Proposal for a Regulation of the European Parliament and the Council on the law applicable to contractual obligations (Rome I)
Date: 2005-12-15
Institutions: European Commission
Subjects: European judicial area, Intergovernmental Convention (EU), approximation of laws, civil law, commercial law, contract, drafting of EU law, private international law

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 15.12.2005 
COM(2005) 650 final 

2005/0261 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND THE COUNCIL 

on the law applicable to contractual obligations (Rome I) 

(presented by the Commission) 

EN 

   EN 

 
 
 
  
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

1.1. 

Background and objective  

The  Brussels  Convention  of  1968  on  jurisdiction  and  the  recognition  and  enforcement  of 
judgments  in  civil  and  commercial  matters  contains  options  enabling  a  claimant  to  choose 
between specified courts, which generates the risk that a party will choose the courts in one 
Member State rather than another simply because the law is more favourable to his cause. To 
reduce the risk, the Member States, acting on the same legal basis, signed in 1980 the Rome 
Convention on the law applicable to contractual obligations.  

The Amsterdam Treaty gave a new impetus to private international law of Community origin. 
That was the legal basis on which the Community adopted what is known as the ”Brussels I” 
Regulation1 to replace the Brussels Convention of 1968 in relations between Member States. 
On 22 July 2003 the Commission presented a proposal for a Regulation on the law applicable 
to non-contractual obligations (Rome II).2 The Rome Convention is now the only Community 
private international law instrument that remains in international treaty form. The drawbacks 
that this represents are all the less acceptable as Brussels I, Rome II and the Rome Convention 
of 1980 form an indissoluble set of Community rules of private international law relating to 
contractual and non-contractual obligations civil and commercial matters. 

1.2. 

Grounds for the proposal 

The importance of compatibility between conflict-of-laws rules for achieving the objective of 
mutual recognition of judicial decisions was acknowledged in the Vienna Action Plan.3 The 
2000 Mutual Recognition Programme4 sets forth measures to harmonise the conflict-of-laws 
rules  as  accompanying  measures  to  facilitate  the  implementation  of  the  mutual  recognition 
principle. More recently, in the Hague Programme, the European Council5 restated that work 
on  the  conflict-of-laws  rules  regarding  contractual  obligations  (Rome  I)  should  be  “actively 
pursued”. The Council and Commission action plan to give effect to that programme provides 
for a Rome I proposal to be adopted by 2005.6 

1 
2 
3 
4 
5 
6 

Council Regulation (CE) No 44/2001 of 22.12.2000, OJ L 12, 16.1.2001, p. 1. 
COM (2003) 427 final. 
OJ C 19, 23.1.1999, p. 1, point 40 (c). 
OJ C 12, 15.1.2001, p. 8. 
The Hague Programme, Presidency Conclusions, 5.11.2004, point 3.4.2. 
Point 4.3.c). 

EN 

2 

   EN 

 
                                                 
2. 

OUTCOME OF CONSULTATIONS OF INTERESTED PARTIES AND OTHER INSTITUTIONS 
- IMPACT ANALYSIS  

This  proposal  has  been  preceded  by  extensive  consultation  of  the  Member  States,  the  other 
institutions  and  civil  society,  in  particular  via  the  Green  Paper  of  14  January  20037  and  the 
public hearing on it in Brussels on 7 January 2004. The 80 or so replies to the Green Paper,8 
received  from  governments,  universities,  the  legal  professions  and  a  variety  of  economic 
actors, confirmed that the Rome Convention is not only a widely-known instrument but also 
highly appreciated in relevant circles, who by a large majority supported its conversion into a 
Community Regulation while also confirming the need to modernise certain of its rules. On 4 
and  5  November  1999  the  Commission  also  organised  a  public  hearing  on  Electronic 
Commerce: jurisdiction and applicable law, receiving about 75 written contributions. 

In  their  Opinions  dated  29  January9  and  12  February  200410  respectively,  the  European 
Economic  and  Social  Committee  and  the  European  Parliament  came  out  in  favour  of 
converting the Convention into a Community Regulation and modernising it.  

On 17 February 2005, the Member States’ experts met to consider a preliminary draft Rome 
I Regulation prepared in the Commission.  

Given the limited impact of this proposal on the existing body of legislation and the relevant 
circles, the Commission has decided to refrain from making a formal impact assessment. The 
proposal  does  not  set  out  to  establish  a  new  set  of  legal  rules  but  to  convert  an  existing 
convention  into  a  Community  instrument.  But  some  of  the  amendments  made  will  help  to 
modernise  certain  provisions  of  the  Rome  Convention  and  make  them  clearer  and  more 
precise, thus boosting certainty as to the law without bringing in new elements such as would 
substantially change the existing legal situation. All the changes proposed here are based on 
the results of the Commission’s extensive consultations, which were widely accessible to the 
public.  For  further  details  of  the  nature  and  impact  of  the  changes,  see  the  specific 
commentaries on the individual articles (point 4.2 below). 

3. 

LEGAL ASPECTS OF THE PROPOSAL 

3.1. 

Legal basis 

Since  the  Amsterdam  Treaty  entered  into  force,  the  conflict-of-laws  rules  have  come  under 
Article 61(c) of the TEC. Under Article 67 of the TEC, as amended by the Treaty of Nice, the 
Regulation is to be adopted by the  codecision procedure of Article 251  of the TEC. Article 
65(b) provides: “ Measures in the field of judicial cooperation in civil matters having cross-

7 
8 

9 

10 

COM (2002) 654 final. 
Accessible at: 
http://europa.eu.int/comm/justice_home/news/consulting_public/rome_i/news_summary_rome1_en.htm 
Opinion of the European Economic and Social Committee on the Green Paper on the conversion of the 
Rome  Convention  of  1980  on  the  law  applicable  to  contractual  obligations  into  a  Community 
instrument and its modernisation. INT/176, 29.01.2004 
European  Parliament  Resolution  on  the  prospects  for  approximating  civil  procedural  law  in  the 
European  Union  (COM(2002)  654  -  COM(2002)  746  –  C5-0201/2003  –  2003/2087(INI)),  A5-
0041/2004. 

EN 

3 

   EN 

 
                                                 
 
border implications, to be taken in accordance with Article 67 and in so far as necessary for 
the proper functioning of the internal market, shall include: … promoting the compatibility of 
the rules applicable in the Member States concerning the conflict of laws and of jurisdiction”. 
The Community legislature thus has some room for manoeuvre in deciding whether a measure 
is necessary for the proper functioning of the internal market. Harmonisation of the conflict-
of-laws rules relating to contractual obligations is necessary for the proper functioning of the 
internal market. 

Title  IV  of  the  TEC,  which  is  the  basis  for  the  matters  covered  by  this  proposal,  does  not 
apply to Denmark by reason of the Protocol applicable to it. Nor does it apply to Ireland and 
the  United  Kingdom,  unless  those  countries  exercise  their  right  to  opt  into  this  initiative  as 
provided by the Protocol annexed to the Treaty.  

3.2. 

Principles of subsidiarity and proportionality 

The  objective  of  the  proposal  –  the  adoption  of  uniform  rules  on  the  law  applicable  to 
contractual  obligations  to  make  judicial  decisions  more  easily  foreseeable  –  cannot  be 
adequately attained by the Member States, who cannot lay down uniform Community rules, 
and can  therefore, by reason  of  its  effects throughout  the  Community,  be  better  achieved  at 
Community  level,  the  Community  can  take  measures,  in  accordance  with  the  subsidiarity 
principle  set  out  in  Article  5  of  the  Treaty.  And  the  measures  respect  the  proportionality 
principle  set  out  in  that  Article,  by  increasing  certainty  in  the  law  without  requiring 
harmonisation of the substantive rules of domestic law. 

Point 6 of the Protocol on the application of the principles of subsidiarity and proportionality 
provides that “Other things being equal, directives should be preferred to regulations..”. For 
this proposal, however, the Regulation would seem to be preferable as its provisions lay down 
uniform rules on the applicable law that are detailed, precise and unconditional and require no 
measures for their transposal into domestic law. If the Member States enjoyed some room for 
manoeuvre in transposing, the uncertainty as to the law which the aim is to abolish would be 
restored.  

4. 

ARTICLE-BY-ARTICLE COMMENTARY  

4.1. 

Adaptations linked to the nature of the instrument 

Apart  from  the  changes  of  substance  (point  4.2),  the  obvious  differences  between  the  legal 
nature of the Rome Convention (the “Convention”) and the Regulation warrant a number of 
adaptations: apart from the purely formal adaptations, there are those that allowed contracting 
States  to  enter  reservations  (article  22),  to  adopt  new  conflict  rules  after  a  notification 
procedure (article 23) or the limited duration of the Convention (article 30). Likewise the two 
Protocols  annexed  to  the  Convention  concerning  interpretation  by  the  Court  of  Justice  are 
now superfluous.  

4.2. 

Adaptations to modernise the Rome Convention rules 

Given  the  similarity  between  the  Convention and  the  proposed  Regulation,  only  changes  of 
substance from the Convention are considered here.  

Article 1 – Scope 

EN 

4 

   EN 

 
The proposed changes seek to align the scope of the future Rome I instrument on that of the 
Brussels  I Regulation  and  to  reflect  the  work  done  by  the  Council  and  the  European 
Parliament  on  the  proposed  Rome  II Regulation.  Point  (e)  confirms  the  exclusion  of 
arbitration agreements and agreements on the choice of court as the majority of the replies to 
the  Green  Paper  felt  that  the  former  was  already  covered  by  satisfactory  international 
regulations and that the question of the law applicable to the choice-of-forum clause should 
ultimately be settled by the Brussels I Regulation. Point (f) combines the rules of point (e) and 
the company-law aspects of point (f) of the Convention. The first sentence of point (f) of the 
Convention  has  been  deleted  as  there  is  a  specific  rule  on  agency  (Article  7).  Point  (i) 
proposes a specific rule for pre-contractual obligations which, according to the contributions, 
confirms the analysis of the majority of legal systems in the Union and the restrictive concept 
of  the  contract  adopted  by  the  Court  of  Justice  in  its  judgments  concerning  Article  5(1)  of 
the Brussels I Regulation: for the purposes of private international law, they would be treated 
as a matter of tort/delict and governed by the future Rome II instrument. 

Article 2 – Application of law of non-member States 

The  discussions  of  the  Rome  II  draft  revealed  that  the  title  of  Article  2  of  the 
Convention (“Universal  application”)  was  a  source  of  confusion:  it  has  therefore  been 
changed for the sake of clarity. 

Article 3 – Freedom of choice 

The proposed changes to the second and third subparagraphs of paragraph 1 require the courts 
to ascertain the true tacit will of the parties rather than a purely hypothetical will: they suggest 
that the parties’ conduct be taken into account and seek to clarify the impact of the choice of 
court, so as to reinforce the foreseeability of the law.  

To further boost the impact of the parties’ will, a key principle of the Convention, paragraph 2 
authorises the parties to choose as the applicable law a non-State body of law. The form of 
words  used  would  authorise  the  choice  of  the  UNIDROIT  principles,  the  Principles  of 
European Contract Law or a possible future optional Community instrument, while excluding 
the  lex  mercatoria,  which  is  not  precise  enough,  or  private  codifications  not  adequately 
recognised by the international community. Like Article 7(2) of the Vienna Convention on the 
international sale of goods, the text shows what action should be taken when certain aspects 
of the law of contract are not expressly settled by the relevant body of non-State law.  

Paragraph 4 addresses the issue of fraudulent evasion of the law, referring not only to binding 
international provisions within the meaning of Article 8 but also the mandatory provisions in 
the  domestic  law  of  a  legal  system.  Paragraph  5  aims  to  prevent  fraudulent  evasion  of 
Community law. 

Article 4 –Applicable law in the absence of choice 

The rule in the Convention, whereby the applicable law is the law of the place where the party 
performing the service characterising the contract has his habitual residence, is preserved, but 
the  proposed  changes  seek  to  enhance  certainty  as  to  the  law  by  converting  mere 
presumptions  into  fixed  rules  and  abolishing  the  exception  clause.  Since  the  cornerstone  of 
the instrument is freedom of choice, the rules applicable in the absence of a choice should be 
as precise and foreseeable as possible so that the parties can decide whether or not to exercise 
their choice.  

EN 

5 

   EN 

 
Regarding the solutions for the different categories of contracts, only those proposed at points 
(g) and (h) have come up for discussion and prompted court decisions in the Member States in 
relation to determination of the characteristic performance. The solutions are based on the fact 
that Community law seeks to protect the franchisee and the distributor as the weaker parties.  

Paragraph 2 retains the characteristic performance criterion for contracts for which paragraph 
1 lays  down  no  special  rule,  such  as  complex  contracts  that  are  not  easy  to  categorise  or 
contracts  involving  mutual  performance  by  the  parties  in  terms  that  can  be  regarded  as 
characteristic on both sides. 

Article 5 – Consumer contracts 

Paragraph 1 proposes a new, simple and foreseeable conflict rule consisting of applying only 
the law of the place of the consumer’s habitual residence, without affecting the substance of 
the professional’s room for manoeuvre in drawing up his contracts. The solution adopted in 
the Convention was widely criticised in the responses to the Green Paper as it often produced 
hybrid solutions in which the law applicable to the professional and the mandatory provisions 
of the law applicable to the consumer were applied in parallel. In the event of a dispute, this 
complex  solution  entails  additional  procedural  costs  that  are  all  the  less  justified  as  the 
consumer’s claim will tend to be quite small. There are two possible solutions to prevent this 
hybrid  situation  –  full  application  of  the  law  applicable  to  the  professional  or  the  law 
applicable to the consumer – only the latter would be truly compatible with the high level of 
protection for the consumer demanded by the Treaty. It also seems fair in economic terms: a 
consumer will make cross-border purchases only occasionally whereas most traders operating 
across borders will be able to spread the cost of learning about one or more legal systems over 
a large range of transactions. Finally, in practice this solution does not substantially modify 
the situation of the professional, for whom the initial difficulty in drafting standard contracts 
is to comply with the mandatory provisions of the law in the country of consumption; under 
the Convention, the mandatory provisions are already those of the country of the consumer’s 
habitual residence. Regarding other clauses, which the parties are free to draft as they wish, 
the freedom of the  parties to  draft their own contract is the rule that continues to prevail; it 
therefore matters little whether they are governed by the law of one or other party.  

Paragraph 2 specifies the conditions for applying the special rule. The first subparagraph now 
recalls that the consumer’s contracting partner, a concept defined in some detail by the Court 
of Justice, is a professional. As requested in the great majority of contributions in response to 
the Green Paper, the second subparagraph replaces the conditions of Article 5(2) and (4)(b) of 
the Convention by the targeted activity criterion, already present in Article 15 of the Brussels 
I  Regulation  to  take  account  of  developments  in  distance  selling  techniques  without 
substantially  changing  the  scope  of  the  special  rule.  When  the  Brussels  I  Regulation  was 
adopted,  a  joint  declaration  by  the  Council  and  the  Commission11  specified  that,  for  the 
consumer  protection  provisions  to  be  applicable,  it  was  not  enough  for  a  firm  to  target  its 
activities on the Member State where the consumer was domiciled a contract must also have 
been concluded in the exercise of his trade or profession. “The mere fact that an Internet site 
is accessible is not sufficient for Article 15 to be applicable, although a factor will be that this 
Internet site solicits 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 sites to which this declaration refers 

11 

Accessible at: http://europa.eu.int/comm/justice_home/unit/civil/justciv_conseil/justciv_en.pdf. 

EN 

6 

   EN 

 
                                                 
are  not  necessarily  interactive  sites:  a  site  inviting  buyers  to  fax  an  order  aims  to  conclude 
distance contracts. On the other hand, a site which offers information to potential consumers 
all over the world but refers them to local distributor or agent for the purposes of concluding 
the  actual  contract  does  not  aim  to  conclude  distance  contracts.  Unlike  Article  5(2)  of  the 
Convention,  the  proposed  Regulation  does  not  require  the  consumer  to  have  done  the  acts 
needed  to  conclude  the  contract  in  the  country  of  his  habitual  residence,  as  this  is  a 
superfluous condition in terms of contracts concluded via the Internet. On the other hand, the 
last subparagraph of this paragraph brings in a safeguard clause to protect the professional, for 
example where he has agreed to enter into a contract with a consumer who has lied about his 
habitual residence; for a contract concluded via the Internet, it will up to the professional to 
ensure that his standard form makes it possible to identify where the consumer lives. 

The  proposed  Regulation  no  longer  contains  a  list  of  contracts  to  which  the  special  rule 
applies;  its  material  scope  is  accordingly  extended  to  all  contracts  with  consumers  except 
those expressly excluded by paragraph 3.  

Article 6 – Individual employment contracts  

The basic rule in paragraph 2(a) has been amplified and the reference is now to the “country 
in or from which…” to take account of the law as stated by the Court of Justice in relation to 
Article  18  of  the Brussels  I  Regulation  and  its  broad  interpretation  of  the  habitual  place  of 
work.  This  change  will  make  it  possible  to  apply  the  rule  to  personnel  working  on  board 
aircraft,  if  there  is  a  fixed  base  from  which  work  is  organised  and  where  the  personnel 
perform other obligations in relation to the employer (registration, safety checks). Paragraph 
2(b) will thus apply more rarely. The text then provides additional guidance as to whether an 
employee  posted  abroad  is  temporarily  employed  there,  though  there  is  no  rigid  definition. 
The courts are to have regard to the intentions of the parties.  

Article 7 – Contracts concluded by an agent 

Among  the  three  legal  relationships  that  arise  from  a  contract  concluded  by  an  agent  – 
between principal and agent, between agent and third party and between principal and third 
party – only the first two are covered by the Convention. The question of the agent’s powers 
is excluded by Article 1(2)(f); the reasons for the exclusion are the diversity of the national 
conflict rules when the Convention was negotiated and the existence of the Hague Convention 
of 14 March 1978 on the law applicable to agency. As only three Member States have signed 
and/or  ratified  the  Convention  and  national  solutions  have  come  closer  into  line  with  each 
other,  the  exclusion  is  no  longer  warranted.  The  proposed  Regulation  brings  together  in  a 
single Article all the rules governing legal relationship arising from agency contracts.  

Article 8 – Mandatory provisions 

Paragraph  1  proposes  a  definition  of  international  mandatory  provisions  for  the  purposes  of 
Article 8 which is inspired by the Court of Justice’s judgment in Arblade.12 Paragraph 31 of 
that judgment holds that the fact that national rules are categorised as mandatory provisions 
legislation  does  not  mean  that  they  are  exempt  from  compliance  with  the  provisions  of  the 
Treaty: the considerations underlying such national legislation can  be taken into account by 
Community law only in terms of the exceptions to Community freedoms expressly provided 

12 

Cases C-369/96 and C-374/96 (judgment given on 23.11.1999). 

EN 

7 

   EN 

 
                                                 
for by the Treaty. Paragraph 3 specifies the criteria that may be used by the courts to decide 
whether it should apply the mandatory provisions of another Member State. The replies to the 
Green  Paper  having  enabled  decisions  referring  to  the  concept  of  foreign  mandatory 
provisions, including those of the Member States that had entered reservations on Article 7(1) 
of  the  Convention,  to  be  identified,  the  utility  of  the  rule  would  seem  to  be  confirmed, 
especially  as  the Brussels  I  Regulation  sometimes  provides  for  alternative  grounds  of 
jurisdiction;  it  is  therefore  essential  in  a  genuine  European  justice  area  for  the  courts  to  be 
able  to  have  regard  to  another  Member  State's  mandatory  provisions  where  there  is  a  close 
connection with the case and where a court action has already been brought by the claimant.  

Article 10 – Formal validity 

Given  the  growing  frequency  of  distance  contracts,  the  rules  in  the  Convention  governing 
formal validity of contracts are now clearly too restrictive. To facilitate the formal validity of 
contracts or unilateral acts, further alternative connecting factors are introduced. The specific 
rules for contracts concluded by an agent have been incorporated in paragraphs 1 and 2.  

Article 13 – Voluntary assignment and contractual subrogation 

Voluntary  assignment  and  contractual  subrogation  perform  a  similar economic  function  and 
are now covered by a single Article. Paragraph 3 introduces a new conflict rule relating to the 
possibility of pleading an assignment of a claim against a third party; the solution is the one 
recommended  by  the  great  majority  of  respondents,  which  was  also  adopted  in  the  2001 
UNCITRAL Convention on the assignment of receivables in international trade. 

Article 14 – Statutory subrogation  

Voluntary subrogation is now covered by Article 13, so Article 14 applies solely to statutory 
subrogation as provided, for instance, where an insurer who has compensated a person who 
has suffered a loss is subrogated to the victim’s rights against the person who caused the loss. 
The  amendment  reflects  the  work  done  by  the Council  and  the  European  Parliament  on  the 
Rome II proposal to explain this mechanism, unknown in certain legal systems, in terms that 
are easier to understand. 

Article 15 – Multiple debtors 

The  amendment  reflects  the  same  work  so  as  to  cover  subrogation  and  multiple  debtors  by 
two separate provisions and present the conflict rules relating to multiple debtors in simpler 
terms. The final sentence clarifies the situation of a debtor enjoying special protection. 

Article 16 – Statutory offsetting 

The contributions confirmed the analysis in the Green Paper regarding the usefulness of a rule 
governing statutory offsetting, given that contractual offsetting is by definition subject to the 
general rules in Articles 3 and 4. The aim of the solution adopted here is to make offsetting 
easier while respecting the legitimate concerns of the person who did not take the initiative. 

Article 18 – Assimilation to habitual residence 

Like  the  Rome  II  proposal,  Article  18  contains  a  definition  of  “habitual  residence”,  in 
particular for legal persons.  

EN 

8 

   EN 

 
Article 21 – States with more than one legal system 

Where  a  State  consists  of  several  territorial  units  each  with  its  own  substantive  law  of 
contractual  obligations,  this  Regulation  must  also  apply  to  conflicts  of  laws  between  those 
territorial  units  so  as  to  ensure  foreseeability  and  certainty  on  the  law  and  the  uniform 
application of European rules to all conflict situations. 

Article 22 – Relationship with other provisions of Community law 

Like  Article  20  of  the  Convention,  Article  22  determines  the  relationship  with  other 
provisions  of  Community  law.  Point  a)  covers  the  conflict-of-laws  rules  in  instruments  of 
Community secondary legislation in the specific subject-areas listed in Annex 1. The purpose 
of point b) is to secure consistency with a possible optional instrument in the context of the 
European  Contract  Law  project.  The  relationship  between  the  proposed  Regulation  and  the 
rules to promote the smooth operation of the internal market is governed by point c). 

Article 23 – Relationship with existing international conventions  

The purpose of the proposed amendments is to strike a balance between compliance with the 
Member  States’  international  commitments  and  the  objective  of  establishing  a  genuine 
European  judicial  area  while  enhancing  the  transparency  of  the  body  of  law  in  force  by 
publishing the conventions to which the Member States are Parties. Paragraph 2 sets out the 
basic  rule  that  international  conventions  take  precedence  over  the  proposed  Regulation.  But 
there is an exception where at the time of conclusion of the contract all material aspects of the 
situation are located in one or more Member States. The co-existence of two parallel schemes 
– application of conventions rules for Member States which have ratified and application of 
the proposed regulation elsewhere – would be contrary to the smooth operation of the internal 
market.  Paragraph  3  specifically  refers  to  bilateral  conventions  concluded  between  the  new 
Member States.  

EN 

9 

   EN 

 
2005/0261 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND THE COUNCIL 

on the law applicable to contractual obligations (Rome I) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Articles 
61(c) and the second indent of Article 67(5) thereof, 

Having regard to the proposal from the Commission13, 

Having regard to the Opinion of the European Economic and Social Committee14, 

Acting in accordance with the procedure provided for by Article 251 of the Treaty15, 

Whereas: 

(1) 

(2) 

(3) 

13 
14 
15 
16 
17 

The Union has set itself the objective of establishing an area of freedom, security and 
justice.  To  that  end  the  Community  must  adopt  measures  relating  to  judicial 
cooperation in civil matters with a cross-border impact to the extent necessary for the 
proper  functioning  of  the  internal  market,  including  measures  promoting  the 
compatibility of the rules applicable in the Member States concerning the conflict of 
laws. 

For  the  purposes  of  effectively  implementing  the  relevant  provisions  of  the 
Amsterdam  Treaty,  the  Council  (Justice  and  Home  Affairs)  on  3  December  1998 
adopted  a  plan  of  action  on  how  best  to  implement  the  provisions  of  the  Treaty  of 
Amsterdam on an area of freedom, security and justice,16 stressing the importance of 
promoting the compatibility of conflict-of-law rules in order to attain the objective of 
mutual  recognition  of  judgments  and  calling  for  the  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 Tampere European Council on 15 and 16 October 1999 approved the principle of 
mutual  recognition  of  judgments  as  a  priority  matter  in  the  establishment  of  a 
European  judicial-  area.  The  programme  of  measures  for  implementation  of  the 
principle  of  mutual  recognition  of  decisions  in  civil  and  commercial  matters17 

OJ C , , p. . 
OJ C , , p. . 
OJ C , , p. . 
OJ C 19, 23.1.1999, p. 1. 
OJ C 12, 15.1.2001, p. 1. 

EN 

10 

   EN 

 
                                                 
specifies that the accompanying measures relating to harmonisation of conflict-of-law 
rules  actually  do  help  facilitate  the  mutual  recognition  of  judgments.  In  the  Hague 
Programme,18  the  European  Council  restated  that  work  on  the  conflict  of  laws 
regarding contractual obligations should be actively pursued. 

The proper functioning of the internal market creates a need, in order to improve the 
predictability  of  the  outcome  of  litigation,  certainty  as  to  the  law  and  the  free 
movement  of  judgments,  for  the  rules  of  conflict  of  laws  in  the  Member  States  to 
designate  the  same  national  law  irrespective  of  the  country  of  the  court  in  which  an 
action is brought. For the same reasons there is a need to achieve the greatest harmony 
between three instruments – this Regulation, Council Regulation (EC) No 2001/44 of 
22 December 2000 on jurisdiction and the recognition and enforcement of judgments 
in  civil  and  commercial  matters  (“Brussels  I”)19  and  Parliament  and  Council 
Regulation (EC) No […] on the law applicable to non-contractual obligations (“Rome 
II”). 

The  concern  for  transparency  in  Community  legislation  is  such  that  the  largest 
possible  number  of  conflict-of-laws  rules  should  be  brought  together  in  a  single 
instrument  or  at  least  that  this  Regulation  should  contain  a  list  of  special  rules  laid 
down by sectoral instruments. 

The scope of the Regulation must be determined in such a way as to be consistent with 
Regulation (EC) No 44/2001 and Parliament and Council Regulation (EC) No […] on 
the law applicable to non-contractual obligations (“Rome II”). 

Freedom for the parties to choose the applicable law must be one of the cornerstone of 
the system of conflict-of-laws rules in matters of contractual obligations.  

To contribute to the general objective of the instrument – certainty as to the law in the 
European judicial area – the conflict rules must be highly foreseeable. But the courts 
must retain a degree of discretion to determine the law that is most closely connected 
to the situation in a limited number of hypothetical cases. 

As  regards  contracts  concluded  with  parties  regarded  as  being  weaker,  those  parties 
should be protected by conflict rules that are more favourable to their interests than the 
general rules.  

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

(10)  With  more  specific  reference  to  consumer  contracts,  the  conflict  rule  must  make  it 
possible  to  cut  the  cost  of  settling  disputes  on  what  are  commonly  relatively  small 
claims  and  to  take  account  of  the  development  of  distance-selling  techniques. 
Harmony with Regulation (EC) No 44/2001 requires both that there be a reference to 
the concept of “targeted activity” as a condition for applying the consumer-protection 
rule and that the concept be interpreted harmoniously in the two instruments, bearing 
in mind that a joint declaration by the Council and the Commission on Article 15 of 
Regulation  No  44/200120  states  that  “for  Article  15(1)(c)  to  be  applicable  it  is  not 
sufficient  for  an  undertaking  to  target  its  activities  at  the  Member  State  of  the 

18 
19 

20 

Annex 1 to Presidency Conclusions, 5.11.2004. 
OJ  L  12,  16.1.2001,  p.  1.  Regulation  as  last  amended  by  Regulation  (EC)  No  2245/2004  (OJ  L  381, 
28.12.2004, p. 10). 
Accessible at: http://europa.eu.int/comm/justice_home/unit/civil/justciv_conseil/justciv_en.pdf. 

EN 

11 

   EN 

 
                                                 
consumer’s residence, or at a number of Member States including that Member State; 
a  contract  must  also  be  concluded  within  the  framework  of  its  activities”.  The 
declaration  also  states  that ”the  mere  fact  that  an  Internet  site  is  accessible  is  not 
sufficient  for  Article  15  to  be  applicable,  although  a  factor  will  be  that  this  Internet 
site solicits the conclusion of distance 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.” 

(11)  Regarding individual employment contracts, the conflict rule should make it possible 
to  identify  the  centre  of  gravity  of  the  employment  relationship,  looking  beyond 
appearances. This rule does not prejudge the application of the mandatory rules of the 
country  to  which  a  worker  is  posted  in  accordance  with  Directive  96/71/EC  of  16 
December 1996 concerning the posting of workers in the framework of the provision 
of services.21 

(12)  Regarding contracts concluded by agents, conflict rules should be laid down to govern 
the  three  legal  relationships  between  the  principal,  the  agent  and  the  third  party.  A 
contract concluded between the principal and the third party would remain subject to 
the general rules of this Regulation. 

(13)  Respect  for  the  public  policy  (ordre  public)  of  the  Member  States  requires  specific 
rules concerning mandatory rules and the exception on grounds of public policy. Such 
rules must be applied in a manner compatible with the Treaty. 

(14)  For  the  sake  of  certainty  as  to  the  law  there  should  be  a  clear  definition  of  habitual 
residence,  in  particular  for  bodies  corporate.  Unlike  Article  60(1)(c)  of  Regulation 
(EC)  No  44/2001,  which  establishes  three  criteria,  the  conflict-of-laws  rule  should 
proceed  on  the  basis  of  a  single  criterion;  otherwise,  it  would  remain  impossible  for 
parties to foresee the law applicable to their situation. 

(15)  The relationship between this Regulation and certain other provisions of Community 

law should be spelled out. 

(16)  Respect for international commitments entered into by the Member States means that 
this Regulation should not affect conventions relating to specific matters to which the 
Member States are parties. However, where at the time of conclusion of the contract 
material  aspects  of  the  situation  are  located  in  one  or  more  Member  States,  the 
application  of  certain  international  conventions  to  which  only  some  of  the  Member 
States  are  Parties  would  be  contrary  to  the  objective  of  a  genuine  European  judicial 
area. The rule set out in this Regulation should accordingly be applied. To make the 
rules easier to read, the Commission will publish the list of the relevant conventions in 
the Official Journal of the European Union on the basis of information supplied by the 
Member States. 

(17)  Since  the  objective  of  the  proposed  action,  namely  better  foreseeability  of  court 
judgments  requiring  genuinely  uniform  rules  on  the  law  applicable  to  contractual 
obligations  determined  by  a  mandatory  and  directly  applicable  Community  legal 
instrument, cannot be adequately attained by the Member States, who cannot lay down 

21 

OJ L 18, 21.1.1997, p. 1. 

EN 

12 

   EN 

 
                                                 
uniform  Community  rules,  and  can  therefore,  by  reason  of  its  effects  throughout  the 
Community,  be  better  achieved  at  Community  level,  the  Community  can  take 
measures,  in  accordance  with  the  subsidiarity  principle  set  out  in  Article  5  of  the 
Treaty.  In  accordance  with  the  proportionality  principle  set  out  in  that  Article,  a 
Regulation,  which  increases  certainty  in  the  law  without  requiring  harmonisation  of 
the substantive rules of domestic law, does not go beyond what is necessary to attain 
that objective. 

(18) 

[In accordance with Article 3 of the Protocol on the position of the United Kingdom 
and Ireland, annexed to the Treaty on European Union and the Treaty establishing the 
European Community, these Member States have stated their intention of participating 
in the adoption and application of this Regulation. / In accordance with Articles 1 and 
2 of the Protocol on the position of the United Kingdom and Ireland, annexed to the 
Treaty  on  European  Union  and  the  Treaty  establishing  the  European  Community, 
these  Member  States  are  not  participating  in  the  adoption  of  this  Regulation,  which 
will accordingly not be binding on those Member States.] 

(19) 

In  accordance  with  Articles  1  and  2  of  the  Protocol  on  the  position  of  Denmark, 
annexed  to  the  Treaty  on  European  Union  and  the  Treaty  establishing  the  European 
Community, that Member State is not participating in the adoption of this Regulation, 
which will accordingly not be binding on that Member State, 

HAVE ADOPTED THIS REGULATION: 

Chapter One – Scope 

Article 1 – Scope 

This  Regulation  shall  apply,  in  any  situation  involving  a  conflict  of  laws,  to 

1. 
contractual obligations in civil and commercial matters.  

It shall not extend, in particular, to revenue, customs or administrative matters. 

2. 

(a) 

(b) 

(c) 

(d) 

The Regulation shall not apply to: 

questions involving the status or legal capacity of natural persons, without prejudice 
to Article 12; 

contractual  obligations  relating  to  a  family  relationship  or  a  relationship  which,  in 
accordance with the law applicable to it, has similar effects, including maintenance 
obligations; 

obligations  arising  out  a  matrimonial  relationship  or  a  property  ownership  scheme 
which,  under  the  law  applicable  to  it,  has  similar  effects  to  a  marriage,  wills  and 
successions; 

obligations arising under bills of exchange, cheques and promissory notes and other 
negotiable instruments to the extent that the obligations under such other negotiable 
instruments arise out of their negotiable character; 

EN 

13 

   EN 

 
(e) 

(f) 

(g) 

(h) 

(i) 

arbitration agreements and agreements on the choice of court; 

questions  governed  by  the  law  of  companies  and  other  bodies  corporate  or 
unincorporate  such  as  the  creation,  by  registration  or  otherwise,  legal  capacity, 
internal  organisation  or  winding  up  of  companies  and  other  bodies  corporate  or 
unincorporate,  the  personal  liability  of  officers  and  members  as  such  for  the 
obligations of the company or body and the question whether a management body of 
a company or other body corporate or unincorporated can bind the company or body 
in relation to third parties; 

the  constitution  of  trusts  and  the  relationship  between  settlers,  trustees  and 
beneficiaries; 

evidence and procedure, without prejudice to Article 17; 

obligations arising out of a pre-contractual relationship. 

In  this  Regulation,  the  term  “Member  State”  shall  mean  Member  States  with  the 

3. 
exception of Denmark [,Ireland and the United Kingdom]. 

Article 2 – Application of law of non-member States 

Any  law  specified  by  this  Convention  shall  be  applied  whether  or  not  it  is  the  law  of  a 
Member State. 

Chapter II –Uniform rules 

Article 3 – Freedom of choice 

Without  prejudice  to  Articles  5,  6  and  7,  a  contract  shall  be  governed  by  the  law 

1. 
chosen by the parties. 

The choice must be expressed or demonstrated with reasonable certainty by the terms of the 
contract behaviour of the parties or the circumstances of the case. If the parties have agreed to 
confer  jurisdiction  on  one  or  more  courts  or  tribunals  of  a  Member  State  to  hear  and 
determine  disputes  that  have  arisen  or  may  arise  out  of  the  contract,  they  shall  also  be 
presumed to have chosen the law of that Member State. 

By  their  choice  the  parties  can  select  the  law  applicable  to  the  whole  or  a  part  only  of  the 
contract. 

The  parties  may  also  choose  as  the  applicable  law  the  principles  and  rules  of  the 

2. 
substantive law of contract recognised internationally or in the Community. 

However,  questions  relating  to  matters  governed  by  such  principles  or  rules  which  are  not 
expressly  settled  by  them  shall  be  governed  by  the  general  principles  underlying  them  or, 
failing such principles, in accordance with the law applicable in the absence of a choice under 
this Regulation.  

EN 

14 

   EN 

 
3. 
The parties may at any time agree to subject the contract to a law other than that which 
previously governed it, whether as a result of an earlier choice under this Article or of other 
provisions  of  this  Regulation.  Any  change  in  the  law  to  be  applied  that  is  made  after  the 
conclusion of the contract shall not prejudice its formal validity under Article 10 or adversely 
affect the rights of third parties. 

4. 
The fact that the parties have chosen a foreign law in accordance with paragraphs 1 or 
2,  whether  or  not  accompanied  by  the  choice  of  a  foreign  tribunal,  shall  not,  where  all  the 
other  elements  relevant  to  the  situation  at  the  time  of  the  choice  are  connected  with  one 
country  only,  prejudice  the  application  of  rules  of  the  law  of  that  country  which  cannot  be 
derogated from by contract, hereinafter called “mandatory rules”. 

Where the parties choose the law of a non-member State, that choice shall be without 
5. 
prejudice to the application of such mandatory rules of Community law as are applicable to 
the case. 

The  existence  and  validity  of  the  consent  of  the  parties  as  to  the  choice  of  the 
6. 
applicable law shall be determined in accordance with the provisions of Articles 9, 10 and 12. 

Article 4 – Applicable law in the absence of choice 

To the extent that the law applicable to the contract has not been chosen in accordance 

1. 
with Article 3, the contract shall be governed by the law determined as follows: 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

(h) 

a contract of sale shall be governed by the law of the country in which the seller has 
his habitual residence; 

a contract for the provision of services shall be governed by the law of the country in 
which the service provider has his habitual residence; 

a contract of carriage shall be governed by the law of the country in which the carrier 
has his habitual residence; 

a contract relating to a right in rem or right of user in immovable property shall be 
governed by the law of the country in which the property is situated;  

notwithstanding  point  (d),  a  lease  for  the  temporary  personal  use  of  immovable 
property for a period of no more than six consecutive months shall be governed by 
the  law  of  the  country  in  which  the  owner  has  his  habitual  residence,  provided  the 
tenant is a natural person and has his habitual residence in the same country; 

a contract relating to intellectual or industrial property rights shall be governed by the 
law  of  the  country  in  which  the  person  who  transfers  or  assigns  the  rights  has  his 
habitual residence; 

a  franchise  contract  shall  be  governed  by  the  law  of  the  country  in  which  the 
franchised person has his habitual residence; 

a  distribution  contract  shall  be  governed  by  the  law  of  the  country  in  which  the 
distributor has his habitual residence. 

EN 

15 

   EN 

 
2. 
Contracts not specified in paragraph 1 shall be governed by the law of the country in 
which  the  party  who  is  required  to  perform  the  service  characterising  the  contract  has  his 
habitual residence at the time of the conclusion of the contract. Where that service cannot be 
identified,  the  contract  shall  be  governed  by  the  law  of  the  country  with  which  it  is  most 
closely connected. 

Article 5 – Consumer contracts 

1. 
Consumer  contracts  within  the  meaning  and  in  the  conditions  provided  for  by 
paragraph 2 shall be governed by the law of the Member State in which the consumer has his 
habitual residence. 

2. 
Paragraph 1 shall apply to contracts concluded by a natural person, the consumer, who 
has his habitual residence in a Member State for a purpose which can be regarded as  being 
outside his trade or profession with another person, the professional, acting in the exercise of 
his trade or profession. 

It shall apply on condition that the contract has been concluded with a person who pursues a 
trade or profession in the Member State in which the consumer has his habitual residence or, 
by any means, directs such activities to that Member State or to several States including that 
Member  State,  and  the  contract  falls  within  the  scope  of  such  activities,  unless  the 
professional did not know where the consumer had his habitual residence and this ignorance 
was not attributable to his negligence.  

3. 

Paragraph 1 shall not apply to: 

(a) 

(b) 

(c) 

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; 

contracts of carriage other than contracts relating to package travel within the 
meaning of Directive 90/314/EEC of 13 June 1990; 

contracts relating to a right in rem or right of user in immovable property other 
than  contracts  relating  to  a  right  of  user  on  a  timeshare  basis  within  the 
meaning of Directive 94/47/EC of 26 October 1994. 

Article 6 – Individual employment contracts 

1. 
Notwithstanding the provisions of Article 3, in a contract of employment a choice of 
law made by the parties shall not have the result of depriving the employee of the protection 
afforded him by the mandatory rules of the law which would be applicable under this Article 
in the absence of choice. 

A contract of employment shall, in the absence of choice in accordance with Article 3, 

2. 
be governed: 

(a) 

by the law of the country in or from which the employee habitually carries out 
his work in performance of the contract. The place of performance shall not be 
deemed  to  have  changed  if  he  is  temporarily  employed  in  another  country. 

EN 

16 

   EN 

 
Work  carried  out  in  another  country  shall  be  regarded  as  temporary  if  the 
employee is expected to resume working in the country of origin after carrying 
out his tasks abroad. The conclusion of a new contract of employment with the 
original employer or an employer belonging to the same group of companies as 
the original employer does not preclude the employee from being regarded as 
carrying out his work in another country temporarily; 

(b) 

if  the  employee  does  not  habitually  carry  out  his  work  in  or  from  any  one 
country, or he habitually carries out his work in or from a territory subject to no 
national sovereignty, by the law of the country in which the place of business 
through which he was engaged is situated. 

The  law  designated  by  paragraph  2  may  be  excluded  where  it  appears  from  the 
3. 
circumstances as a whole that the contract is more closely connected with another country, in 
which case the contract shall be governed by the law of that country. 

Article 7 – Contracts concluded by an agent 

In the absence of a choice under Article 3, a contract between principal and agent shall 
1. 
be governed by the law of the country in which the agent has his habitual residence, unless the 
agent exercises or is to exercise his main activity in the country in which the principal has his 
habitual residence, in which case the law of that country shall apply. 

2. 
The relationship between the principal and third parties arising out of the fact that the 
agent has acted in the exercise of his powers, in excess of his powers or without power, shall 
be governed by the law of the country in which the agent had his habitual residence when he 
acted. However, the applicable law shall be the law of the country in which the agent acted if 
either the principal on whose behalf he acted or the third party has his habitual residence in 
that country or the agent acted at an exchange or auction.  

Notwithstanding  paragraph  2,  where  the  law  applicable  to  a  relationship  covered  by 
3. 
that  paragraph  has  been  designated  in  writing  by  the  principal  or  the  agent  and  expressly 
accepted by the other party, the law thus designated shall be applicable to these matters.  

4. 
The  law  designated  by  paragraph  2  shall  also  govern  the  relationship  between  the 
agent and the third party arising from the fact that the agent has acted in the exercise of his 
powers, in excess of his powers or without power. 

Article 8 – Mandatory rules 

Mandatory rules are rules the respect for which is regarded as crucial by a country for 
1. 
safeguarding  its  political,  social  or  economic  organisation  to  such  an  extent  that  they  are 
applicable  to  any  situation  falling  within  their  scope,  irrespective  of  the  law  otherwise 
applicable to the contract under this Regulation. 

Nothing in this Regulation shall restrict the application of the rules of the law of the 

2. 
forum in a situation where they are mandatory.  

Effect may be given to the mandatory rules of the law of another country with which 
3. 
the situation has a close connection. In considering whether to give effect to these mandatory 

EN 

17 

   EN 

 
rules, courts shall have regard to their nature and purpose in accordance with the definition in 
paragraph 1 and to the consequences of their application or non-application for the objective 
pursued by the relevant mandatory rules and for the parties. 

Article 9 – Consent and material validity 

1. 
The  existence  and  validity  of  a  contract,  or  of  any  term  of  a  contract,  shall  be 
determined  by  the  law  which  would  govern  it  under  this  Regulation  if  the  contract  or  term 
were valid. 

2. 
Nevertheless a party may rely upon the law of the country in which he has his habitual 
residence to establish that he did not consent if it appears from the circumstances that it would 
not be reasonable to determine the effect of his conduct in accordance with the law specified 
in the preceding paragraph. 

Article 10 – Formal validity 

1. 
A  contract  is  formally  valid  if  it  satisfies  the  formal  requirements  of  the  law  which 
governs it in substance under this Regulation or the law of the country in which one or other 
of the parties or his agent is when it is concluded or the law of the country in which one or 
other of the parties has his habitual residence at that time. 

2. 
A  unilateral  act  intended  to  have  legal  effect  relating  to  an  existing  or  contemplated 
contract is formally valid if it satisfies the formal requirements of the law which governs or 
would govern the contract in substance under this Regulation or of the law of the country in 
which the act is performed or the law of the country in which the person who drafted it has his 
habitual residence at that time. 

3. 
Paragraphs 1 and 2 of this Article shall not apply to contracts that fall within the scope 
of Article 5. The form of such contracts shall be governed by the law of the country in which 
the consumer has his habitual residence. 

4. 
Notwithstanding  paragraphs  1  to  3  of  this  Article,  a  contract  the  subject  matter  of 
which is a right in immovable property or a right to use immovable property shall be subject 
to the mandatory requirements of form of the law of the country where the property is situated 
if by that law those requirements are mandatory provisions within the meaning of Article 8. 

Article 11 – Scope of applicable law 

1. 

The law applicable to a contract by virtue of this Regulation shall govern in particular: 

(a) 

interpretation; 

(b) 

performance; 

(c) 

within the limits of the powers conferred on the court by its procedural law, the 
consequences  of  the  total  or  partial  breach  of  obligations,  including  the 
assessment of damages in so far as it is governed by rules of law; 

EN 

18 

   EN 

 
(d) 

the various ways of extinguishing obligations, and prescription and  limitation 
of actions; 

(e) 

the consequences of nullity of the contract. 

In  relation  to  the  manner  of  performance  and  the  steps  to  be  taken  in  the  event  of 
2. 
defective  performance  regard  shall  be  had  to  the  law  of  the  country  in  which  performance 
takes place. 

Article 12 – Incapacity 

In a contract concluded between persons who are in the same country, a natural person who 
would have capacity under the law of that country may invoke his incapacity resulting from 
another law only if the other party to the contract was aware of this incapacity at the time of 
the conclusion of the contract or was not aware thereof as a result of negligence. 

Article 13 – Voluntary assignment and contractual subrogation  

The  mutual  obligations  of  assignor  and  assignee  under  a  voluntary  assignment  or 
1. 
contractual subrogation of a right against another person shall be governed by the law which 
under this Regulation applies to the contract between the assignor and assignee. 

The  law  governing  the  original  contract  shall  determine  the  effectiveness  of 
2. 
contractual limitations on assignment as between the assignee and the debtor, the relationship 
between  the  assignee  and  the  debtor,  the  conditions  under  which  the  assignment  can  be 
invoked against the debtor and whether the debtor’s obligations have been discharged. 

3. 
The  question  whether  the  assignment  or  subrogation  may  be  relied  on  against  third 
parties shall be governed by the law of the country in which the assignor or the author of the 
subrogation has his habitual residence at the material time. 

Article 14 – Statutory subrogation  

Where a person has a contractual claim upon another and a third person has a duty to satisfy 
the  creditor,  the  law  which  governs  the  third  person’s  duty  to  satisfy  the  creditor  shall 
determine whether the third person is entitled to proceed against the debtor. 

Article 15 – Multiple liability 

Where  a  creditor  has  a  claim  upon  several  debtors  who  are  jointly  liable  and  one  of  those 
debtors has in fact satisfied the creditor, the law of the obligation of this debtor towards the 
creditor  governs  the  right  of  this  debtor  to  claim  against  the  other  debtors.  Where  the  law 
applicable  to  a  debtor’s  obligation  to  the  creditor  provides  for  rules  to  protect  him  against 
actions to ascertain his liability, he may also rely on them against other debtors. 

EN 

19 

   EN 

 
Article 16 – Statutory offsetting 

Statutory  offsetting  shall  be  governed  by  the  law  applicable  to  the  obligation  in 

1. 
relation to which the right to offset is asserted. 

Article 17 – Burden of proof 

The law governing the contract under this Regulation shall apply to the extent that it 
1. 
contains,  in  the  law  of  contract,  rules  which  raise  presumptions  of  law  or  determine  the 
burden of proof. 

A contract or an act intended to have legal effect may be proved by any mode of proof 
2. 
recognized by the law of the forum or by any of the laws referred to in Article 10 under which 
that contract or act is formally valid, provided that such mode of proof can be administered by 
the forum. 

Chapter III – Other provisions 

Article 18 – Assimilation to habitual residence 

For companies or firms and other bodies or incorporate or unincorporate, the principal 
1. 
establishment  shall  be  considered  to  be  the  habitual  residence  for  the  purposes  of  this 
Regulation. 

Where the contract  is  concluded  in  the course of operation of a subsidiary, a branch or  any 
other  establishment,  or  if,  under  the  contract,  performance  is  the  responsibility  of  such  an 
establishment, this establishment shall be considered the habitual residence. 

For the purposes of this Regulation, where the contract is concluded in the course of 
2. 
the  business  activity  of  a  natural  person,  that  natural  person’s  establishment  shall  be 
considered the habitual residence. 

Article 19 – Exclusion of renvoi 

The application of the law of any country specified by this Regulation means the application 
of the rules of law in force in that country other than its rules of private international law. 

Article 20 – Ordre public 

The  application  of  a  rule  of  the  law  of  any  country  specified  by  this  Regulation  may  be 
refused  only  if  such  application  is  manifestly  incompatible  with  the  public  policy  (“ordre 
public”) of the forum.  

EN 

20 

   EN 

 
Article 21 – States with more than one legal system 

Where  a  State  comprises  several  territorial  units  each  of  which  has  its  own  rules  of  law  in 
respect of contractual obligations, each territorial unit shall be considered as a country for the 
purposes of identifying the law applicable under this Regulation. 

Article 22 – Relationship with other provisions of Community law 

This Regulation shall not prejudice the application or adoption of acts of the institutions of the 
European Communities which: 

(a) 

(b) 

(c) 

in  relation  to  particular  matters,  lay  down  choice-of-law  rules  relating  to 
contractual  obligations;  a  list  of  such  acts  currently  in  force  is  provided  in 
Annex 1; or 

govern contractual obligations and which, by virtue of the will of the parties, 
apply in conflict-of-law situations; or 

lay down rules to promote the smooth operation of the internal market, where 
such rules cannot apply at the same time as the law designated by the rules of 
private international law. 

Article 23 – Relationship with existing international conventions 

1. 
The  Member  States  shall  notify  the  Commission,  no  later  than  six  months  after  the 
entry into force of this Regulation, of the list of multilateral conventions governing conflicts 
of laws in specific matters relating to contractual obligations to which  they are Parties. The 
Commission  shall  publish  the  list  in  the  Official  Journal  of  the  European  Union  within  six 
months thereafter. 

After that date, the Member States shall notify the Commission of all denunciations of such 
conventions,  which  the  Commission  shall  publish  in  the  Official  Journal  of  the  European 
Union within six months after receiving them. 

2. 
This  Regulation  shall  not  prejudice  the  application  of  international  conventions 
referred to in paragraph 1. However, where, at the time of conclusion of the contract, material 
aspects of the situation are located in one or more Member States, this Regulation shall take 
precedence over the following Conventions: 

the Hague Convention of 15 June 1955 on the law applicable to international sales of 

- 
goods; 

- 

the Hague Convention of 14 March 1978 on the law applicable to agency. 

This  Regulation  shall  take  precedence  over  bilateral  international  conventions 
3. 
concluded between Member States and listed in Annex II if they concern matters governed by 
this Regulation. 

EN 

21 

   EN 

 
Chapter IV – Final provisions 

Article 24 – Entry into force and application in time 

This  Regulation  shall  enter  into  force  on  the  twentieth  day  following  its  publication  in  the 
Official Journal of the European Union. 

This Regulation shall apply from [one year after entry into force]. 

It shall apply to  contractual  obligations arising after its entry into application. However, for 
contractual  obligations  arising  before  its  entry  into  application,  this  Regulation  shall  apply 
where its provisions have the effect of making the same law applicable as would have been 
applicable under the Rome Convention of 1980. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

EN 

22 

   EN 

 
 
 
ANNEX 1: List of instruments mentioned in Article 22(a) 

–  Directive  on  the  return  of  cultural  objects  unlawfully  removed  from  the  territory  of  a 

Member State (Directive 7/1993/EC of 15.3.1993) 

–  Directive concerning the posting of workers in the framework of the provision of services 

(Directive 71/1996/EC of 16.12.1996) 

–  Second  non-life  insurance  Directive  (Directive  357/1988/EEC  of  22.6.1988,  as  amplified 

and amended by Directives 49/1992/EC and 13/2002/EC) 

–  Second  life  assurance  Directive  (Directive  619/1990/EEC  of  8.1.1990  as  amplified  and 

amended by Directives 96/1992/EC and 12/2002/EC) 

EN 

23 

   EN 

 
ANNEX II: List of bilateral conventions mentioned in Article 23(3) 

[…] 

EN 

24 

   EN