................... 14

The application of the standardised conflict rules in the new Member States........... 15

The choice of instrument: regulation or directive? .................................................... 16

IS THERE A NEED FOR MODERNISING THE ROME CONVENTION OF 1980?16

3.1.

The general balance of the Convention...................................................................... 17

3.1.1.

Link between the general conflict rules of the Rome Convention and the rules in
sectoral instruments that have an impact on the applicable law ................................ 17

3.1.1.1. The proliferation of rules in sectoral instruments that have an impact on the

applicable law............................................................................................................. 17

3.1.1.2. Possible solutions....................................................................................................... 18

3.1.2.

Envisage a clause to guarantee the use of the Community minimum standard when
all the elements or some of the elements of the contract are located in the Community18

3.1.2.1. The risk that Community law is not applied although all the elements of the case are

located in the Union ................................................................................................... 18

3.1.2.2. Possible solutions....................................................................................................... 19

3.1.3. Relationship with existing international conventions ................................................ 20

3.2.

Problems met in the implementation of various Articles........................................... 20

3.2.1.

Scope of the Convention - exclusion of arbitration and choice of forum clauses
(Article 1(2)(d)).......................................................................................................... 20

2

3.2.2. Rules applicable to insurance contracts (Article 1(3))............................................... 21

3.2.2.1. The current situation .................................................................................................. 21

3.2.2.2. Questions regarding the current situation .................................................................. 21

3.2.2.3. Possible solutions....................................................................................................... 22

3.2.3.

Freedom of choice (Article 3(1)) - Questions regarding the choice of non-state rules22

3.2.4.

Freedom of choice – tacit choice (Article 3(1)) ......................................................... 23

3.2.4.1. The legislature’s intention.......................................................................................... 23

3.2.4.2. Difficulties encountered in applying this Article ....................................................... 24

3.2.4.3. Possible solutions....................................................................................................... 24

3.2.5. What is the strength of the general presumption laid down by Article 4(2) .............. 25

3.2.5.1. Current situation......................................................................................................... 25

3.2.5.2. Difficulties encountered ............................................................................................. 25

3.2.5.3. Possible solution ........................................................................................................ 25

3.2.6. Application of the special presumption in property matters to holiday leasing

agreements (Article 4(3)) ........................................................................................... 26

3.2.6.1. Current solution.......................................................................................................... 26

3.2.6.2. Difficulties encountered in the application of this Article ......................................... 26

3.2.6.3. Possible solution ........................................................................................................ 27

3.2.7.

The protection of consumers (Article 5) .................................................................... 27

3.2.7.1. Summary of the contents and scope of the protective rules of Article 5 ................... 27

3.2.7.2. Difficulties encountered ............................................................................................. 28

3.2.7.3. Possible solutions....................................................................................................... 30

3.2.8. Questions regarding the definition of the term “mandatory provisions” ................... 33

3.2.8.1. The concept of mandatory provision covers a multiform reality............................... 33

3.2.8.2. Difficulties encountered ............................................................................................. 33

3.2.8.3. Possible solutions....................................................................................................... 34

3.2.9. Uncertainties relating to the interpretation of “temporary employment” of employees
in Article 6 ................................................................................................................. 35

3.2.9.1. The law applicable to employment contract .............................................................. 35

3.2.9.2. Difficulties encountered ............................................................................................. 35

3.2.9.3. Possible solutions....................................................................................................... 37

3.2.10. Other questions concerning Article 6......................................................................... 37

3

3.2.11. Application of foreign mandatory rules (Article 7(1))............................................... 38

3.2.12. Law applicable to formal validity of contracts (Article 9)......................................... 38

3.2.12.1.Current solution.......................................................................................................... 38

3.2.12.2.Difficulties encountered ............................................................................................. 39

3.2.12.3.Possible solutions....................................................................................................... 39

3.2.13. Law applicable to the voluntary assignment of legal rights (Article 12)................... 39

3.2.13.1.Current solution.......................................................................................................... 39

3.2.13.2 Difficulties encountered ............................................................................................. 40

3.2.13.3 Possible solutions....................................................................................................... 40

3.2.14. Respective scope of Articles 12 and 13 relating to the assignment of claims and

subrogation................................................................................................................. 41

3.2.14.1.Subrogation in the Rome Convention ........................................................................ 41

3.2.14.2.Difficulties encountered ............................................................................................. 42

3.2.14.3.Possible solutions....................................................................................................... 42

3.2.15. Absence of conflict rule relating to offsetting of claims............................................ 42

3.2.15.1.The offsetting mechanism .......................................................................................... 42

3.2.15.2.Difficulties encountered ............................................................................................. 42

3.2.15.3.Possible solutions....................................................................................................... 42

 Annex 1 ................................................................................................................................... 44

Annex 2 .................................................................................................................................... 46

4

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

The  purpose of this  Green  Paper  is  to  launch  a  wide-ranging  consultation  of  interested  parties  on  a
number of legal questions on the conversion of the Rome Convention of 1980 on the law applicable to
contractual obligations (“the Rome Convention” or “the Convention”) into a Community instrument
and its modernisation.

It sets out the general context of the debate and presents a number of options.

The Commission invites interested parties to send reasoned replies to the questions raised in
this Green Paper and listed on page 3. The questions are, obviously, not restrictive and more
general  comments  will  be  appreciated.  In  addition,  for  each  question  interested  parties  are
asked to provide the Commission with whatever information they can on the impact that the
various options would have on:

 i.  business life in general;

 ii.  small business in particular;

iii.  relations between businesses and consumers/workers.

The  Commission  will  take  account  of  comments  received  in  the  case  it  prepares  a  proposal  for  a
Community instrument.

It  must  be  stressed  that  the  Commission  has  neither  taken  a  decision  in  respect  of  the  necessity  to
modernise the Rome Convention nor in respect of its conversion into a Community instrument.

The  present  document  does  not  intend  to  examine  the  relationship  between  a  possible  future
instrument  and  the  Internal  Market  rules.  For  the  Commission  it  is  clear,  however,  that  such  an
instrument  should  leave  intact  the  principles  of  the  Internal  Market  laid  down  in  the  Treaty  or  in
secondary legislation.

Interested parties are requested to send their answers and comments before 15 September 2003 to the
following address:

European Commission
Directorate-General for Justice and Home Affairs,
Unit A3 - Cooperation in Civil Matters
B-1049 Brussels
Fax: + 32 (2) 299,64 57
E-MAIL: jai-coop-jud-civil@cec.eu.int

Interested parties are requested to chose one single means of communication (electronic mail, fax or
ordinary  mail)  to  send  their  contributions.  In  the  absence  of  formal  instructions  to  the  contrary,
respondents’ answers and comments may be published on the Commission’s website.

The Commission plans to organise a public hearing on the subject in the last quarter of 2003.

5

 
LIST OF THE QUESTIONS

Question 1: Do  you  have 

information  concerning  economic  actors’  and 

legal
practitioners' actual knowledge of the Rome Convention of 1980 and of its
rules,  in  particular  the  rule  allowing  parties  to  freely  choose  the  law
applicable  to  their  contract?  If  you  consider  that  such  knowledge  in
sufficient,  do  you  think  that  this  situation  has  a  negative  impact  on  the
parties' conduct in their contractual relations or on court proceedings?

Question 2: Do  you  believe  the  Rome  Convention  of  1980  should  be  converted  into  a
Community instrument? What are  your arguments for or against  such a
conversion?

Question 3: Are you aware of difficulties encountered because of the proliferation and
dispersal  of  rules  having  an  impact  on  the  applicable  law  in  several
horizontal  and  sectoral  instruments  of  secondary  legislation?  If  so,  what
do you think is the best way of remedying them?

Question 4: Do you think a possible future instrument should contain a general clause
guaranteeing the application of a Community minimum standard when all
elements, or at least certain highly significant elements, of the contract are
located  within  the  Community?  Does  the  wording  proposed  at  3.1.2.2
allow the objective pursued to be attained?

Question 5: Do  you  have  comments  on  the  guidelines  with  regard  to  the  relationship
international

instrument  and  existing 

between  a  possible  Rome 
conventions?

Question 6: Do  you  think  one  should  envisage  conflict  rules  applicable  to  arbitration

and choice of forum clauses?

Question 7: How  do  you  evaluate  the  current  rules  on  insurance?  Do  you  think  that
the current treatment of hypotheses (a) and (c) is satisfactory? How would
you recommend resolving the difficulties that have been met (if any)?

Question 8: Should  the  parties  be  allowed  to  directly  choose  an  international
convention, or even general principles of law? What are the arguments for
or against this solution?

Question 9: Do you think that a future Rome I instrument should contain more precise
information regarding the definition of a tacit choice of applicable law or
would  conferring  jurisdiction  on  the  Court  of  Justice  suffice  to  ensure
certainty as to the law?

Question 10: Do  you  believe  that  Article  4  should  be  redrafted  to  compel  the  court  to
begin by applying the presumption of paragraph 2 and to rule out the law
thus obtained only if it is obviously unsuited to the instant case? If so, how
do you think it would be best drafted?

6

Question 11: Do  you  believe  one  should  create  a  specific  rule  on  short-term  holiday
tenancy, along the lines of the second subparagraph of Article 22(1) of the
Brussels I Regulation, or do you consider the present solution satisfactory?

Question 12: Evaluation of the consumer protection rules:

A.  How  do  you  evaluate  the  current  rules  on  consumer  protection?  Are  they  still
appropriate, in particular in the light of the development of electronic commerce?

B.  Do  you  have  information  on  the  impact  of  the  current  rule  on  a)  companies  in

general; b) small and medium-sized enterprises; c) consumers?

C.  Among the  proposed solutions, which do you prefer,  and why?  Are  other  solutions

possible?

D.  In  your  view,  what  would  be  the  impact  of  the  various  possible  solutions  on  a)

companies in general; b) small and medium-sized enterprises; c) consumers?

Question 13: Should the future Rome I instrument specify the meaning of “mandatory

provisions” in Articles 3, 5, 6 and 9 and in Article 7?

Question 14: Should  Article  6  be  clarified  as  regards  the  definition  of  “temporary

employment"? If so, how?

Question 15: Do you think that Article 6 should be amended on other points?

Question 16: Do you believe there should be rules concerning foreign mandatory rules
in  the  meaning  of  Article  7?  Would  it  be  desirable  for  the  future
instrument to be more precise on the conditions for applying such rules?

Question 17: Do you think that the conflict rule on form should be modernised?

Question 18: Do you believe that a future instrument should specify the law applicable
to  the  conditions  under  which  the  assignment  may  be  invoked  against
third parties ? If so, what conflict rule do you recommend?

Question 19: Would it be useful to specify the respective scope of Articles 12 and 13? Do
you believe that there should be a conflict rule for subrogation payments
made in the absence of an obligation?

Question 20: In  your  view,  would  it  be  useful  to  specify  the  law  applicable  to  legal
compensation? If so, what conflict rule do you recommend?

7

Introduction

1.1.

The creation of an area of freedom, security and justice

One  of  the  consequences  of  expanding  trade  and  travel  in  the  world  in  general  and  the
European  Union  in  particular  is  the  increased  risk  that  European  citizens  or  companies
established in a Member State may be involved in a dispute of which all the elements are not
confined to the State where they have their habitual residence. An example might be a Greek
consumer  who  bought  an  electronic  instrument  in  Germany  from  a  catalogue  or  via  the
Internet  and  now  wants  to  sue  the  manufacturer  because  it  has  a  serious  defect  that  the
manufacturer refuses to repair, or a German company which wants to sue its English trading
partner for failure to perform its contract.

Parties  are  often  discouraged  from  asserting  their  rights  in  a  foreign  country  by  the
incompatibility  or  complexity  of  national  legal  and  administrative  systems.  This  applies
particularly to private individuals or small businesses, who generally do not have the financial
resources to secure the services of an international network of lawyers.

But  in  the  European  Union  there  cannot  be  a  genuine  internal  market,  envisaging  free
movement of goods, persons, services and capital, without a common  law-enforcement area
in which all citizens can  assert  their  rights  not  only  in  their  home  country  but  also  in  other
Member States.

The Tampere European Council on 15 and 16 October 19991 set three main lines of priority
action  for  the  creation  of  such  an  area,  one  of  which  is  the  strengthening  of  the  mutual
recognition of court orders and judgments.

Harmonisation of the rules of private international law is essential for attaining this objective.

1.2.

The role of private international law in the creation of a European judicial area

Private  international  law2  is  made  up  of  mechanisms  to  facilitate  the  settlement  of
international disputes. It answers three questions:

–  which  country’s  courts  have  jurisdiction  in  a  dispute;  this  question  refers  to  the

determination of “international jurisdiction” or “conflicts of jurisdiction”;

–  which country’s substantive law is to be applied by the court hearing the case; the problem

of applicable law goes by the name of “conflict of laws”;

–  can the decision  given  by  the  court  which  declared  that  it  had  jurisdiction  be  recognised
and,  if  necessary,  enforced  in  another  Member  State;  this  question,  designated  by  the
expressions  “effect  of  foreign  judgments”  or  “mutual  recognition  and  enforcement  of
foreign judgments”, is especially important if the losing party has no assets in the country
where the judgment was given.

1

2

Presidency conclusions of 16.10.1999, points 28 to 39.
Private  international  law  does  not  have  the  same  meaning  in  all  Member  States.  In  German  or
Portuguese law, for example, it only designates the rules concerning conflict of laws, whereas in other
systems  it  also  includes  the  rules  concerning  the  international  jurisdiction  of  the  courts  and  the
recognition of foreign judgments. In this document, the term is used in its broad sense.

8

                                                
Practically speaking, where a court action is to be brought in an international dispute, the first
question  is  which  country’s  courts  have  international  jurisdiction.  Once  this  has  been
determined, this court will decide which law is applicable to the dispute. It is only when this
court has given judgment that the problem of enforcement abroad will arise.

Traditionally, each Member State has its own national rules of private international law. But
this entails the major inconvenience of  a  lack  of uniformity and legal  certainty  and also  the
risk that the parties or one of them might take advantage of the fact that their case has links
with  various  legal  systems  to  escape  the  law  normally  applicable  to  them.  To  return  to  the
example  of  the  Greek  consumer  and  the  German  seller,  just  imagine  that  the  sales  contract
between  them  contains  a  clause  choosing  the  law  of  a  third  country  that  has  no  consumer
protection provisions. This practice, if it were valid, would be repugnant as it would deprive
the consumer of the protection provided for by both Greek and German law.

To  combat  such  inconvenience  and  practices,  the  Member  States  have  therefore  chosen  to
harmonise  their  rules  of  private  international  law.  So  far  they  have  concentrated  on
contractual and non-contractual obligations in civil and commercial matters.

1.3.

The  Rome  Convention,  the  Brussels  I  Regulation  and  the  future  Rome  II
instrument - three complementary instruments

No picture of the  objectives  of  the  Rome  Convention  is  complete  without  a  reminder  of  its
predecessor,  the  Brussels  Convention  of  1968  (replaced  since  1  March  2002,  except  for
Denmark, by the Brussels I Regulation).3 This was drawn up on the idea, already described in
the EC Treaty, that a common market implies the possibility of having a judgment given in
another Member State recognised and enforced with the minimum of difficulty. To facilitate
this  objective,  the  Brussels  Convention  begins  with  rules  determining  the  Member  State
whose courts have jurisdiction.4

But merely having rules on jurisdiction does not fully exclude arbitrary factors in settling the
dispute  on  the  substance.  The  Brussels  Convention  and  the  Regulation  which  replaces  it
contain a number of options enabling the claimant to choose between this or that court. The
risk  is  that  parties  will  opt  for  the  courts  of  one  Member  State  rather  than  another  simply
because the  applicable  law  in  this  state  would  be  more  favourable  to  them.  This  practice  is
known as “forum-shopping”. By  unifying  the  Member  States’  rules  on  conflict  of  laws,  the
Rome  Convention  ensures  that  the  same  solution  will  be  applied  as  to  the  substance
irrespective of the court hearing the case and thus reduces the risk of forum-shopping in the
European Union.

But there is a great difference between the scope of the Brussels Convention and the scope of
the  Rome  Convention:  the  first  covers  both  contractual  and  non-contractual  obligations,
whereas the second covers only the former. Should the work on a future Rome II instrument
on the law applicable to non-contractual relations5 succeed, this instrument will therefore be

3

4

5

Council  Regulation  (EC)  No  44/2001  of  22.12.2000  on  jurisdiction  and  the  recognition  and
enforcement of judgments in civil and commercial matters, replacing the Brussels Convention of 1968,
the  consolidated  version  of  which  was  published  in  the  OJ  C  27,  26.1.1998,  p.  1.  But  the  Brussels
Convention of 1968 remains in force for relations between Denmark and the other Member States.
The rules on jurisdiction in the 1968 Convention and the Brussels I Regulation are not basically what
this  Green  Paper  is  about,  but  we  refer  to  some  of  them  when  considering  the  various  conflict  rules
(point 3).
On 3 May 2002 the Commission launched a wide-ranging consultation on a preliminary draft proposal
for  a  Council  Regulation  on  the  law  applicable  to  non-contractual  obligations  in  order  to  collect  the

9

                                                
the natural extension of the work on unifying the private international law rules on contractual
and non-contractual obligations of a civil and commercial nature in the Community.

Before looking in closer detail at the conflict rules of the Rome Convention, it is worth briefly
describing their objectives.

1.4.

Objectives of the rules concerning conflict of laws as regards contracts

For each conflict of laws rule, the legislature has a number of options. To explain why one or
other option is preferred, we should begin by reviewing two principles – the principle of the
proper law and the principle of freedom of choice.

The principle of the proper law is that a situation should be governed by the legal order which
has  the  closest  connection  with  it.  This  principle  is  particularly  significant  as  regards
international  jurisdiction,  for  example  when  a  dispute  concerns  a  building  or  a  traffic
accident:  the  court  for  the  place  of  where  the  building  is  situated  or  the  place  where  the
accident  occurred  is  generally  best  placed  to  assess  the  facts  and  gather  evidence.  The
principle of freedom of choice is that the parties may themselves choose the law  which will
govern  relations  between  them,  this  solution  being  easily  comprehensible  in  one  of  the
example quoted  above  –  the  contract between two companies,  German and  English.  This  is
the dominant principle in contract cases, enshrined in the positive law almost everywhere.

In the last twenty years or so, another principle has come to the fore, that of the protection of
the  weaker  party.  In  the  example  of  the  Greek  consumer  and  the  German  supplier  quoted
above, the two parties are not on equal footing. If there are no limits on the principle of free
will, consumers may well have to accept a law which is unfavourable to them, thus depriving
them of the protection which they are entitled to expect when they buy consumer goods, even
abroad. The same reasoning applies to the relationship between employer and employee.

All these principles are present in the rules of the Rome Convention of 1980.

1.5.

Outline of the rules of the Rome Convention

The uniform rules of the Rome Convention “apply to contractual obligations in any situation
involving a choice between the laws of different countries”,6 i.e. in situations in which all the
elements  are  not  connected  to  the  legal  order  of  one  and  the  same  State.  For  instance,  the
parties to the contract may be of different nationality or domiciled in different States, or the
contract may be made or performed in different countries or in a country different from that of
the court hearing the case.

The Rome Convention  is what is  known  as a  “universal” convention,7 i.e. the conflict  rules
that it enacts can lead to the application of the law of a non-EU State.

The Convention also provides for the exclusion of the following: the status or legal capacity
of natural persons; the law governing  family economic matters (wills, successions, marriage
settlements,  contracts  covering  maintenance  responsibility);  obligations  arising  from
negotiable  instruments  (bills  of  exchange,  cheques,  promissory  notes);  the  law  governing

the 

interested  parties.  The 

comments  of 
http://europa.eu.int/comm/dgs/justice_home/index_en.htm.
Article 1.
Article 2.

text 

is  available  at 

6

7

the 

following  address:

10

                                                                                                                                                        
companies, associations and other legal entities; arbitration agreements and agreements on the
choice of court; trusts; evidence and procedure.8

The  keystone  of  the  system  is  freedom  of  choice  (Article  3),  a  principle  which  allows  the
parties  to  chose  the  law  applicable  to  their  contract.  The  freedom  left  to  parties  is  not
unlimited: they may choose any law, even if it has no objective connection with the contract;
they may choose the law governing the contract after its conclusion and change their choice at
any  time  during  the  life  of  the  contract,  in  certain  Member  States  even  in  the  course  of
proceedings. Regarding  the  form  of  the  choice,  it  “must  be  expressed  or  demonstrated  with
reasonable certainty by the terms of the contract or the circumstances of the case”, which can
be ascertained from an explicit clause in the contract or alternatively from other elements of
the contractual environment, the court being left the task of checking whether there is a tacit
or implicit choice of law.

In the absence of a choice of  law by  the  parties, the  Convention  retains the principle of the
proper law, the contract then being governed by the law of the country with which it is most
closely connected (Article 4). The contract is presumed to be most closely connected with the
country  where  the  party  who  is  to  effect  the  performance  which  is  characteristic  of  the
contract has his habitual residence. The “characteristic performance” is what makes it possible
to  distinguish  one  contract  from  another  (e.g.  the  obligation  of  the  vendor  to  transfer  the
property, in a sales  contract; the obligation of  a carrier to transport a  good or a person,  in  a
contract  of  carriage;  etc.);  the  obligation  to  pay  an  amount  of  money  does  not  therefore
constitute the characteristic  performance  for the  purposes of Article 4,  though there may  be
exceptions. The Convention then  provides  for other presumptions  as regards  property rights
and the carriage of goods. But the court can disregard these presumptions “if it appears from
the  circumstances  as  a  whole  that  the  contract  is  more  closely  connected  with  another
country.”

Under  certain  conditions  the  Rome  Convention,  like  the  so-called  "Brussels  I"  Regulation,
contains  special  rules  for  weaker  parties  (consumers  and  workers,  Articles  5  and  6).  The
choice of a law by the parties to the contract may not deprive a consumer or an employee of
the protection of the mandatory provisions of the law which would be normally applicable to
them – as designated in accordance with the general rules of the Convention – in the absence
of a choice of law. In the absence of a choice of law, a consumer contract is governed by the
law  of  the  country  of  the  consumer’s  habitual  residence,  and  an  employment  contract  is
governed  by  the  law  of  the  place  in  which  the  employee  habitually  carries  out  his  work  in
performance of the contract or in the absence of such a place, the law of the place in which he
was engaged.

The Convention lays down special rules for certain matters (in particular assignment of claims
and  subrogation).  It  covers  the  law  of  contract  in  a  very  broad  sense,  since  it  governs  the
interpretation of the contract and its performance or non-performance as well as its extinction
and nullity.

1.6.

Connection with the “European contract law” project

There  are  those  who  are  already  considering  the  link  between  Rome  I  and  the  European
contract law project.9

8

Subject to Article 14 of the Convention.

11

                                                
The  Commission  communication  of  2  July  2001  aimed  at  broadening  the  discussion  on  the
future of European contract law at Community level and on the need for a change of approach
regarding the substantive law.10 In this paper the Commission in particular raised the issue of
coherence of the EC acquis in  the area of  contract law and whether  divergences  in  contract
law  between  the  Member  States  may  hinder  the  proper  functioning  of  the  internal  market.
One of the options put forward, if a new approach turned out to be needed, was the adoption
of a new Community instrument contributing to further approximation of the substantive law
of contracts. Thus some commentators already  called  into question the value of  working on
rules prescribing the application of one or the other national rule.

There  is,  however,  no  reason  for  such  questioning.  In  the  Commission's  opinion,  the
"European contract law" project does neither aim at the uniformisation of contract law nor at
the  adoption  of  a  European  civil  law  code.  The  Commission  had  already  announced  that  a
follow-up document  would  be  published early in 2003.  In addition, even  assuming  that  one
day there will be closer harmonisation of contract law in the Community, it is quite possible
that this will  concern only  certain  particularly  important  aspects and that  the applicable law
will still have to  be determined for  the  non-harmonised  aspects.  Conflict  of  laws'  rules  will
therefore lose none of their importance for Community cross-border transactions, today and in
the future.

Accordingly,  the  European  contract  law  project  does  not  detract  in  any  way  from  the
arguments  for  considering  a  possible  modernisation  of  the  Rome  Convention.  On  the
contrary, both projects complement each other and will be conducted in parallel.

1.7.

Initiatives already taken

To prepare the discussions on modernising the Convention, the Commission provided finance
under  the  GROTIUS  CIVIL  2000  programme  for  a  project  submitted  by  the  Academy  of
European  Law  in  Trier  for  establishment  of  a  database  accessible  on  line  relating  to  the
implementation of the Convention by the courts of the Member States. This web site11 already
contains a number of references to case law.

In  addition,  on  4  and  5  November  1999,  when  preparing  Regulation  (EC)  No  44/2000
(Brussels I), DG JAI organised a hearing covering the private international law and electronic
commerce.  It  received  74  written  contributions  from  professional  bodies,  consumers’
associations,  public  institutions,  companies  and  researchers.  A  major  part  of  the  comments
covers the question of the law applicable to contracts concluded via Internet.

Lastly, the EUROPEAN GROUP FOR PRIVATE INTERNATIONAL LAW (GEDIP) has been working
on  possible  improvements  to  the  Convention,  culminating  in  specific  proposals  for
amendment of the current text.12

9

10

11

12

Commission communication to the Council and Parliament concerning the European contract law (OJ C
255, 13.9.2001, p.1).
The  substantive  law  of  contracts  rules  questions  such  as  the  validity,  the  conclusion  and  the
performance  of  the  contract,  in  contrast  with  private  international  law  of  contracts  which  only  deals
with the question of the law applicable to a contract.
http://www.rome-convention.org.
The results are accessible at http://www.drt.ucl.ac.be/gedip.

12

                                                                                                                                                        
Before considering whether the conflict of laws rules in the Convention should be modernised
(part 3), the reasons which could possibly justify its conversion into a Community instrument
should be analysed (part 2).

But first of all, the Commission wishes to take the opportunity to gather precise information
concerning  what  economic  actors  –  companies,  consumers  and  workers  as  well  as  legal
practitioners  –  actually  know  about  the  existence  of  the  Rome  Convention  and  the  rules  it
contains. The Commission also wonders how this knowledge or the lack of it influences the
parties' practical conduct in their contractual relations or court proceedings.

Question 1: Do  you  have 

information  concerning  economic  actors’  and 

legal
practitioners' actual knowledge of the Rome Convention of 1980 and of its
rules,  in  particular  the  rule  allowing  parties  to  freely  choose  the  law
applicable  to  their  contract?  If  you  consider  that  such  knowledge  in
sufficient,  do  you  think  that  this  situation  has  a  negative  impact  on  the
parties' conduct in their contractual relations or on court proceedings?

2.

CONVERTING THE ROME CONVENTION OF 1980 INTO A COMMUNITY
INSTRUMENT

At  Community  level,  the  Rome  Convention  is  the  only  private  international  law  instrument
still  in  the  form  of  an  international  Treaty.  Therefore  the  question  of  its  conversion  into  a
Community instrument has been raised.

Converting the Convention into a Community instrument could have a number of advantages,
the  first  of  which  would  be  greater  consistency  in  Community  legislation  on  private
international  law  (point  2.2),  based  on  Article  61(c)  of  the  Treaty  (point  2.1).  It  would,  in
addition,  entail  conferring  on  the  Court  of  Justice  the  jurisdiction  to  interpret  it  in  the  best
conditions (point 2.3) and would facilitate the application of the standardised conflict rules in
the new Member States (point 2.4).

2.1.

A  new  legal  basis:  Article  61  c)  of  the  EC  Treaty  as  amended  at  Amsterdam
gave a new impetus to Community-based private international law

While  Community  instruments  on  private  international  law  were  adopted  on  the  basis  of
Article 293 (formerly  Article 220) of  the Treaty  (Brussels  Convention  of 1968) or  have  the
same status as instruments adopted on this basis (Rome Convention of 1980), since the entry
into force of the Treaty of Amsterdam, this field is governed by the first pillar of the European
Union.

In  addition, on the  basis  of Article  61(c) of the Treaty, the Community has adopted several
new Regulations for judicial cooperation in civil matters (Brussels II,13 Bankruptcy,14 Service
of  documents15  and  Evidence16)  and  converted  the  Brussels  Convention  of  1968  into  a

13

14

15

Council  Regulation  (EC)  1347/2000  of  29  May  2000  on  jurisdiction  and  the  recognition  and
enforcement of judgments in matrimonial matters and matters of parental responsibility for children of
both spouses, OJ L160, 30.6.2000, p. 19.
Council Regulation (EC) 1346/2000 of 29 May 2000 on insolvency proceedings, OJ L160, 30.6.2000,
p. 1.
Council Regulation (EC) 1348/2000 of on 29 May 2000 on the service in the Member States of judicial
and extrajudicial documents in civil or commercial matters, OJ L160, 30.6.2000, p. 37.

13

                                                
Regulation.  The  Commission  is  currently  preparing  a  Community  instrument  on  the  law
applicable to non-contractual obligations (Rome II). The Vienna Action Plan17 of the Council
and the Commission, adopted by the Council in 1998, refers specifically to the compatibility
of the conflict rules. Point 40(c) calls for “revision, where necessary, of certain provisions of
the Convention on the Law applicable to contractual obligations, taking into account special
provisions on conflict of law rules in other Community instruments”. The Mutual Recognition
Programme18 specifies that measures to harmonise conflict of laws rules constitute supporting
measures, facilitating implementation of the principle of mutual recognition of judgments in
civil and commercial matters.

Upon entry  into  force of the Nice Treaty,  the  "co-decision"  procedure  which  provides  for  a
stronger  participation  of  the  European  Parliament  to  the  legislative  process  will  apply  to
cooperation in civil matters, except for family law.

2.2.

Consistency of Community legislation as regards private international law

Since the rules on jurisdiction and choice of law applying to contractual and non-contractual
obligations of a civil or commercial nature form an entity, the fact that the Rome Convention
takes a different form from the other Community instruments of private international law does
not improve the consistency of this entity.

In addition, since the Rome Convention takes the form of an international Treaty, it contains a
number of provisions that will have to be reviewed in the light of the concern for consistency
in Community legislative policy, among them:

-

-

-

-

the  right  of  the  Member  States,  under  Article 22,  to  enter  reservations  (relating  to
Articles 7(1) and 10(1)(e);

the right of the Member States, under Article 23, to adopt new choice of law rules in
regard to any particular category of contract;

the  right  of  the  Member  States,  under  Article  24,  to  accede  to  multilateral
Conventions on conflict of laws; and

the limited (though renewable) duration of the Convention (Article 30).

It needs to be examined whether these provisions are compatible with the aim of establishing
a genuine area of justice.

2.3.

Interpretation of the Convention by the Court of Justice

An  analysis  of  the  first  judgments  given  by  national  courts  that  certain  Articles  of  the
Convention are not always being applied uniformly, in particular because the national courts
tend to interpret the Convention in the light of previous solutions, either to fill in gaps in the
Convention or to modify the  interpretation of certain flexible provisions. Examples of these
differences  can  be  found  in  Article 1(1) (material scope: definition of contract,  for  example

16

17

18

Regulation (EC) No 1206/2001 of the Council of 28 May 2001 on cooperation between the courts of the
Member States in the taking of evidence in civil or commercial matters, OJ L 174, 27.6.2001, p. 1.
OJ C 19, 23.1.1999, p. 1, point 51(c).
OJ C 12, 15.1.2001, p. 8.

14

                                                                                                                                                        
the  question  whether  contract  chains  should  be  included)  or  Article  3(1)  (definition  of  tacit
choice: what about the reference to a legal concept specific to a given legal system).19

There is no doubt that uniform interpretation of the Rome Convention by the Court of Justice
would improve the consistency of the interpretation of conflict of laws' rules at EC level.

In  a  Joint  Declaration,20  the  Member  States  stated  that  they  were  ready  to  examine  the
possibility  of  conferring  jurisdiction  in  certain  matters  on  the  Court  of  Justice,  and  the
Convention has been supplemented by two Protocols conferring jurisdiction on the Court of
Justice to interpret the Convention. But they are not yet in force.21

Converting  the  Convention  into  a  Community  instrument  would  ensure  that  the  Court  of
Justice  would  have  identical  jurisdiction  over  all  the  Community  private  international  law
instruments. The Court of Justice  could  therefore  ensure  that  the  legal  concepts  common  to
the Rome Convention and the Brussels I Regulation22 are interpreted in the same manner.

Here one should also bear in mind that the jurisdiction conferred on the Court of Justice under
Title IV could well expand in the future. However, the ratification of the two protocols to the
Rome Convention remains important for contracts concluded before the entry into force of a
possible  future  "Rome  I"  instrument  which  would  continue  to  be  governed  by  the  Rome
Convention.  The  latter  will  therefore  remain  the  relevant  text  for  an  important  number  of
existing contracts.

2.4.

The application of the standardised conflict rules in the new Member States

The Rome Convention of 1980 is part of the ‘acquis communautaire’. From the point of view
of  enlargement  of  the  Union,  the  adoption  of  a  Community  instrument  would  prevent  the
entry into force of the uniform conflict rules from being delayed by ratification procedures in
the applicant countries.

To illustrate this remark it is enough to recall that the Conventions of Funchal23 and Rome,24
concerning the  accession of Spain and Portugal and Austria, Finland  and Sweden, have still
not been  ratified by  all  the  Member  States.  As  the  initial  text  was  amended  slightly  on  this
occasion, two different versions of the Rome Convention therefore coexist today.25

19

20

21

22

23

24

25

Another source of divergent interpretations is that certain Member States have chosen to incorporate the
provisions of the Convention in  their  national legislation by  statute, sometimes amending the original
text.
The consolidated text of the Convention as amended by the various Conventions of Accession, and the
declarations and protocols annexed to it, is published in OJ C 27, 26.1.1998, p. 34.
Ratification  of  the  second  protocol  by  Belgium  is  still  needed  for  the  first  protocol  conferring
jurisdiction on the  Court of Justice to enter into force in all the Member States  which have ratified it
(i.e.  all  Member  States  except  Belgium  and  Ireland);  for  progress  with  ratifications,  see:
http://ue.eu.int/Accords/default.asp?lang=en.
The concept of consumer, for example.
OJ L 333, 18.11.1992, p. 1.
OJ C 15, 15.1.1997, p. 10.
The amendment made by the Funchal Convention mainly concerned the deletion of  Article 27 on the
geographical scope of the Convention.

15

                                                
2.5.

The choice of instrument: regulation or directive?

For the choice of the type of measure to be adopted - a regulation or a directive - it must be
borne in mind that, in accordance with the Mutual Recognition Programme, the harmonisation
of the conflict rules contributes to the mutual recognition of court judgments in the Union.

One should also take into consideration that the point is not to regulate one or the other aspect
of a matter – as is the case of sectoral Directives – but to harmonise an entire subject-matter –
the private international law of obligations.

It seems that this objective can more easily be reached if a possible future Rome I instrument
is  in  the  form  of  a  regulation,  the  instrument  being  directly  applicable  and  its  application
avoiding the uncertainties of the transposal of a directive.

Question 2: Do  you  believe  the  Rome  Convention  of  1980  should  be  converted  into  a
Community  instrument?  What  are  your  arguments  for  or  against  doing
this?

3.

IS  THERE  A  NEED  FOR  MODERNISING  THE  ROME  CONVENTION  OF
1980?

Since a good many of the substantive conflict rules entered into force barely eleven years ago,
many will be surprised by the question. But there are several arguments for doing so.

First  of  all,  the  Member  States  undertook  to  consider  the  advisability  of  revising  Article  5
concerning  consumer protection at the time of Austrian  accession  to  the  Rome  Convention:
the explanatory report on the Convention of Accession specifies that this must be done in the
near future and a declaration to this effect was annexed to the Final Act of the Conference of
the Governments of the Member States.26

Then  there  is  the  close  link  between  the  Rome  Convention  and  the  related  instrument  in
matters of conflicts of jurisdiction – the Brussels Convention. When this was converted into a
Community  Regulation,  some  of  its  articles  were  changed,  too27.  Some  point  out  that  the
consistency of the Community private  international  law  demands  that  these  amendments  be
reflected in the instrument that deals with conflict of laws.

Moreover, there is a body of case law covering a period that is longer than the period during
which the Convention has been in force. Several signatory States had already incorporated its
provisions into their national legislation unilaterally before it actually entered into force.28 In
other Member States, the Convention inspired judges even before it entered into force.

It is manifest in this case law that certain essential rules of the Convention are criticised on
grounds of insufficient precision. But  it must be borne in mind that this is  not  one  of  those
areas  where strict precision is always possible, and  a  balance must  be sought  between  rules
that  would  give  the  judges  complete  freedom  to  determine  the  applicable  law  and,  on  the
other hand, rigid rules that leave no opportunity for flexibility in the case in question.

26

27

28

OJ C 191, 23.6.1997, p. 11, 12.
Namely Articles 5, 15 et 22 § 1.
Denmark, Luxembourg, Germany and Belgium.

16

                                                
Consequently, the value of revising the substance cannot therefore lie in clarifying in minute
detail all the points on which divergent interpretations are possible but in sorting out the most
debatable  points.  Before  considering  these  points  Article  by  Article  (at  point  3.2),  there  are
broader questions concerning the general balance of the Convention (point 3.1).

3.1.

The general balance of the Convention

3.1.1.

Link  between  the  general  conflict  rules  of  the  Rome  Convention  and  the  rules  in
sectoral instruments that have an impact on the applicable law

3.1.1.1. The  proliferation  of  rules  in  sectoral  instruments  that  have  an  impact  on  the

applicable law

The  proliferation  of  sectoral  instruments  of  Community  secondary  legislation  containing
isolated  conflict  rules29  or  of  rules  that  determine  the  scope  of  territorial  application  of
community law and therefore having an impact on the applicable law30 has aroused extensive
comment. The effect of Article 20 of the Convention and the general principles of law31 is that
these  special  rules  governing  specific  matters  derogate  from  Convention  rules  of  general
scope.  In  most  cases,  the  sectoral  rules meet  the aim  to  strengthen the protection of weaker
parties (cf. point 3.2.6, infra ).32

But their  proliferation  is  a  source  of  concern.  According  to  some,  this  is  likely  to  harm  the
consistency of the body of conflict rules applicable in the Union. An example often cited is
the rules have an impact on the applicable law in the consumer protection Directives, which
use a mechanism differing from that of the conflict rules as such33 and also contain formulas
that  vary  slightly  from  one  instrument  to  another.  In  addition,  transposal  by  the  Member
States does not always  reflect  the  spirit of  the  Directives,  in particular  when a bilateral rule
becomes unilateral.34

29

30

31

32

33

34

In  particular:  Directive  on  the  return  of  cultural  objects  unlawfully  removed  from  the  territory  of  a
Member State (1993/7, 15.3.1993); Directive concerning the posting of workers in the framework of the
provision of services (1996/71, 16.12.1996); Directive 1944/44 of 25 May 1999 on certain aspects of
sale  and  of  the  guarantees  of  the  consumer  goods.  There  is  also  a  coherent  set  of  conflict  rules
applicable to insurance in the following Directives: second non-life insurance Directive (1988/357 of 22
June 1988), as supplemented and amended by Directives 1992/49 and 2002/13; second  life  assurance
Directive (1990/619 of 8 November 1990), as supplemented and amended by Directives 1992/96 and
2002/12.
A certain number of directives contain a provision that, although not being a conflict of laws' rule, have
an impact on the applicable law to a contract. If the contract has a direct link to the territory of one or
more Member States, these provisions provide for the application of Community law even if the parties
chose  the  law  of  a  third  country.  The  following  instruments  contain  such  a  clause:  Unfair  terms
Directive  (1993/13,  5.4.1993); Timeshare  Directive  (1994/47,  26.10.1994);  Directive  97/7  of  20  May
1997  on  the  protection  of  consumers  in  respect  of  distance  contracts;  Directive  on  the  sale  and
guarantees of consumption goods (1999/44, 25.5.1999); Directive on distance sales of financial services
(2002/65, 23.9.2002)
“Generalia specialibus derogant” – special laws derogate from general laws.
The provisions concerning the territorial scope of the consumer directives find their reason in the fact
that the protection given by Article 5 of the Convention is not always considered as being sufficient; cf.
pint 3.2.7, infra
Cf. note 34, supra.
Most of the rules of conflict of laws are bilateral, i.e. they can designate either a foreign law or the law
of the forum. For example, there is a French rule according to which the court must determine a child’s
affiliation on the basis of the law of the mother’s nationality. If the mother is French, the French court
will apply French law; if she is Italian, it will apply Italian law. According to the unilateralist method,
each state is satisfied with determining the cases  where its own law  is applicable in order not to give

17

                                                
Other commentators argue that this dispersal of the conflict rules make it very difficult for the
reader, and in particular for the expert, to determine what text is applicable, in the context of
the  broader  debate  in  progress  in  the  European  Union  on  codification  of  the  ‘acquis
communautaire’ to improve transparency.35

3.1.1.2. Possible solutions

Several solutions are  currently under discussion,  ranging from measures enabling experts to
find their way more easily around the mass of existing legislation to genuine codification of
the Community conflict rules:

 i.  existing  legislation  might  be  more  reader-friendly  if  there  were  an  annex  to  the  future
instrument,  listing  the  references  of  sectoral  instruments  of  secondary  legislation
containing conflict rules and updated each time an instrument is adopted;

 ii.  special  rules  could  be  incorporated  in  the  future  Community  instrument.  The  real
question  would  then  be  whether  the  aim  is  to  move  towards  a  general  instrument
covering all the Community conflict rules in contractual matters. This de facto raises the
question of codification of the ‘acquis communautaire’;

iii. 

the  rules  in  the  sectoral  instruments  that  have  an  impact  on  the  applicable  law  aim  in
general  at  better  protection  for  weaker  parties.  However,  the  present  Green  paper
precisely takes up some reflections currently under discussion among academic writers
in order to, on the one hand, introduce a general clause that guarantees the application of
a  Community  minimum  standard  (cf.  point  3.1.2.,  infra)  and,  on  the  other  hand,  to
modernise Article 5 of the Convention on consumer contracts (cf. point 3.2.7, infra). If
these  amendments  were  made,  some  have  already  suggested  to  repeal  the  rules  in
sectoral instruments.

Question 3: Are you aware of difficulties encountered because of the proliferation and
dispersal  of  rules  having  an  impact  on  the  applicable  law  in  several
horizontal  and  sectoral  instruments  of  secondary  legislation?  If  so,  what
do you think is the best way of remedying them?

3.1.2.

Envisage a clause to guarantee the  use  of the Community minimum standard when
all the elements or some of the elements of the contract are located in the Community

3.1.2.1. The risk that Community law is not applied although all the elements of the case are

located in the Union

There are and always will be situations in which a weaker party does not enjoy the benefit of
the  protective  rules  of  the  Convention  owing  to  the  specific  circumstances  of  the  case.  The
parties'  autonomy  can  thus  lead  to  the  application  of  the  law  of  a  third  State.  If  all  parties
involved are Community nationals, such a result goes against the spirit of the Convention and
of Community law in general.

jurisdiction to the law of another State in a case where that state does not want it to be applied. Based
on the idea that private international law serves to resolve conflicts of sovereignty, such rules are the
exception nowadays. An example is Article 3 subparagraph 3 of the French  Civil Code:  “the laws on
the status and capacity of persons govern French persons, even those residing abroad”.
Cf.  Commission  communication  to  Parliament  and  the  Council  on  Codification  of  the  Acquis
communautaire, COM (2001) 645 final, 21.11.2001.

35

18

 
                                                                                                                                                        
As will be seen (point 3.2.7, infra),  it  may happen that a  “mobile”  consumer is unprotected
against  the  application  of  the  law  of  a  third  country.  For  example,  where  a  Portuguese
consumer goes to Belgium to make a purchase, no provision of the Rome Convention forbids
the  seller  from  submitting  the  contract  to  the  law  of  a  non-European  country  which  has  no
consumer protection rules.36

Admittedly,  one  could  point  to  the  fact  that  the  protection  of  weaker  parties  is  also  and  in
particular contained in a number of Directives that comprise rules on the scope of application
in  order  to  avoid  that  a  choice  of  law  of  a  third  state  leads  to  their  non-application.  (point
3.1.1,  supra).  However,  some  argue  that  such  a  mechanism  is  not  sufficient:  apart  from
making it  more  difficult  to  identify  the  applicable  rule,  the  sectoral  Directives,  as  their  title
indicates, do not apply across the full range of civil law but only in certain areas of it. Lastly,
the sectoral Directive technique is also unsatisfactory in that the consumer cannot rely on the
provisions of a Directive that has not been transposed or has been incorrectly transposed.37

3.1.2.2. Possible solutions

The modernisation of articles 5 and 6, as discussed under point 3.2.7 infra, would admittedly
allow  to  correct  some  shortcomings  of  their  current  wording.  But  consideration  should  be
given to another solution– a clause to guarantee the Community minimum standard where all
elements, or the very characteristic elements, of the contract are located in the Community.

Such a clause could be based on Article 3(3) of the present Convention, which specifies that
“where all the other elements relevant to the situation at the time of the choice are connected
with one country only”, the fact that the parties have chosen a foreign law may not prejudice
the application of that country’s mandatory rules of law.

Likewise, the future Rome I instrument could specify that, if a directive imposes the respect
for minimum standards, the parties cannot circumvent this by virtue of the rules on conflict of
laws  by  choosing  the  law  of  a  third  country  for  contracts  that  are  purely  internal  to  the
Community.  A  provision  along  the  following  lines  has  been  suggested:  “The  fact  that  the
parties  have  chosen the law of a  non-member  country  shall  not  prejudice  the  application  of
the mandatory rules of Community law where all the other elements relevant to the situation
at the time when the contract is signed are connected with one or more Member States.”38

This proposal has to be seen also in the light of the Ingmar decision of the European Court of
Justice. Despite the fact that not all elements of this case were situated within the Community
– the principal was established in the US – the Court of Justice held that certain articles of the
Directive 86/653 on commercial agents apply because the commercial agent had exercised his
activity in a Member State39.

36

37

38

39

There remain obviously the safety-nets in the form of public-order legislation – the rules that the court
can apply whatever the law applicable to the contract (cf. point 3.2.8, infra ). This device, however, is
burdensome: there are only  few  rules that can be clearly identified as such – the foreseeability of the
judicial solution is thus far from being guaranteed.
Because directives do not have horizontal direct effect. Thus the German Gran Canaria jurisprudence
has  its  origins  in  the  non-transposition  of  the  Directive  85/577  of  20.12.1985  by  Spain  (cf.  note  61,
infra).
As to the notion “mandatory rules”, cf. point 3.2.8., infra
Case  381/98  Ingmar  GB  Ltd  c/  Eato  Lonard  Technologies  Inc  [2000]  ECR  263  (judgment  given
9.11.2000).

19

                                                
Question 4: Do you think a possible future instrument should contain a general clause
guaranteeing the application of a Community minimum standard when all
elements, or at least certain highly significant elements, of the contract are
located  within  the  Community?  Does  the  wording  proposed  at  3.1.2.2
allow the objective pursued to be attained?

3.1.3.

Relationship with existing international conventions

Even  a  Community  instrument  could  make  it  possible  for  Member  States  to  continue
implementing conflict rules contained in international conventions to which they are currently
Parties. The point of this would be to avoid conflicts between the rules in those Conventions
and the rules in the Community instrument. And Member States which are already Parties to
such Conventions would not have to denounce them.

This  solution  has  the  disadvantage  of  enabling  these  States  to  apply  rules  diverging  from
those provided for by the Community instrument, which would detract from the creation of a
genuine common law-enforcement area. But this is only a slight risk, as the content of these
rules is already  perfectly  known  and  the  Member  States  would  no  longer  be  able  to  accede
individually  to  other  Conventions  once  the  proposed  Community  instrument  is  adopted.
Under the rule in AETR,40 the adoption of a Community instrument standardising the rules of
conflict of laws relating to civil and commercial contracts would confer exclusive power on
the Community to negotiate and adopt international instruments on such matters.

This possibility could be accompanied by an obligation for  the  Member  States to notify the
relevant international conventions so as to guarantee transparency and certainty as to the law.
The list could be reproduced in an annex to a Rome I instrument.

Question 5: Do you have comments on the guidelines identified above?

3.2.

Problems met in the implementation of various Articles

3.2.1.

Scope  of  the  Convention  -  exclusion  of  arbitration  and  choice  of  forum  clauses
(Article 1(2)(d))

Arbitration clauses – which provide for the designation of an arbitrator or an arbitration board
rather  than  a  court  in  the  event  of  a  dispute  –  and  choice  of  forum  clauses  –  i.e.  clauses
designating  the  court  having  jurisdiction  in  the  event  of  a  dispute  –  are  excluded  from  the
scope of the Convention.

The exclusion of arbitration agreements is not a problem, as there are a number of treaties on
the matter. But they more often  concern  the  recognition and  enforcement  of  arbitral  awards
than the law applicable to the arbitration agreement itself.

Regarding  choice  of  forum  clauses,  Article  23  of  the  Brussels  I  Regulation  does  contain
material rules, directly laying down certain conditions for the validity of such clauses, but the
Article does not settle all aspects of the matter.

Question 6: Do  you  think  one  should  envisage  conflict  rules  applicable  to  arbitration

and choice of forum clauses?

40

Case 22/70 Commission v Council [1971] ECR 263 (judgment given on 31.3.1971).

20

                                                
3.2.2.

Rules applicable to insurance contracts (Article 1(3))

3.2.2.1. The current situation

Insurance contracts covering risks located on the territory of the Union are excluded from the
scope of the Convention. The reason for this exclusion is that, in parallel with the negotiations
for the Rome Convention, another group of experts was working on private international law
and freedom to provide services as regards insurance. Several sectoral Directives41 govern the
conflict of laws specifically for insurance.

Accordingly, three hypothetical situations need to be distinguished depending, whether on the
risk is or is not located in a Member State and whether the insurer is or is not established in
the Community:

a) 

b) 

the  risk  is  located  outside  the  territory  of  the  Union:  the  applicable  law  is  determined
according  to  the  rules  of  the  Convention,  whether  the  insurer  is  established  in  the
Community or not; under the general rules of the Convention (Article 4), in the absence
of  a  choice  of  law,  the  contract  is  presumed  to  be  most  closely  connected  with  the
country in which the insurer is established;

the  risk  is  located  in  the  Union  and  is  covered  by  an  insurer  established  in  the
Community:  the  applicable  law  is  determined  in  accordance  with  the  rules  of  the
insurance  directives,  which  differ  appreciably  from  the  general  solutions  of  the
Convention. Directive 90/619 on life insurance lays down the general rule that the law of
the state where the policy-holder habitually resides apply if the policy-holder is a private
individual.  This  solution,  which  treats  the  policy-holder  effectively  as  a  consumer,
corresponds to the one applied in most non-member countries;

c) 

the  risk  is  located  in  the  Union  and  is  covered  by  an  insurer  not  established  in  the
Community:  the  applicable  law  is  determined  in  accordance  with  the  national  conflict
rules of each Member State; there is no harmonised solution for the Union.

3.2.2.2. Questions regarding the current situation

The  current  situation  has  been  criticised  by  specialists  in  private  international  law,  in
particular  because  it  is  not  strictly  compatible  with  the  concern  for  transparency  in
Community  law;  insurance  law  specialists  can  identify  the  applicable  rules,  but  the  more
general public cannot always do so.

Then there is  the  question  whether  situation  (a),  in  which  the  insurer’s  law  is  applied,  is  in
line  with  the  general  aim,  also  described  in  the  Brussels  I  Regulation,42  of  ensuring  a  high
level of protection where the policy-holder is a private individual.

Lastly, it may seem surprising that there are no harmonised conflict rules for situation (c) (risk
located in the European Union covered by an insurer established outside the Community). But
insurance specialists stress that in practice there is no need to worry about hypothesis (c), as

41

42

The Directives  mentioned in  footnote 29 above. It should be noted that  on  27  May  2002  the  Council
adopted a joint position for the adoption of a consolidated version of the life assurance Directives (OJ C
170 E, 16.7.2002, p. 45). Work is also in hand to consolidate the Directives on non-life insurance, to be
completed in 2003.
Section 3 of the Brussels Convention of 1968 already contained special rules on jurisdiction.

21

                                                
the rules concerning freedom to provide services require the non-Community service provider
to declare an address for service in the Union, which brings them under Community law.

3.2.2.3. Possible solutions

The following avenues could be explored:

 i.  Do  the  Convention’s  general  rules,  applying  in  situation  (a),  adequately  reflect  the
specific nature of insurance  contracts. Would  it  not  be preferable  to  envisage  a special
conflict rule, like the Brussels I Regulation? Or should the Community, like most other
countries, ignore risks which are not located on its territory?

 ii.  To  improve  the  transparency  of  Community  legislation,  the  special  rules  on  insurance
might conceivably be incorporated in a future Rome I instrument. But if the instrument
was  a  Regulation,  this  is  not  necessarily  the  appropriate  legislative  technique  for  rules
concerning  insurance:  when  the  insurance  directives  were  prepared,  the  Community
legislature  wished  to  leave  the  Member  States  some  room  for  manoeuvre  regarding
connecting factors  to allow the law of the policy-holder to  apply,  and  such  freedom  is
not compatible with a regulation. Most Member States, responding to the Commission’s
work on insurance and electronic commerce, expressed their wish not to incorporate the
conflict rules in the Rome Convention or the instrument which will replace it.

iii.  The  annex  giving  a  regular  update  of  the  conflict  rules  in  sectoral  instruments  (point
3.1.1.2., supra) would make it possible to improve the legibility and transparency of the
applicable rules.

Question 7: How  do  you  evaluate  the  current  rules  on  insurance?  Do  you  think  that
the current treatment of hypotheses (a) and (c) is satisfactory? How would
you recommend resolving the difficulties that have been met (if any)?

3.2.3.

Freedom of choice (Article 3(1)) - Questions regarding the choice of non-state rules

It  is  common  practice  in  international  trade  for  the  parties  to  refer  not  to  the  law  of  one  or
other  state  but  direct  to  the  rules  of  an  international  convention  such  as  the  Vienna
Convention of 11 April 1980 on contracts for the international sale of goods, to the customs
of  international  trade,  to  the  general  principles  of  law,  to  the  lex  mercatoria  or  to  recent
private  codifications  such  as  the  UNIDROIT  Principles  of  International  Commercial
Contracts.

In the minds of the authors of the Convention, such a choice does not constitute a choice of
law  within  the  meaning  of  Article  3,  which  can  only  be  choice  of  a  body  of  state  law:  a
contract containing such a choice would be governed by the law applicable in the absence of a
choice (Article 4), and it would fall to this law to determine the role to be played by the non-
state  rules  chosen  by  the  parties.43  Traditionally,  most  academic  writers  have  ruled  out  the
possibility  of  choosing  non-state  rules,  particularly  because  there  is  not  yet  a  full  and
consistent body of such rules.

43

Cf.  P.  Lagarde,  Le  nouveau  droit  international  privé  des  contrats  après  l'entrée  en  vigueur  de  la
Convention de Rome du 19 juin 1980, RCDIP, 1980.287.

22

 
                                                
Others would prefer the choice of non-state law to constitute a choice of law for the purposes
of Article 3 of the Rome Convention.44 One of the reasons brought forward to this is that one
should  not  refuse  a  practice  before  the  court  that  is  already  admitted  (in  many  countries)
before arbitrators.

Concerning more specifically the parties’ choice of the rules of the Vienna Convention of 11
April 1980, the Dutch courts have twice ruled on situations in which the Convention did not
apply directly pursuant to its Article 1(1).45 According to the Hoge Raad, the Dutch Supreme
Court,  the  parties  were  free  to  designate  this  Convention  as  the  law  applicable  to  their
contract.  There  is  still  the  question  of  the  effects  of  such  a  designation:  if  the  contract  had
been  purely  internal,  the  rules  of  the  Convention  could  not  have  derogated  from  the
mandatory rules of the law applicable in the absence of a choice. But since the contract was
an international contract, the Court acknowledged that the choice of the Convention ruled out
the mandatory rules of the law applicable in the absence of a choice.46 It did not refer to the
law which would have been applicable in the absence of a choice to ascertain the role that it
would confer on the Vienna Convention. In other words the parties themselves had genuinely
chosen this Convention.

Question 8: Should  the  parties  be  allowed  to  directly  choose  an  international
convention, or even the general principles of law? What are the arguments
for or against this solution?

3.2.4.

Freedom of choice – tacit choice (Article 3(1))

3.2.4.1. The legislature’s intention

Once  the  principle  of  freedom  of  choice  is  accepted,  it  must  be  ensured  that  the  parties
actually  exercise  this  right  to  choose  the  law  applicable  to  their  contract.  According  to  the
second  sentence  of  Article  3(2),  “the  choice  must  be  expressed  or  demonstrated  with
reasonable certainty by the terms of the contract or the circumstances of the case”. However,
some  translations  of  the  Convention  seem  to  be  more  flexible  than  others47,  and  it  is  not
impossible  that  this  difference  is  at  the  root  of  divergent  interpretations  in  the  countries
concerned.

The legislature’s intention was to admit a clear choice, even if it was tacit. In addition to the
frequent case of a deliberate clause inserted in the contract, the choice of law can therefore be
ascertained  either  from  other  provisions  of  the  contract  or  from  aspects  of  the  contractual
environment:  the  first  situation  would  include,  for  example,  acceptance  of  a  standard-form
contract  governed  by  a  specific  legal  system,  even  in  the  absence  of  any  deliberate
clarification as to the applicable law, the text leaving it to the court to check that the choice,
though  tacit,  is  real,  or  a  reference  to  provisions  of  a  given  law  without  this  law  being
designated in the aggregate. Regarding the “circumstances of the  case”,  a  contract might be

44

45

46

47

Cf.  K.  Boele-Woelki,  Principles  and  Private  International  Law  -  The  UNIDROIT  Principles  of
International Commercial Contracts and the Principles of European Contract Law: How to Apply Them
to International Contracts, Uniform Law Review, 1996.652.
Article 1(1) of the Convention specifies that it  applies  “to  contracts  of  sale  of  goods between  parties
whose places of business are in different States: a) when the States are Contracting States; or b) when
the rules of private international law lead to the application of the law of a Contracting State.”
Hoge Raad, 26.5.1989, NJ 1992.105 and 5.1.2001, NJ 2001.391.
Instead  of  “with  reasonable  certainty”  and  “mit  hinreichender  Sicherheit”  in  the  English  and  German
version, the French version asks for “de façon certaine”.

23

                                                
closely connected with an earlier contract in which there had been a deliberate choice of law,
or  it  might  be  part  of  a  series  of  operations,  the  law  having  been  chosen  only  for  the  basic
contract underlying the general operation.48

Article  3(2)  on  the  other  hand  excludes  the  purely  hypothetical  choice  deduced  from
excessively ambiguous contractual clauses. This boils down to the hypothesis of the absence
of a choice by the parties, and the court will apply the presumptions of Article 4.

3.2.4.2. Difficulties encountered in applying this Article

The  borderline  between  the  tacit  choice  and  the  purely  hypothetical  choice  is  rather  vague.
Analysis of the case-law reveals a major difference of the solutions regarding this point: the
German and  English  courts,  perhaps  under the influence of a slightly more flexible form of
words,  and  under the influence of their previous solutions,  are  less strict about  discerning  a
tacit choice than their European counterparts.

One  of  the  recurring  questions  is  how  far  an  arbitration  or  choice  of  court  clause  can
constitute  an  implicit  choice  of  the  law  of  the  country  whose  courts  or  arbitrators  are
designated. The question arises in particular when the court is confronted with such a clause
without further argument in favour of this choice. Divergences have also emerged regarding
the role to be given to the parties’ reference to technical standards or legal concepts belonging
to the law of a given country.

3.2.4.3. Possible solutions

The  legislature’s  intention  having  been  to  leave  the  court  with  considerable  room  for
manoeuvre  in  interpreting  the  parties’  choice,  Article  3,  which  is  a  key  provision  of  the
Convention, is voluntarily written in general terms. This means that the question of revision
must be approached very cautiously:

 i.  If the Convention is converted into a Community instrument, the Court of Justice would
automatically have jurisdiction to interpret it. Admittedly, since Decisions would then be
taken  on  a  case-by-case  basis,  the  fact  that  jurisdiction  is  conferred  on  the  Court  of
Justice, which decides points of law and not of fact, would not mean that  the  concrete
solution can be predicted in advance. But the court can reasonably be expected to define
at  least  the  general  framework  for  the  interpretation  of  Article  3(1),  thus  reducing  the
most glaring uncertainties;49

 ii.  The future instrument could itself give more precise information regarding the definition

and the minimum requirements for there to be a tacit choice;

iii.  To  strengthen  the  uniform  implementation  of  the  Convention,  it  seems  preferable  to

align the various language versions of the text.

48

49

Cf. examples given by the explanatory report on the Convention by Mr Guiliano and Mr Lagarde, OJ C
282, 31.10.1980.
The  Court  of  Justice  might  also,  for  example,  hold  that  the  mere  fact  of  designating  the  courts  of  a
country does not constitute a choice of law if this choice is not corroborated by other factors.

24

 
                                                
Question 9: Do you think that a future Rome I instrument should contain more precise
information regarding the definition of a tacit choice of applicable law or
would  conferring  jurisdiction  on  the  Court  of  Justice  suffice  to  ensure
certainty as to the law?

3.2.5. What is the strength of the general presumption laid down by Article 4(2)

3.2.5.1. Current situation

Which law should be applied when the parties have made no explicit or tacit choice of the law
applicable  to  their  contract?  The  Convention  follows  the  principle  of  the  proper  law:
according to Article 4(1) the contract is governed by the law of the country with which it is
most  closely  connected.  The  formula  is  deliberately  vague:  the  court  has  to  weigh  up  the
factors that help to reveal the “centre of gravity” of the contract. That is sometimes a difficult
task, and there is a risk of uncertainty as to the solution selected.

To  strengthen  certainty  as  to  the  law  and  help  the  court  to  determine  the  applicable  law,
Article  4(2)  then  establishes  a  general  presumption  that  “the  contract  is  most  closely
connected  with  the  country  where  the  party  who  is  to  effect  the  performance  which  is
characteristic  of  the  contract  has,  at  the  time  of  conclusion  of  the  contract,  his  habitual
residence”.50 The “characteristic” performance is what constitutes the centre of gravity of the
contract,  basically  that  which  must  be  paid  for  depending  on  the  type  of  contract  –  the
obligation to transfer property in a sales contract, to provide a service in a service contract, to
transport in a contract of carriage,  to insure in an insurance contract,  and  so on. Art. 4  thus
leads, in principle, to the application of the law of the seller or the service provider.

But the court can disregard this presumption “if it appears from the circumstances as a whole
that  the  contract  is  more  closely  connected  with  another  country”  (Article  4(5)).  It  then
applies  the  general  rule  of  identifying  the  law  with  which  the  contract  is  most  closely
connected. This mechanism making  it possible to return to the  general rule is  known  as  the
“exception clause”.

3.2.5.2. Difficulties encountered

In the spirit of many comments on the Convention, the exception clause of Article 4(5) must
be used carefully and rarely since its frequent application leads  to unforeseeability  as to  the
applicable law – an unforeseeability that the presumptions of Art. 4 are precisely intended to
reduce.

Thus,  an  analysis  of  the  case-law  reveals  that  in  several  cases  the  courts  have  applied  the
exception  clause  ab  initio,  seeking  immediately  the  law  that  is  most  closely  connected,
without beginning with the presumption of Article 4(2).

3.2.5.3. Possible solution

The solution is closely bound up with the objective that one wishes to pursue with the conflict
rule: is it to ensure the closest possible connection, which would encourage a flexible clause

50

For  certain  types  of  contract  (immovable  property,  contract  for  carriage  of  goods),  the  Convention
establishes special presumptions (Article 4(3) and (4)).

25

                                                
such as Article 4(5), or the highest degree of certainty as to the law, which would encourage
the strict application of the presumption provided for in Article 4(2)?

Given the letter and spirit of the Convention, the courts might reasonably be expected to begin
with  the  presumption  of  Article  4(2).  Only  if  it  emerged  that  the  law  designated  is  not
appropriate because  other  circumstances  clearly militate  in favour  of  another  law would  the
court then use the “exception clause”. This is precisely the rule laid down in a Decision of the
Dutch Hoge Raad, whereby the court must first apply the presumption of Article 4(2) and rule
out the law thus obtained only if it is obviously unsuited to the instant case.51

To clarify the text on this point, it would be possible to review the drafting of Article 4. One
possibility  would  be  purely  and  simply  to  delete  paragraph  1  so  as  to  emphasise  the
exceptional character of paragraph 5. Another solution would be to amend paragraph 5 itself.
Thus  the  future  Rome  I  instrument  could  take  as  a  starting  point  the  preliminary  draft
proposal for a Council Regulation on the law applicable to non-contractual obligations (Rome
II), the exception clause in Article 3(3) of which introduces two new conditions in relation to
the Rome Convention: it is required that there be “a substantially closer connection [between
the  tortious/delictual  act  and]  another  country”  and  also  that  “there  is  no  significant
connection between the non-contractual obligation and the country whose law would be the
applicable law under paragraphs 1 and 2.”

Question 10: Do  you  believe  that  Article  4  should  be  redrafted  to  compel  the  court  to
begin by applying the presumption of paragraph 2 and to rule out the law
thus obtained only if it is obviously unsuited to the instant case? If so, how
do you think it would be best drafted?

3.2.6.

Application  of  the  special  presumption  in  property  matters  to  holiday  leasing
agreements (Article 4(3))

3.2.6.1. Current solution

When  the  subject  matter  of  the  contract  is  a  right  in  immovable  property  or  a  right  to  use
immovable property (sale contract, deed or lease of an apartment, for example), it is presumed
be  most  closely  connected  with  the  law  of  the  place  where  the  property  is  situated  (Article
4(3)).  The  reason  for  this  rule  is  that  States  traditionally  want  buildings  located  in  their
territory to be governed by their own law, in particular owing to the importance of property
for the social and economic organisation of the country.

3.2.6.2. Difficulties encountered in the application of this Article

The special presumption in property matters also covers contracts for very short-term holiday
accommodation.  For  instance,  a  German  landlord,  being  a  private  individual  or  a  travel
agency, owns a house in the South of Spain and rents it to German private individuals. The
tenants are not satisfied with the state of the house and wish to recover part of the rent. As this

51

Nouvelles des Papeteries de l’ Aa v. BV Machinenfabriek BOA, Hoge Raad, 25 September 1992: when
the characteristic performance could be ascertained, § 2 contained the  main rule  and  the  exception  to
that  rule  contained  in  §  5  should  therefore  be  interpreted  restrictively.  In  other  words,  §  2  should  be
disapplied only if, in the light of special factors, the country of habitual residence of the party carrying
out the characteristic performance had “no real value as a connecting factor”.

26

                                                
contract  concluded  between  two  Germans  concerns  immovable  property,  it  would  be
governed by the Spanish law under Article 4(3).52

It  was  already  suggested  in  the  explanatory  report  on  the  Convention  that  in  such
circumstances the courts could apply the exception clause in Article 4(5). Some courts have
already done so.53

Some authors do however not approve the frequent use of the exception clause in article 4 (5)
because it leads to uncertainty with respect to the outcome of a procedure.

In  addition, this  solution may be incompatible with the Brussels  I  Regulation, Article  22  of
which  contains  -  unlike  the  Brussels  Convention  of  1968  -  a  specific  rule  on  “tenancies  of
immovable  property  concluded  for  temporary  private  use  for  a  maximum  period  of  six
consecutive  months”.  Under  certain  circumstances  the  parties  are  then  allowed  to  derogate
from  the  exclusive  jurisdiction  of  the  courts  of  the  place  where  the  immovable  property  is
situated  and  to  bring  proceedings  in  the  courts  of  the  Member  state  of  the  landlord's  and
tenant's common domicile.

3.2.6.3. Possible solution

The  EUROPEAN  GROUP  FOR  PRIVATE  INTERNATIONAL  LAW  suggested  Article  4  (3)  should
contain  a  specific  rule  on  short-term  holiday  tenancy,  along  the  lines  of  the  second
subparagraph of Article 22 of the Brussels I Regulation. The wording could be the following:
"However,  contracts which have as their  object tenancies of immovable  property  concluded
for a temporary private use for a maximum period of six consecutive months will be governed
by  the  laws  of  the  country  in  which  the  lessor  is  domiciled,  provided  that  the  tenant  is  a
natural  person  and  that  the  landlord  and  the  tenant  are  domiciled  in  the  same  country."54
Should such a clause be inserted to article 4 (3), the judge would still be allowed to apply the
exception clause of article 4 (5) to compensate for the rigidity of such a rule.

Question 11: Do  you  believe  on  should  create  a  specific  rule  on  short-term  holiday
tenancy, along the lines of the second subparagraph of Article 22(1) of the
Brussels I Regulation, or the present solution is it satisfactory?

3.2.7.

The protection of consumers (Article 5)

3.2.7.1. Summary of the contents and scope of the protective rules of Article 5

Since  the  1970s  a  new  special  body  of  law  –  consumer  law  –  has  emerged  to  reflect  the
imbalance  between consumers  and professionals. Special rules, such  as  the  nullity  of  unfair
terms or the right to withdraw from a contract unilaterally within a certain time, now protect
the consumer against rash commitments.

52

53

54

Article  5  does  not  apply  if  the  lessor  himself  is  a  private  individual.  If  the  lessor  is  a  professional,
Article 5  (4)  provides  that  the  consumer  protecting  rules  do  not  apply  in  a  contract  for  the  supply  of
services "where the services are to be supplied to the consumer exclusively in a country other than that
in which he has his habitual residence".
BGH,  12  October  1998,  IPRAX  1990,318:  application  of  the  German  law  to  a  contract  in  which  a
German travel agency supplied its German customers with holiday houses in France.
Care will have to be taken with the consistency of legal terminology in the future instrument, as Article
22  of  the  Brussels  I  Regulation  introduces  the  concept  of  “natural  person”,  which  might  appear  less
restrictive than “consumer”.

27

                                                
But the protective rules in force in the country of the consumer’s habitual residence, i.e. those
on  which  the  consumer  basically  relies  for  protection,  would  be  rendered  ineffective  in
international  or  intra-Community  trade  if  they  could  be  excluded  merely  by  choosing  a
foreign law. To reassure consumers, who have a vital role to play in an internal market which
has  no  hope  of  success  without  their  active  participation,  the  Rome  Convention  envisages
special conflict rules.

But  Article  5  also  aims  to  preserve  a  degree  of  balance  between  the  parties.  That  is  why  it
states the conditions for its application precisely.

Article 5 lays down a double rule: on the one hand, in the absence of choice, the contract is
governed by the law of the country in which the consumer has his habitual residence (Article
5(3)). Moreover, “a choice of law made by the parties shall not have the result of depriving
the  consumer  of  the  protection  afforded  to  him  by  the  mandatory  rules  of  the  law  of  the
country  in  which  he  has  his  habitual  residence”  (Article  5(2)).  The  application  of  this
provision leads to a situation described as “dépeçage”, i.e. different parts of a same contract
are ruled by the  laws of two ore even more  countries.  Thus  a  contract  between  a  consumer
residing in country A and a business established in country B will contain very often a clause
for  making  the  law  of  country  B  applicable;  when  the  conditions  of  Article  5  are  met,  the
court must nevertheless give effect to certain provisions of the law of country A, those which
relate  to  public  policy  and  protect  the  consumer.55  The  court  must  accordingly  apply  two
distinct laws to the same contract.

Regarding  the  conditions  for  application  of  Article  5,  the  scope  of  the  protective  rules  is
confined to certain types of contracts,56 concluded with consumers, this concept being strictly
defined, in quite precise circumstances. There are three of these circumstances, and they can
be  summarised  by  saying  that,  as  a  general  rule  and  apart  from  the  case  of  cross-border
excursions organised by the vendor, there is no protection for  the  “mobile consumer”, i.e. a
consumer who travels to a country other than that of habitual residence to make a purchase or
receive  a  service.57  For  the  mobile  consumer,  the  general  conflict  rules  of  Articles  3  and  4
apply,  and  they  generally  make  the  law  of  the  seller’s  or  service  provider’s  residence
applicable.

3.2.7.2. Difficulties encountered

The solution in Article 5, which was written at a time when consumer law and distance selling
techniques were in their infancy, has come in for some criticism. Austria, for instance, made
its accession to the Rome Convention conditional on consideration being given to revision of
this Article.58

55

56

57

58

This involves in particular the right of the consumer to withdraw from the contract and to be protected
against unfair terms, such as those releasing the professional from liability in the event of damage.
The contracts to which Article 5 applies are contracts for the supply of tangible goods or services and
contracts to finance such supplies.
More precisely, the following three hypotheses are concerned. First, where the signing of the contract
was preceded in the country of the consumer’s habitual residence by a specific proposal (for example
the sending of a catalogue or of an offer of contract) or advertising (via  radio,  television,  newspaper,
mail,  whatever)  if  the  consumer  performed  in  this  country  the  measures  needed  to  conclude  the
contract. Second,  where the professional received the order in the country of  the  consumer’s  habitual
residence. Third, more specific, where the tradesman organised a “cross-border excursion” with the aim
of prompting the consumer to conclude sale.
Cf. footnote 26, supra .

28

                                                
Article 5 is regarded by several academic writers as not  giving  the mobile  consumer proper
protection. It is clear from an analysis of the case law that, since the contract is not within the
situations  envisaged  by  this  Article,  a  consumer  contract  can  be  governed  by  a  foreign  law
which has no consumer protection provisions.  His situation  is  still worsened  when,  as  in  an
important German case, he finds himself also deprived of the benefit of the mandatory rules
of article 7.59

Admittedly, thanks to a large number of EC directives, all consumers residing in the European
Union now enjoy the benefit of a Community minimum protection standard.60 But it must be
borne in mind that these directives cover only certain aspects of legal rules which protect the
consumer. In addition, there can still be differences from one country to another, in particular
where a Member State fails to transpose  a  directive:  since  directives  do  not have horizontal
direct effect, the consumer cannot rely on a provision not transposed into national law in his
relations with his contracting partners.61 Lastly, a certain number of EC directives introduce
only a minimum standard of protection which falls short of the consumer protection given in
certain Member States.

Article  5  is  also  criticised  for  the  criteria  on  the  basis  of  which  it  distinguishes  consumers
eligible  for  specific  protection  from  those  subject  to  the  general  system.  These  are  the
conditions for application of Article 5.62 The criteria selected no longer seem adapted to the
development  of  new  distance  selling  techniques.  To  determine  whether  or  not  a  contract  is
within the scope  of  Article 5, it  is always necessary  to locate it in space  by  reference  to  an
aspect such as advertising, the signing of a contract or the receipt of an order (Article 5(2)). In
addition, this solution is no longer in harmony with Article 15 of the Brussels  I Regulation,
under  which  consumer  protection  provisions  apply  where  a  company  directs  its  business
activities towards the Member State of the consumer’s residence and a contract is concluded
within the framework of these activities, whatever distance selling technique is used.63

59

60

58

62

63

Cf.  judgment  of  the  German  BGH  of  19.3.1997,  quoted  in  footnote  61,  infra.  On  the  contrary,  the
French Cour de cassation recently decided that some of the rules on overindebtedness contained in the
French Code de Consommation are mandatory within the meaning of Article 7 (Civ I, 10.7.2001, Bull.
n° 210, N° 000-04-104).
Cf. point 3.1.2, supra.
Such  a  failure  to  transpose  a  Community  Directive  was  at  the  source  of  two  sets  of  cases  (Gran
Canaria) in the German courts, which culminated in a judgment of the Bundesgerichtshof. In the first
set of cases, German tourists on  holiday on the Spanish island of Gran Canaria  were the  victims of a
German company manufacturing bed linen. It had an agreement  with a local Spanish company  which
organised free bus excursions to a bird reserve. During the trip it advertised the products of the German
company  and  gave  the  tourists  a  “sales  contract”  form,  which  they  signed  without  paying  anything
immediately. It was stated that on returning to Germany the customers would receive confirmation of
their orders from the German company. Disputes arose when, on their return to Germany, some of these
tourists refused to pay the price invoiced by the German company and claimed  to  exert  their  right  of
withdrawal under German law, enacted under Directive 85/577. The legal question was whether the law
applicable to these disputes was the German law, favourable to the customers, or Spanish law, specified
as the applicable law by the  contract,  which,  as  Spain  had  not  transposed  part  of  the  Directive  at  the
material time, did not acknowledge the right to withdraw. In the second set of cases, German consumers
travelling in the Canary Islands were subjected to hard-sell sessions and induced to sign contracts  for
the purchase of a timeshare in a holiday apartment. The contracts - some subject to the law of the Isle of
Man, others to Spanish law - contained a non-withdrawal clause although  withdrawal  was possible in
German law and Community law. The question was whether the consumers could rely on German law
against the law chosen in the contract. The BGH ruled out any attempt to justify the application of the
protective German law, even as mandatory rule of the forum within the meaning of Article 7.
Cf. note 57, supra .
Cf. joint declaration by the Commission and the Council concerning Articles 15 and 73 of the Brussels I
Regulation, accessible at http://europa.eu.int/comm/justice_home/unit/civil_en.htm.

29

                                                
Lastly,  some  wonder  about  the  use  of  the  dépeçage  mechanism.  It  raises  theoretical
questions,64 and it will also be necessary to ascertain whether practical difficulties arise with
its use in the courts.

3.2.7.3. Possible solutions

When  consideration  is  given  to  the  revision  of  Article  5,  the  general  concerns  for  the
protection  for  the  consumer,  in  particular  when  all  the  facts  of  the  case  are  located  in  the
Union, and the need to preserve balance in the interests of the parties must be borne in mind.
Future rules  should be  clear,  general  and  as  broad  as  possible,  so  that  the  parties  can  know
clearly in advance what law will apply to their contractual relationship.

Consideration will extend to the nature of the protection given to the consumer (application of
one  or  other  law)  and  to  the  criteria  for  identifying  the  consumers  actually  eligible  for  the
protective provisions, i.e. the conditions for application of them.

The following are some possible guidelines for the debate:

 i.  Maintenance  of  the  current  solution,  with  a  general  clause  guaranteeing  the  use  of  the
Community  minimum  protection  standard  (point  3.1.2,  supra  ):  This  solution  would
make  it  possible  to  remedy  situations  in  which  the  lack  of  Community  consumer
protection is the most blatant. But while such a clause would state that certain provisions
of Community law must be adhered to, it would not itself determine the applicable law.
This solution would therefore involve a mechanism very different from that of the other
conflict  rules  and  it  might  remain  exceptional.  In  particular,  EC  directives  do  not  yet
cover all the aspects of consumer law, so protection via national law remains important;

 ii.  Maintenance  of  the  current  solution,  but  changing  the  conditions  for  application  to
include the mobile consumer and possibly the types of contracts currently excluded, on
the grounds that the current solution is basically satisfactory, and that all that is needed is
to enlarge its scope (point vi, infra);

iii.  Generalisation of Articles 3 and 4 of the Convention, the law of the place of the business
being applied in exchange for generalised application of the mandatory rules of the state
of  the  consumer’s  residence:  The  EUROPEAN  GROUPING  OF  PRIVATE  INTERNATIONAL
LAW  proposes  applying  Articles  3  and  4  of  the  Convention  to  consumer  contracts,  in
combination  with  an  extension  of  the  rule  currently  provided  for  in  Article  5(2).  In
practice this  would  mean that the consumer  contract would be  governed by  the  law  of
the place where the business is established, whether or not the parties choose it, but that
the court would in either event apply the mandatory rules of protection of the law of the
consumer’s  place  of  residence.  This  solution  would  have  the  advantage  of  making  it
easier  for  the  supplier  to  foresee  the  applicable  law.  To  further  increase  this
foreseeability,  the  solution  could  be  supplemented  by  a  provision  that  the  mandatory
rules  of  law  of  the  consumer’s  place  of  residence  are  applied  provided  the  supplier  is
actually in a position to know where that is (point vii, infra). But this would increase the

64

One  of  the  questions  raised  by  the  dépeçage  mechanism  is  what  happens  when  the  consumer’s
protective provisions are more favourable in country B than in country A. The answer to this question
depends on the view taken of consumer protection: does it consist of applying a law that is known to the
consumer and therefore matches his legitimate expectations or a law which is actually more favourable
to him?

30

 
                                                
number  of  cases  of  dépeçage  and  the  potential  practical  difficulties  will  have  to  be
weighed up;

iv.  Options  ii  and  iii  require  the  identification  of  the  "mandatory  rules"  of  the  consumer's
habitual place of residence. For legal matters already harmonised at Community level, it
was suggested that the consumer protection rules of the law chosen by the parties should
apply (in general, the law of the place where the business is established). Only in matters
not  harmonised  at  EC  level,  the  consumer  should  not  be  deprived  of  the  protection
through the "mandatory rules" of the law of the country of his habitual residence;

 v.  Systematic application of the law of the consumer’s place of residence: This would be a
neat and clear solution and would make it unnecessary to split the contract. This in turn
would enhance certainty as to the law and would enable proceedings to be handled more
quickly  and  more  cheaply;  both  parties  stand  to  gain.  But  here  again,  there  is  the
question of the conditions for application of the rule (point vi, infra);

 vi.  With  respect  to  solutions  ii,  iii  or  v,  there  will  always  be  a  need  to  examine  the
conditions of their application to make a distinction between consumers who are eligible
for  specific  protection  in  cross-border  transactions  and  those  who  are  not.65  The
traditional  approach,  adopted  in  the  Brussels  Convention  of  1968  and  the  Rome
Convention,  was  to  look  at  the  question  from  the  consumer’s  angle,  withholding
protection from those who had knowingly taken the “risk of foreign trade”. But, as has
already been seen, this criterion, requiring locating measures taken by the parties, is not
well  adapted  to  the  era  of  the  new  distance  selling  techniques  (Pay-TV,  Internet).
Another  solution  might  be  to  analyse  the  conduct  by  the  business  to  determine  the
conditions for application of the protective provisions of Article 5. Thus the future Rome
I instrument could take as a starting point Article 15 of the Brussels I Regulation, which
combines  two  conditions  to  decide  whether  a  consumer  is  eligible  for  the  protective
rules66: firstly, that the business directs its activities towards the State of the consumer’s
residence and, secondly, that a contract is concluded at a distance within the framework
of these activities. This Green Paper could also be the occasion to reflect on the need to
introduce  a  Community  definition  of  the  expression  to  "direct  an  activity  towards
another State"; for instance, such definition could be composed of a range of facts.

 vii.  The  introduction of  elements  involving  the  theory  of  appearance  provides  a  variant  on
solution  (vi), still  with the objective of  specifying the  conditions  for application  of  the
consumer protection provisions. Thus a future instrument could provide that the place of

65

66

There  are  hypotheses  in  which  the  application  of  the  consumer’s  law  is  not  reasonably  possible,  for
example when a Belgian tourist travelling in Portugal enters a local shop there and buys a video cassette
that turns out to be defective.
Cf. statement by the Commission and the Council on Article 15 of the Brussels I Regulation (available
at  http://europa.eu.int/comm/justice_home/unit/civil/justciv_conseil/justciv_en.pdf),  specifies  that  for
the consumer protection provisions to be applicable, it is not sufficient for an undertaking to target its
activities at the Member State of the consumer's residence; a contract must also be concluded within the
framework  of  its  activities.  “...  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 contracts 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.” The
statement does not necessarily refer only to interactive sites: the aim of a site asking the visitor to send
an  order  by  fax  is  to  conclude  a  distance  contract.  But  a  site  does  not  aim  to  conclude  a  distance
contract  if,  while  addressing  the  consumers  of  the  whole  world  with  in  the  intention  of  providing
information on a product, it then refers them to a local distributor for the purpose of signing a contract.

31

 
                                                
the consumer’s residence would be a relevant factor only if the supplier was aware of it
or should have been aware of it on the ground of the consumer’s conduct. The supplier
would be protected from the application of a foreign law if the consumer did not provide
him  with  any  means  of  knowing  at  least  the  country  –  but  not  necessarily  the  exact
address  –  of  his  residence,  on  the  understanding  that  it  is  for  the  supplier  to  give  the
consumer the opportunity to do so.67

viii.  A  completely  different  approach  would  be  not  to  distinguish  any  more  between
consumers  which  are  eligible  for  specific  protection  and  those  who  are  not,  but  to
introduce one single rule applicable to  all consumers. For instance,  a future  instrument
might  permit,  for  all  consumer  contracts,  the  choice  of  a  law  which  is  not  that  of  the
consumer's  habitual  residence,  but  it  would  be  a  very  limited  choice,  since  the  parties
could only chose the law of the country where the business is established. For this choice
being valid, it would be for the business to prove that the consumer made an informed
choice and that he had advance information on all the rights and obligations conferred on
him  by  that  law  (right  of  withdrawal,  exchange  of  product,  duration  and  terms  of  the
guarantee, etc If the business failed to do so, the court would apply either the consumer’s
law  or  the  mandatory  provisions  of  that  law.  Such  a  solution,  being  justified  by  the
existence of a Community minimum standard of consumer protection, would obviously
be  applicable  only  if  the  business  was  domiciled  in  a  Member  State.  Non-Community
businesses, in exchange for the choice of a law other than that of the consumer, would
remain subject to its mandatory provisions and must accept the dépeçage of the contract;

Whatever the  solution  selected,  it  must be remembered that consumer disputes  only  seldom
come before the courts, as they tend to be small claims. The question of the law applicable to
a consumer contract should accordingly be seen in the context of current  efforts  both  in  the
Member  States  and  at  the  European  Commission  to  encourage  alternative,  including
electronic, dispute resolution procedures.68

Question 12: Evaluation of the consumer protection rules:

A.  How  do  you  evaluate  the  current  rules  on  consumer  protection?  Are  they  still
appropriate, in particular in the light of the development of electronic commerce?

B.  Do  you  have  information  on  the  impact  of  the  current  rule  on  a)  companies  in

general; b) small and medium-sized enterprises; c) consumers?

C.  Among the  proposed solutions, which do you  prefer, and why?  Are  other  solutions

possible?

D.  In  your  view,  what  would  be  the  impact  of  the  various  possible  solutions  on  a)

companies in general; b) small and medium-sized enterprises; c) consumers?

67

68

For  a  contract  concluded  via  the  Internet,  for  example,  it  is  up  to  the  business  to  make  sure  that  its
standard form enables it to identify the place of the consumer’s residence.
Cf. Green Paper on alternative dispute resolution in civil and commercial matters, COM(2002)196 (01).

32

 
                                                
3.2.8. Questions regarding the definition of the term “mandatory provisions”

3.2.8.1. The concept of mandatory provision covers a multiform reality

The  Convention  refers  to  the  applicability  of  mandatory  provisions  in  Articles  3(3),  5,  6,  7
and  9.  What  does  this  mean?  In  national  law,  there  are  numerous  mandatory  provisions
designed to guarantee a country’s social and economic order, also called “public policy” rules.
The reference here is to rules from which the parties cannot derogate by contract, in particular
those aiming to protect weaker parties (consumers, workers, authors in publishing contracts,
minors, commercial agents).69 However, in a contract subject to a foreign law, a weak party
cannot  automatically  expect  his  own  country’s  public  policy  provisions  to  apply  unless  the
special rules of the Convention (Articles 5 and 6) so provide.

The  mandatory  provisions  within  the  meaning  of  Article  7,  also  designated  by  the  term
“overriding rules" by English writers, are a different matter, and they are involved only in an
international context: this involves provisions to which a state attaches such importance that it
requires them to be applied whenever there is a connection between the legal situation and its
territory,  whatever  law  is  otherwise  applicable  to  the  contract.  What  is  special  about  the
mandatory  rules  within  the  meaning  of  Article  7  is  that  the  court  does  not  even  apply  its
conflict  rules  to  see  what  law  would  be  applicable  and  assess  whether  its  content  might  be
repugnant to the values of the forum70 but automatically applies its own law. Article 7 does
not  enumerate  overriding  mandatory  rules,  each  court  must  decide  on  the  basis  of  its  own
legal system whether this or that provision is a mandatory rule within the meaning of Article
7, and the answer is not always obvious.

This  difference can  be illustrated  by  the  French  law on  redundancy.  This  is  indisputably  an
internal public policy law, which means that any contract between  a French employer and a
French  employed  whereby  the  employee  waived  his  rights  to  redundancy  pay  or  agreed  to
shorter than normal periods of notice without compensation would be null and void. On the
other hand, the French courts have held that  it  is not an  "overriding mandatory rule" within
the  meaning  of  Article  7,  applicable  whatever  the  law  applicable  to  the  contract.71
Accordingly, a  French employee whose  employment  contract  is  validly  subject  to  a  foreign
law (point 3.2.9, infra) cannot expect French redundancy legislation to apply automatically.

3.2.8.2. Difficulties encountered

There  are  those72  who  express  doubts  about  the  combination  between  the  mandatory
provisions of Article 5 and those of Article 7: they argue that Article 5 is a special application
of Article 7 as the  two  aim to displace  the  normally  applicable  law.  Accordingly,  when  the
conditions of  Article  5  are  not  met,  Article  7  would  also  be  inoperative.  This  interpretation
would deprive a mobile consumer, who already does not enjoy the protection of Article 5, of
the safety valve offered by the public order acts. The German case law has followed the same
line,73 but most academic writers are sharply critical.

69

70

71

72

73

For example, in employment law, the rules concerning safety and health at work, minimum wages, paid
leave or sick leave.
This is the public-policy exception, provided for by Article 16 of the Convention.
Paris Court of Appeal, 22.3.1990, D. 1990, Somm., p. 176.
P. Lagarde, Cf. P. Lagarde, Le nouveau droit international privé des contrats après l'entrée en vigueur
de la Convention de Rome du 19 juin 1980, RCDIP, 1991,316.
Bundesgerichtshof, 19 March 1997 (Case VIII ZR 316/96): German consumers travelling in the Canary
Islands were induced by dubious practices to sign contracts for the purchase of a timeshare in a holiday

33

                                                
Generally, the use of the same expression for very different concepts generates confusion in
the interpretation of the Convention.

3.2.8.3. Possible solutions

A future instrument could specify that the scope of the two Articles is not identical. Article 5
designates  an  objectively  applicable  law  (in  the  circumstances  that  it  defines)  whose
mandatory protective  provisions  (as defined  by  national  law) must  be complied with.  But it
does not interfere with the possible application of overriding mandatory rules, provided for by
Article  7  as  regards  laws  which  regard  their  provisions  as  internationally  mandatory  and
which  can  thus  provide  complementary  protection  when  their  conditions  for  application  in
geographical terms are satisfied.

The  future  Rome  I  instrument  could  therefore  propose  a  definition  of  the  concept  of
mandatory rules within the meaning of Article 7, based on the decision of the Court of Justice
in Arblade,74 according to which this term means “national provisions compliance with which
has been deemed to be so crucial for the protection of the political, social or economic order
in the Member State concerned as to require compliance therewith by all persons present on
the national territory of that Member State and all legal relationships within that State.”

In response to the Court’s decision in Ingmar GB Ltd v Eaton Loenard Technologies Inc.,75
some have also suggested specifying in the future instrument that there cannot be mandatory
provision  within  the  meaning  of  Article  7  when  a  rule  aims  only  to  protect  purely  private
interests, as opposed to legislation protecting the state’s political, economic or social order.

According  to  the  Ingmar  decision,  not  only  national  provisions  but  also  provisions  of
Community legislation may be mandatory within the meaning of Article 7. This idea could be
incorporated into a future "Rome I" instrument, along the lines of Article 11 (3) of the draft
proposal  for  a  Council  Regulation  on  the  law  applicable  to  non-contractual  obligations
("Rome II").76

Question 13: Should  a  future  Rome  I  instrument  specify  the  meaning  of  "mandatory

provisions" in Articles 3, 5, 6 and 9 and in Article 7?

apartment. The contracts - some subject to the law of the Isle of Man, others to Spanish law - contained
a non-withdrawal clause although withdrawal was possible in German law and Community law. When
they  returned  to  Germany,  certain  tourists  wished  nevertheless  to  exercise  the  right  of  withdrawal
provided  for  by  German  law.  Being  eligible  as  “mobile”  consumers  for  the  consumer  protection
measures  of  Article  5,  the  lower  courts  argued  that  the  right  of  withdrawal  under  German  law  was
conferred  by  public-order  legislation  within  the  meaning  of  Article  7(2)  of  the  Convention.  This
argument  was rejected by the Supreme Court on the  ground that German law  could  be  applied  under
Article  7  only  if  the  conditions  as  to  connection  with  the  territory  provided  for  by  Article  5(2)  for
contracts  governed  by  this  Article  were  met.  Consumer  protection  in  such  a  case  is  now  given  by
Community sectoral Directives.
Cases C-369/96 and C-374/96 (judgment given on 23.11.1999).
Case C-381/98 (judgment given on 9.11.2000).
Cf. note 5, supra.

74

75

76

34

                                                                                                                                                        
3.2.9. Uncertainties relating to the interpretation of “temporary employment” of employees

in Article 6

3.2.9.1. The law applicable to employment contract

Out  of  the  same  concern  for  workers’  protection  as  for  consumers,  the  authors  of  the
Convention derogated from the general rules of Articles 3 and 4. Article 6(1) is built on the
same  model  as  the  first  subparagraph  of  Article  5(2):  freedom  of  choice  is  not  abolished,
which  is  not  negligible  for  contracts  negotiated  by  managers.  This  freedom  is  limited,
however, in that the choice of another law than that which would be objectively applicable in
the  absence  of  a  choice  cannot  have  the  effect  of  depriving  the  worker  of  the  protection
enjoyed under the mandatory provisions of the objectively applicable law.

But  the  spirit  behind  the  determination  of  the  objectively  applicable  law  in  Article  6(2)  is
different  from  Article  5:  while  for  Article  5,  the  applicable  law  is  that  of  the  consumer’s
residence, which is the law that the consumer generally knows and on the protection of which
he  relies,  Article  6(2)  tries  to  determine  the  law  with  which  the  contract  is  most  closely
connected.  It  distinguishes  according  to  whether  the  worker  habitually  carries  out  his  work
under the contract in the same country or not.

In the first case, the law of the country in which the worker habitually carries out his work is
applicable.  The  Article  specifies  that  this  is  also  the  case  when  the  worker  “is  temporarily
employed in another country”: the law applicable to the contract of a worker sent abroad for a
given duration or for the needs of a specific job does not change, whereas expatriation entails
the application of the law of the new country as that is now the country in which the worker
habitually carries out his work.

When,  on  the  other  hand,  the  worker  does  not  habitually  carry  out  his  work  in  the  same
country,77 the  applicable law is that of  “the country  in  which  the  place  of  business  through
which he was engaged is situated”.

In both cases, whether or not the worker habitually carries out his work in the same country,
the objective connection defined by the Convention can be overridden by an exception clause
(end  of  Article  (2)),  which  for  the  worker  avoids  the  harmful  consequences  of  rigid
connection of the contract to the law of the place of performance.78

3.2.9.2. Difficulties encountered

Practitioners and academic writers generally consider that the rules of Article 6 are relatively
well drafted. Consequently, the decided cases tend to focus on the circumstances of the case,
often  complex  and  open  to  interpretation.  But  there  are  a  few  difficulties  that  should  be
pointed  out.  First  there  are  those  already  referred  to  in  relation  to  Articles  3,  4  and  5,
pertaining in particular to determination of the tacit choice, to frequent use of  the  exception
clause and the interaction between the mandatory provisions provided for in Article 6 and the
public-order legislation referred to in Article 7, to which we will not return here.

77

78

Examples  would  include  a  worker  in  a  mobile  construction  crew  and  a  sales  agent  active  in  several
States.
For example, a contract concluded in France between a French employer and a French employee for a
two-year work in an African country, possibly with the promise of further employment in France on the
expiry of the contract, can be assumed to be governed by the law not of the African country of the place
of performance but by French law, with which it is most closely connected.

35

                                                
Close attention must be paid, on the other hand, to the “temporary employment” concept. For
one  thing,  an  analysis  of  the  decided  cases  reveals  that  the  definition  of  “temporary”  raises
problems in private international law, and for another, account must be taken of the definition
of “posting” in Directive 1996/71 of 16 December 1996.

To  begin  with  the  private  international  law  angle,  the  Convention  leaves  it  to  the  court  to
determine the duration beyond which employment ceases to be temporary. Solutions are thus
not easily foreseeable and can vary from country to country. However, this absence of rigidity
regarding the applicable law also enables the court to take have fuller regard to the facts of the
case,  as  “temporary  employment”  can  refer  to  a  great  variety  of  situations.  Temporary
employment within a group of companies raises questions. What happens when the worker is
sent to a company in the same group, with which he concludes a local employment contract?
Sometimes, the companies of a group enjoy genuine autonomy and it may be that the transfer
really  corresponds  to  a  new  contract.  In  other  situations,  the  worker  is  engaged  by  the
management of the group before being transferred by decision of the same management; the
new contract then corresponds merely to administrative requirements (need to obtain a work
permit, for example).

To continue  with the link with the directive on “posting of workers”,79 Article 6  brings  our
attention back to the question of the interaction between the general conflict rule of the Rome
Convention  and  the  rule  affecting  the  applicable  law  in  the  sectoral  Directive.  Apart  from
being difficult for practitioners wishing to identify the applicable law, the two instruments do
not use the same terminology.

The purpose of Directive 96/71 is to guarantee that certain mandatory provisions of the host
Member State are applied in the event of an employee being sent to work there temporarily.
This particularly concerns minimum wage regulations but also health and safety requirements.
A superficial reading might suggest that the Directive does not follow the same logic as the
Convention,  Article  6  of  which  stipulates  that  the  employee’s  status  does  not  have  to  be
changed because of a temporary assignment. But it is clear from a more detailed analysis that
the two instruments sit well together. In the event of a temporary assignment, the Directive by
no  means  aims  to  amend  the  law  applicable  to  the  employment  contract  but  determines  a
“focal point” of mandatory rules to be complied with throughout the period of assignment to
the  host  Member  State,  “whatever  the  law  applicable  to  the  working  relationship”.  The
Directive  must  therefore  be  regarded  as  an  implementation  of  Article  7  of  the  Rome
Convention,  concerning  overriding  mandatory  rules".  The  instrument  thus  aims  to  guaranty
faire competition and the respect for employees' rights on the labour market in the Union.80

There is a risk of confusion in that the two instruments do not use the same terminology.

Article  1(3)  of  the  Directive  96/71  specifies  that  its  rules  apply  provided  there  is  an
employment relationship between the undertaking making the posting and the worker during
the period of posting. From the moment the employee concludes a new employment contract,
there is no posting in the sense of the Directive. But it has been seen that for the purposes of

79

80

Directive 1996/71 of 16 December 1996, OJ L 18, 21.1.1997, p. 1.
It  must be  remembered  that  the  rules  of  the  Directive  also  apply  to  the  non-Community  workers  and
employers,  so  that  there  is  no  differentiated  treatment  according  to  whether  the  sending  company  is
established in a Member State or not. The text specifies that companies  established  in  a  non-member
state may not be treated more favourably than companies established in a Member State. Accordingly
the  legislation  of  Member  States  transposing  the  Directive  applies  without  discrimination  to  workers
seconded to their territory whatever the country of origin of the worker or of the employer.

36

                                                
the Convention, on the  contrary, there  can  be  a  temporary assignment  even if the employee
concludes  a  new  employment  contract  in  the  host  country,  for  example  within  a  group  of
companies.  For  the  purpose  of  the  Convention  it  is  the  criterion  of  duration  which  decides
whether the employee finds himself in the situation of "temporary assignment" in the sense of
Article 6, whereas the criterion of duration is not relevant for the purposes of the Directive.

The  Rome  Convention  and  the  Directive  not  having  the  same  objectives,  there  is  no
inconsistency between these instruments. However, the present situation does not add to the
transparency of Community legislation.

3.2.9.3. Possible solutions

To ensure that the duration of the temporary assignment for the purposes of Article 6 of the
Rome  Convention  is  not  assessed  on  a  purely  case  by  case  basis,  thus  creating  an
unforeseeable solution, several solutions can be envisaged:

 i.  appraisal of the assignment’s temporary nature in the light of the intention of the parties,
in  that  an  assignment  planned  for  a  given  duration  or  a  given  project  would  be
temporary.  This  solution,  which  would  mean  that  the  duration  of  the  assignment  was
assessed  ex  ante,  has  been  proposed  by  the  EUROPEAN  GROUPING  OF  PRIVATE
INTERNATIONAL LAW;

 ii.  another solution would be for the court to assess the duration ex post, on the basis of the
actual duration, on a case by case basis, possibly on the basis of a period set by a future
instrument.  The  EUROPEAN  GROUPING  OF  PRIVATE  INTERNATIONAL  LAW  stresses,
however, that this step, though having the advantage of foreseeability, would inevitably
be arbitrary and probably too rigid in view of the diversity of situations;

iii. 

the Convention could further specify that a new contract concluded with an employer of
the same group does not exclude this being considered as a temporary assignment.

Question 14: Should  Article  6  be  clarified  as  regards  the  definition  of  “temporary

employment” ? If so, how?

3.2.10. Other questions concerning Article 6

The Convention does not specify the position of employees carrying out their work at a place
not  subject  to  national  sovereignty  (sailors,  pilots).  The  courts  tend  to  prefer  the  law  of  the
place  where  the  employee  was  engaged  rather  than  locating  somewhat  artificially  the  place
where work is carried out in one country or another.

Certain  Member  States  have  special  rules,  sometimes  unilateral,  that  are  detrimental  to
uniformity of solutions (for example, a conflict rule designating the law of the flag for sailors
on board ship).

One could also question the relevance of the connection of the contract to the law of the place
of performance of the work in the case of cross-border home-working. Its connection to the
place where the interests of the employing business are located or to the place where the work

37

 
is  delivered  might,  under  certain  circumstances,  be  more  protective81  of  the  employee's
interests. It seems that the last paragraph of Article 6 permits the connection of the contract to
these latter laws, but some academic writers suggest this Article should contain more precise
indications with respect of the country with which "the contract is most closely connected" to
expressly mention the situation of home-working.

Question 15: Do you think that Article 6 should be amended on other points?

3.2.11. Application of foreign mandatory rules (Article 7(1))

In addition to applying the overriding mandatory rules of the forum (point 3.2.8, supra), the
Convention  sometimes allows the  court  to  give  effect  to  mandatory  rules  of  other  countries
with which the situation is closely connected, including states which are not members of the
European Union. This is a highly innovatory provision, expressing the concern of the Member
States  to  respect  the  legislative  policy  of  other  states,  including  non-member  countries.
Foreign  overriding  mandatory  rules  can  be  applicable  in  a  variety  of  situations.  By  way  of
example,  there  is  a  Decision  of  the  House  of  Lords  of  1958  which  had  regard  to  Indian
legislation prohibiting jute exports to South Africa in a case concerning a contract  governed
by English law.82

There have so far been very few court decisions on Article 7(1).

Article  22(1)  of  the  Convention  stipulates  that  Member  States  not  wishing  to  adopt  Article
7(1) relating to foreign overriding mandatory rules may reserve the right not to apply it, and
the  United  Kingdom,  Luxembourg  and  Germany  have  actually  done  so.  This  does  not
preclude  the  courts  there  from  taking  foreign  mandatory  rules  into  account,  but  they  would
then be acting outside the Convention and the additional details that it contains.

Should the Rome  Convention be converted  into a Community instrument, and  if so  may be
even into a regulation which would not be compatible with reservations, the question of the
future of this Article will have to be addressed

Question 16: Do you believe there should be rules concerning foreign mandatory rules
in  the  meaning  of  Article  7?  Would  it  be  desirable  for  the  future
instrument to be more precise on the conditions for applying such rules?

3.2.12. Law applicable to formal validity of contracts (Article 9)

3.2.12.1.Current solution

The  form  of  the  contract  means  any  external  behaviour  imposed  by  law  on  the  author  of  a
legal transaction, such as the requirement of a written document, a hand-written endorsement
or a deed. To encourage the validity of the contract as to form, the Convention lays down an
alternative rule: it is enough for the measure to be valid according to one of two laws – the
law  applicable  as  to  substance,  determined  in  accordance  with  the  general  rules  of  the

81

82

For  instance,  in  case  of  application  of  the  rules  of  the  country  where  the  business  is  established
regarding  collective  dismissal,  the  protection  of  employees'  rights  in  case  of  business  transfer  or
bankruptcy of the business.
Regazzoni v Sethia 1958 [AC] 301. The court does not seem to have referred specifically to the concept
of  foreign  public-order  legislation,  as  the  case  substantially  predated  the  Rome  Convention,  but  the
situation was precisely the kind of situation to which Article 7(1) applies.

38

                                                
Convention, and the law of the place where the contract was concluded. As regards contracts
concluded at a distance (by fax, mail or e-mail, for example), there is a place of conclusion for
each party in the contract, which further multiplies the chances that the contract is valid as to
form. This solution has made it unnecessary to take a more or less artificial decision on the
location of a contract between distant parties.

3.2.12.2.Difficulties encountered

Article 9 was thought up before contracts concluded by e-mail had become common practice.
But  how  is  the  place  of  conclusion  to  be  determined  for  each  party,  this  being  one  of  the
branches  of  the  alternative  proposed  when  offer  and  acceptance  are  done  by  a  simple
exchange of e-mails?

3.2.12.3.Possible solutions

It might be possible to provide a subsidiary rule where it is not possible to determine the place
where the contractual intention was expressed. The alternative rule in Article 9 could contain
an additional branch by adding the law of the habitual residence of the author of the statement
of  intention  to  contract  to  the  law  governing  it  as  to  substance  and  the  law  of  the  place  of
conclusion. It will be enough, therefore, for the statement to satisfy the formal requirements
of one of the three laws to be valid as to form. This rule will apply without discrimination to
contracts concluded by electronic means and to other contracts concluded at a distance.

Question 17: Do you think that the conflict rule on form should be modernised?

3.2.13. Law applicable to the voluntary assignment of legal rights (Article 12)

3.2.13.1.Current solution

Assignment  is  a  mechanism  widely  used,  in  particular  in  banking  practice,  for  carrying  out
various  credit  or  factoring  operations.  There  is  an  agreement  whereby  a  creditor,  called  the
assignor,  transfers  his  claim  against  his  debtor,  called  the  assigned  debtor,  to  a  contractor,
called the assignee. An example might be a parts supplier (the “assignor”) who has claims on
his  own  customers,  the  car  manufacturers  (the  “assigned  debtors”).  Instead  of  waiting  for
manufacturers  to  pay  him,  the  supplier  assigns  these  claims  to  his  bank  (the  “assignee”)  to
obtain the amounts on his invoices immediately.

Like any triangular operation, assignment raises many questions in  private international law
since there are three distinct legal relations, each of which can be subject to its own law. In
the above example, the first contractual link chronologically is between the parts supplier and
the  car  manufacturers.  It  is  this  claim,  called  the  “original  claim”  that  will  subsequently  be
assigned.  It is subject to its own law, determined in accordance with Articles 3  (freedom of
choice) and 4 (closest connection) of the Convention.

The  “assignment  contract”  or  “transfer  contract”  is  then  made  between  the  assignor,  in  our
example the parts supplier, and the assignee, here the bank. According to Article 12(1) of the
Convention, the applicable law is again determined in accordance with the general rules of the
Convention  (Articles  3  and  4).  In  the  absence  of  a  choice,83  the  applicable  law  is  often

83

Some writers argue that an assignment contract contains a tacit choice for the law of the claim assigned.
This  solution  has  the  advantage  of  submitting  the  claim  and  the  assignment  to  the  same  law.  On  the

39

                                                
therefore that of the assignee, who provides the characteristic performance.84 The third legal
relationship  is  between  the  assigned  debtor,  in  our  example  the  car  manufacturer,  and  the
assignee bank. According to the Convention, this contract is governed by the same law as the
original claim. Thus the Convention aims to protect the assigned debtor by ensuring that his
obligations remain governed by the same law, the only one which can reasonably be expected,
and that he does not owe the bank more than he owed the supplier.

3.2.13.2 Difficulties encountered

The Rome Convention does not deal explicitly with the question under which conditions the
assignment  can  be  invoked  against  third  parties.  The  question  is  important  because  it
determines the effectiveness of the assignment of the claim and the transfer of the property. It
may  happen,  in  the  example  aforementioned,  that  the  parts  supplier  did  not  pay  his  own
creditor,  who  then  wishes  to  seize  his  assets  and  claims,  including  the  claims  which  were
assigned to the bank. The question then arises who – the new creditor or the bank – owns the
relevant  claims.  The  supplier  may  also  have  assigned  his  claims  to  two  different  banks  to
obtain  credit  fraudulently.  The  question  is  then  which  of  the  two  banks  owns  the  claims.85
Since  the  Member  States  do  not  all  answer  these  questions  in  the  same  way,  it  would  be
preferable for them to apply the same law to discourage forum-shopping.

But as neither the Convention nor the Bankruptcy Regulation86 enacts conflict rules explicitly
covering the question of the conditions under which the assignments can be invoked against
third  parties,  each  Member  State  applies  its  own  rules  here,  and  the  solution  varies  widely
from  one  court  to  another.  The  disparities  are  all  the  more  marked  as  the  courts  of  certain
Member States consider that, while the question is not treated explicitly by the Convention, it
nevertheless contains implicit rules.

3.2.13.3 Possible solutions

The future instrument could specify the law applicable to the question of assignments being
invoked against third parties. Several options are possible:

 i.  application of Article 12(1) (application of the same law as to the transfer contract): this
solution  has  been  adopted  by  the  Dutch  courts.87  It  has  unquestionable  advantages  in
legal  systems  which  do  not  usually  distinguish  between  the  validity  of  the  transfer
contract and the effectiveness of the transfer of ownership of the claim;

other  hand,  in  the  event  of  a  multiple  assignment,  this  solution  is  likely  to  submit  the  assignments
between assignor and assignee to different laws even though they are a single business operation.
In certain complex operations, for example a large-scale credit operation, the characteristic performance
could also be that of the assignee. The Convention therefore leaves certain room for manoeuvre so that
the courts can take account of specific situations.
In  more technical terms,  what  this  question  boils  down  to  is  whether  the  Convention  covers  only  the
contract  law  aspects  or  whether  it  also  includes  the  property  law  aspects  (what  law  determines  the
question whether the measures of information for the debtor serve only to protect him or also to make
the transfer of property effective).
Regulation (EC) No 1346/2000 of 29 May 2000 relating to  insolvency  proceedings,  which  came  into
force on 31 May 2002. This Regulation does not contain conflict rules, but Article 5 establishes that a
insolvency proceeding initiated in a Member State does not affect rights in rem in assets located in other
Member States. These rights in rem include “the exclusive right to have a claim met” (Article 5(2)(b)).
It must be specified that according to Article 2(g) of the Regulation, a claim is located “in the Member
State  within  the  territory  of  which  the  third  party  required  to  meet  them  has  the  centre  of  his  main
interests”.
Hoge Raad, 16 May 1997, Nederlands International Privatrecht 1997, No 209.

84

85

86

87

40

                                                                                                                                                        
 ii.  application  of Article 12(1) (application of  the same  law as  to the  original  claim):  this
was the solution in the preliminary draft Convention but not in the final text. It is also
the  solution  applied  by  the  German  courts.88  The  position  here  is  that  the  fate  of  third
parties in general, such as a creditor of the transferor or a second assignee of the same
claim, should not be dissociated from that of the assigned debtor; the law applicable to
the  question  whether  the  contract  can  be  pleaded  would  be  the  same  in  both  cases,
ensuring a degree of consistency in the treatment of the assignment operation as a whole;

iii.  application  of  the  law  of  the  place  of  residence  of  the  assignment  debtor:  since  the
assignor’s creditors are not always familiar with the law applicable to the original claim,
some propose that the question whether the contract can be pleaded should be governed
by  the  law  of  the  place  of  residence  of  the  assignment  debtor.  This  solution  has  the
advantage that third parties will be familiar with this law, but it would further complicate
the  multiple  business  credit  assignments  when  debtors  are  resident  abroad,  a  single
business operation being subject to several laws;

iv.  application  of  the  law  of  the  assignor’s  residence:  this  is  the  solution  best  capable  of
satisfying the criterion of foreseeability for third parties. Thus was this solution adopted
by the United Nations Convention on the assignment of claims in international trade;89

 v.  all the solutions except point (ii) have the disadvantage of making the question whether
the assignment can be invoked against the assigned debtor and against other third parties
subject to different laws, which could in certain  circumstances  lead to deadlock.  It has
therefore been suggested that there might be a material rule giving priority to  whoever
brings the first action while taking into account the good or bad faith of the competing
creditors.

Question 18: Do you believe that a future instrument should specify the law applicable
to  the  conditions  under  which  the  assignment  may  be  invoked  against
third parties ? If so, what conflict rule do you recommend?

3.2.14. Respective  scope  of  Articles  12  and  13  relating  to  the  assignment  of  claims  and

subrogation

3.2.14.1.Subrogation in the Rome Convention

This  is  a  mechanism  which  is  not  known  in  all  the  Member  States.  As  in  the  case  of
assignment, it involves a triangular operation transferring an obligation. There is subrogation
where a person paying a creditor acquires his rights and becomes the debtor’s creditor in his
place.  There  can  be  either  a  contract  between  the  parties  or  a  legal  provision  which
automatically  activates  it  in  relation  to  certain  measures.  The  Rome  Convention  does  not
cover liberalities, but only subrogation payments made by a third party under the terms of an
obligation. The question whether this third party is then subrogated to the creditor’s rights is
theoretically governed by the same law as this obligation (Article 13).90

88

89

90

Bundesgerichtshof, 8 December 1998, XI ZR 302/97, IPRAX, 2000, p. 124.
Adopted  by  the  General  Assembly  on  31  January  2002.  This  Convention  has  not  yet  been  signed  or
ratified  by  any  of  the  Member  States.  It  does  not  provide  for  an  “opt-out”  mechanism  for  Article  22
concerning  the  possibility  of  relying  on  the  assignment  against  third  parties,  contrary  to  the  other
conflict rules.
A  payment  made  by  a  guarantor  is  a  typical  case  of  subrogation  and  it  is  therefore  the  law  of  the
contract of guarantee which governs subrogation.

41

 
 
                                                
3.2.14.2.Difficulties encountered

There  is  an  important  business  law  mechanism,  factoring,  called  contractual  subrogation  in
certain countries and credit transfer in others. Since there are conflicts of terminology, it has
not  been  possible  to  apply  the  Convention  uniformly.  In  addition,  some  writers  argue  that
Article 13 applies only to the subrogation by operation of law, contractual subrogation being
covered by Article 12.

Since the rules of Articles 12 and 13 are very similar, it is not  clear whether  the  conflict of
terminology  has  any  real  practical  effect.  But  the  question  remains  whether  there  is  a  clear
rule that is easy for the practitioner to apply.

Lastly,  some  would  like  subrogation  payments  made  in  the  absence  of  an  obligation  to  be
within the scope of the Convention.

3.2.14.3.Possible solutions

The  future  Rome  I  instrument  could  specify  the  respective  scope  of  Articles  12  and  13.
Another solution would be to merge Articles 12 and 13. In the absence of a clear provision,
the question will be settled by the Court of Justice.

Question 19: Would it be useful to specify the respective scope of Articles 12 and 13? Do
you believe that there should be a conflict rule for subrogation payments
made in the absence of an obligation?

3.2.15. Absence of conflict rule relating to offsetting of claims

3.2.15.1.The offsetting mechanism

The offsetting mechanism means that when two parties are each other’s creditor and debtor,
their  respective  debts  are  reduced  to  the  amount  of  the  smallest  one.  For  example,  if  Paul
owes Peter €20 and Peter owes Paul €10, the offsetting mechanism operates automatically so
that  Peter  is  released  from  his  debt  and  Paul  owes  Peter  €10.  This  is  a  mechanism  for
extinguishing obligations and is of great importance in daily business life.

Offsetting  may  be  either  by  operation  of  law  (legal  offsetting),  when  certain  conditions  are
met, or by the desire for the parties (contractual offsetting).91

3.2.15.2.Difficulties encountered

Under Article 10(d) of the Convention, the various methods of extinguishing obligations, of
which  offsetting  is  one,  are  governed  by  the  same  law  as  the  relevant  obligation.  But  this
provision does not reflect the difficulties inherent in the legal offsetting mechanism applied to
two  obligations  subject  to  different  laws.  Here  each  Member  State  would  apply  its  own
conflict rule. As these rules differ, there is uncertainty as to the law in this matter.

3.2.15.3.Possible solutions

The Convention could specify the law applicable to legal offsetting:

91

For contractual offsetting, the applicable law is determined in accordance with the general rules of the
Convention (Article 3 and 4).

42

                                                
 i.  cumulative  application  of  the  two  laws  involved:  this  rule  protects  the  interests  of  the

parties but is very restrictive;

 ii.  application of the law which governs the credit to be offset.

The Bankruptcy Regulation,92 which entered into force on 31 May 2002, contains no conflict
rules concerning offsetting as  such, but  even so  it  has  an  impact  on  this  question.  Article  6
treats  offsetting  in  the  same  way  as  Article  5  treats  assignments:  when,  under  the  normally
applicable  conflict  rules,  the  right  to  offset  is  subject  to  a  different  national  law  from  the
insolvency procedure, Article 6 enables the creditor to preserve this possibility as an acquired
right in the insolvency procedure. But the Convention gives it only if offsetting is allowed by
the law applicable to the claim by the insolvent debtor (passive credit) and thus opts for the
solution (ii) above.

These  rules  apply,  obviously,  only  where  offsetting  is  invoked  in  an  insolvency  proceeding
and leave open the question of the applicable law in other circumstances.

Question 20: In  your  view,  would  it  be  useful  to  specify  the  law  applicable  to  legal
compensation? If so, what conflict rule do you recommend?

92

Council Regulation (EC) No 1346/2000 of 29 May relating to insolvency proceedings.

43

                                                
Annex 1

Private international law: a glossary

Applicable law/lex causae:

Bilateral conflict rule:

Dépeçage:

Domestic public policy:

When a legal relationship between private individuals has
an international character (for example, because they are of
different nationality, do not reside in the same country, are
parties  to  an  international  commercial  transaction,  etc),  it
is  necessary  to  determine  which  of  the  laws  involved
govern  the  situation.  The  applicable  law  is  determined
according to the conflict rules.

Most of the rules of conflict of laws are bilateral, i.e. they
can designate either a foreign law or the law of the forum.
For example, there is a French rule according to which the
court  must  determine  a  child’s  affiliation  on  the  basis  of
the law of the mother’s nationality. If the mother is French,
the French court will apply French law; if she is Italian, it
will  apply  Italian  law.  The  bilateral  conflict  rules  are
opposed to unilateral rules.

Situation  in  which  different  parts  of  an  international
contract  are  governed  by  the  laws  of  several  states  (for
example, a sales contract may be governed by German law
except  for  the  guarantee  clause,  which  is  governed  by
English law).

A set of mandatory national rules the objective of which is
to guarantee the social and economic order of a state. This
concerns  rules  from  which  parties  cannot  derogate  by
contract,  for  example  those  aiming  to  protect  weaker
parties (consumers, workers, minors, etc).

Forum:

The court to which an international dispute was referred.

Forum-shopping:

The  attitude  of  a  person  involved  in  an  international
dispute  who  takes  his  case  to  the  court  of  a  particular
country not because it is best placed to hear the dispute but
only because, under its rules on conflict of laws, it would
apply the law giving the most advantageous result for this
person.

Freedom of choice:

The  right  of  private  individuals  to  choose  the  law
applicable to their legal situation.

International jurisdiction:

When a dispute is  international (for example, because the
parties are of different nationalities or do not reside in the
same country), several courts may have jurisdiction in the
same case. The rules of international jurisdiction determine
the  country  whose  courts  have  jurisdiction  in  a  given
dispute.

44

International public policy:

Mandatory provision:

Overriding mandatory rule:

Rule of conflict of laws:

Substantial law:

Unilateral conflict rule:

After having determined the law applicable to a given legal
situation  in  accordance  with  its  conflict  rules,  the  court
may  consider  that  the  application  of  this  law  entails  a
result  not  compatible  with  the  values  of  the  forum.
Accordingly,  it  rules  out  the  normally  applicable  foreign
law and applies its own law.

In  the  Rome  Convention,  the  expression  “mandatory
provision”  covers  multiple  realities:  it  designates  at  the
same  time  overriding  mandatory  rules  in  the  meaning  of
Article  7,  a  concept  specific  to  private  international  law,
and public-policy rules of national law.

Cf.  Article  7  of  the  Convention.  Concept  of  private
international law which designates the provisions to which
a state attaches such importance that it requires them to be
applied  wherever  the  legal  situation  is  connected  with  its
territory,  whatever  law  is  otherwise  applicable  to  the
situation.  Unlike  the  mechanism  of  the  international
public-policy  exception,  the  court  does  not  look  to  its
conflict  rules  to  ascertain  the  applicable  law  and  evaluate
whether  its  content  may  be  incompatible  with  the  system
of  values  of  the  forum  but  automatically  applies  its  own
rules.

When a legal relation one between private individuals has
an international element, the laws of several countries can
compete with each other to govern the situation. To decide
which  of  the  laws  involved  applies  to  this  situation,  the
courts apply the conflict rules.

Substantial law is opposed to the private international law
of a state. It means the national rules determining the rights
and  obligations  of  a  person  in  a  given  legal  situation  (for
example,  the  rule  that  there  cannot  be  a  contract  if  the
assent of one of the parties was vitiated).

According  to  the  unilateralist  method,  each  state  is
satisfied  with  determining  the  cases  where  its  own  law  is
applicable.  Such  rules  are  the  exception  nowadays.  An
example  is  Article  3  subparagraph  3  of  the  French  Civil
Code:  “the  laws  on  the  status  and  capacity  of  persons
govern French  persons, even  those residing  abroad” (but
this rule is “bilateralised” by the case law).

45

Annex 2

List of Rules of conflict of laws

and rules affecting the applicable law93 in contractual matters

in sectoral instruments of secondary legislation

(cid:1)  Directive  on  the  return  of  cultural  objects  unlawfully  removed  from  the  territory  of  a

Member State (1993/7, 15.3.1993)

(cid:1)  Directive on unfair terms (1993/13, 5.4.1993)

(cid:1)  Directive on time-sharing (1994/47, 26.10.1994)

(cid:1)  Directive concerning the posting of workers in the framework of the provision of services

(1996/71, 16.12.1996)

(cid:1)  Directive 97/7, 20.5.1997 on the protection of consumers in respect of distance contracts

(cid:1)  Directive  1999/44,  25.5.1999  on  certain  aspects  of  the  sale  of  consumer  goods  and

associated guarantees

(cid:1)  Second non-life insurance Directive (1988/357, 22.6.1988) as supplemented and amended

by Directive 1992/49 and 2002/13

(cid:1)  Second  life  assurance  Directive  (1990/619,  8.11.1990)  as  supplemented  and  amended  by

Directives 1992/96 and 2002/12

93

I.e.  conflict  of  laws'  rules,  on  the  one  hand,  and  rules  specifying  the  territorial  scope  of  Community
legislation on the other hand. Cf. notes 31 and 32.

46