Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and of the Council on the law applicable to contractual obligations (Rome I) COM(2005) 650 final — 2005/0261 (COD)
Date: 2006-09-13
Institutions: European Economic and Social Committee
Subjects: European judicial area, Intergovernmental Convention (EU), approximation of laws, civil law, commercial law, contract, drafting of EU law, private international law

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Official Journal of the European Union

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Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the
European Parliament and of the Council on the law applicable to contractual obligations (Rome I)

COM(2005) 650 final — 2005/0261 (COD)

(2006/C 318/10)

On 24 February 2006 the Council decided to consult the Economic and Social Committee, under Article
262 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the
Committee's work on the subject, adopted its opinion on 26 July 2006. The rapporteur was Mr Frank von
Fürstenwerth.

At its 429th plenary session, held on 13/14 September 2006 (meeting of 13 September), the European
Economic and Social Committee adopted the following opinion by 191 votes to one, with five abstentions:

1. Summary of EESC conclusions and recommendations

1.1
The European Economic and Social Committee welcomes
the Commission's plan for a European regulation on conflict-of-
law rules in the field of contractual obligations. The regulation
will develop European conflict-of-law rules in a logical way and
close a loophole in the current system of Community law. The
regulation is useful and necessary for the development of a
single European area of justice, since the 1980 Rome Conven-
tion (1) that currently regulates this field is in need of moderni-
sation but, as a multilateral agreement, the prospects of that
happening are doubtful and would in any case involve time-
consuming negotiations.

The Committee offers its encouragement to the Commis-
1.2
sion and urges it to complete its work as rapidly as possible,
taking account of the proposals set out below, so that the regu-
lation can enter into force.

1.3
The Committee welcomes the Commission's efforts to
introduce full harmonisation so as to close the legislative gap
that exists due to the absence of any European legal act applic-
able to the Member States in the field of conflict-of-law rules
for contractual obligations. This will make matters much
simpler for those applying the law, who, given that the regu-
lation will be directly applicable in all Member States, can, in
future, work on the basis of a single set of identical rules. The
regulation is a necessary complement to the proposed Rome II
regulation (2), which has reached an advanced stage in the legis-
lative process. Together with the Rome II regulation, the present
document will ensure that, for the first time, the EU has a (more
or less) complete system of conflict-of-law rules on contractual
obligations.

The Committee urges the Community legislative bodies

1.4
to incorporate the following amendments:

— Article 3(1)(3) should be changed into a rule of interpreta-

tion,

— Article 3(3) should be amended so that a subsequent choice
of the law applicable to consumer contracts may be made
after a dispute has arisen,

(1) Rome Convention on the law applicable to contractual obligations,

19 June 1980. Current version: OJ C 27, 26.1.1998, p. 36.

(2) COM(2006) 83 final, 2003/0168 (COD).

— the introduction of

less rigid rules than those set out in
Article 4(1) on the law applicable to particularly circum-
stanced exceptional cases should be considered,

— with reference to Article 5, it should be checked whether
and under what conditions the freedom to choose applicable
law may also be granted in cases in which a company oper-
ates in the consumer's country or directs its activity to that
country,

— Article 22(c) should be deleted.

Work on the regulation should be completed as rapidly as
possible so that it can enter into force.

1.5
The Committee is pleased to note that Ireland intends to
become a party to the regulation on a voluntary basis. It regrets
that the regulation will not apply in the United Kingdom and
Denmark, as the impact of harmonisation will not be felt as
strongly as could otherwise have been the case. The Committee
urges the Commission to use all possible means to bring about
the application or adoption of the regulation in these two coun-
tries.

2. General comments

2.1 Grounds for the initiative

2.1.1
The regulation creates a unified set of conflict-of-law
rules on contractual obligations in the EU. Admittedly, such a
set of rules has to some extent already been in place since
1980, when the majority of western European states decided to
conclude the Rome Convention. Other
subsequently
acceded to the Convention. The vehicle of a multilateral conven-
tion was chosen because, at that time, the EC Treaty did not
provide a legal basis for the adoption of an appropriate legal
instrument by the Community. After over twenty-five years of
applying the Convention, it is widely acknowledged as a real
step forward, and the solutions which it provides remain
broadly applicable today. However, revision and modernisation
are needed to remedy certain acknowledged weaknesses. Given
that the Rome Convention was a multilateral agreement, it can

states

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only be revised on the basis of a new round of negotiations,
which would be time-consuming and uncertain in terms of
outcome. However, this is no longer necessary as the TEC now
includes a legal basis for a Community legal act in this area
(Articles 61(c) and 65(b) of the TEC). To make it easier to apply
the law, rules should be identical in all EU Member States. This
means that the only possible legal instrument is a regulation.

2.1.2
In 2004 the Commission conducted a public hearing
on the basis of a 2003 Green Paper (3). A large majority at the
hearing were in favour of a regulation. The EESC (4) and the
EP (5) have also spoken out in favour of modernising the Rome
Convention and converting it into a European regulation.

2.2 The legislative background

2.2.1
The regulation should be seen in the context of the
Commission's activities in the field of civil law and procedural
civil law, which contribute to establishing a uniform European
legal area and facilitating public access
to the law. The
Committee has on several occasions commented on a series of
Commission proposals (6).

(3) COM (2002) 654 final.
(4) 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 instru-
ment and its modernisation. INT/176, 29.01.2004.

(5) 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.

(6) The following examples should be mentioned:

the adoption of the 1968 Brussels Convention in the form of a regu-
lation; Council Regulation (EC) No 2001/44 of 22 December 2000
on jurisdiction and the recognition and enforcement of judgments in
civil and commercial matters, OJ L 12, 16.1.2001, p. 1, and the
EESC opinion on the subject, OJ C 117, 26.4.2000, p. 6 (rapporteur:
Mr Malosse),
the Regulation creating a European enforcement order for uncon-
tested claims, Regulation (EC) No 805/2004 of the European Parlia-
ment and of the Council of 21 April 2004 creating a European
Enforcement Order for uncontested claims, OJ L 143, 30.4.2004, p.
15, and the EESC opinion on the subject, OJ C 85, 8.4.2003, p. 1
(rapporteur: Mr Ravoet),
the Regulation on the service in the Member States of judicial and
extrajudicial documents in civil or commercial matters, Council
Regulation (EC) No. 1348/2000 of 29 May 2000 on the service in
the Member States of judicial and extrajudicial documents in civil or
commercial matters, OJ L 160, 30.6.2000, p. 37, and the EESC
opinion on the subject, OJ C 368, 20.12.1999, p. 47 (rapporteur:
Mr Hernández Bataller),
the Council Regulation on cooperation between the courts of the
Member States in the taking of evidence in civil or commercial
matters, Council Regulation (EC) No. 1206/2001 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, and the EESC opinion on the subject, OJ C 139,
11.5.2001, p. 10 (rapporteur: Mr Hernández Bataller),
Council Regulation (EC) No 1346/2000 of 29 May 2000 on insol-
vency procedures, Council Regulation (EC) No 1346/2002 of
29 May 2000 on insolvency procedures, OJ L 160, 30.6.2000, p. 1,
and the EESC opinion on the subject, OJ C 75, 15.3.2000, p. 1
(rapporteur: Mr Ravoet),
(COM(2002) 443 final of
the Consumer Credit Directive,
11.9.2002). See the EESC opinion on the subject, OJ C 234,
30.9.2003, p. 1 (rapporteur: Mr Pegado Liz),
the Council Directive on unfair terms in consumer contracts, OJ L
95, 21.4.1993, p. 29.and the EESC opinion on the subject, OJ No C
159, 17.6.1991, p. 35 (rapporteur: Mr Hilkens),
Green Paper on a European order for payment procedure and on
measures to simplify and speed up small claims litigation (COM
(2002) 746 final), and the EESC opinion on the subject, OJ C 220,
16.09.2003, p. 5, (rapporteur: Dr von Fürstenwerth),
Proposal for a Regulation of the European Parliament and of the
Council creating a European order for payment procedure, and the
EESC opinion on the subject, OJ C 221, 8.9.2006 (rapporteur: Mr
Pegado Liz).

The initiative ties

in particularly closely with the
2.2.2
Commission's work on conflict of substantive laws,
its
proposal for the Rome II regulation. Rome II is complementary
to Rome I and the two are entirely compatible.

i.e.

2.3 Legal base/Subsidiarity/Proportionality/legal status

2.3.1
The regulation aims to harmonise conflict-of-law rules
in the field of contractual obligations. The legal base for the
harmonisation of conflict-of-law rules is Article 61(c) TEC, cf.
Article 65(b) TEC. This means that the Commission is empow-
ered to act where this is necessary for the smooth operation of
the internal market. In the Committee's view this condition is
met, as harmonising conflict-of-law rules will help to ensure
equal treatment of economic operators in the Community in
cross-border cases, increase legal certainty, simplify application
of the law and thus promote willingness to enter into cross-
border business.
It also promotes the mutual recognition of
legal acts by making it easier for nationals of other Member
States to check that they are legally sound.

2.3.2
These objectives cannot be achieved through measures
at the level of individual Member States, and they require EU
action. EU action in this area is consistent with the subsidiarity
and proportionality principles (Article 5 TEC).

2.4
The Commission has rightly chosen to use the form of a
regulation, as, unlike a directive, it does not leave the Member
States any room for manoeuvre in implementation; this would
result in legal uncertainty, which should be avoided.

3. Specific comments

3.1 Material scope, application of third-country law (Articles 1, 2)

3.1.1
The regulation is intended to apply to contract law
conflict rules in civil and commercial matters (Article 1(1)).
The Commission could therefore use the terminology of
Council Regulation (EC) No 44/2001 (Article 1), which is also
used in the proposed Rome II regulation, as this is clearly
tax, customs and administrative
defined. The exclusion of
is not necessary to
logically. Although it
matters
mention it, there is no harm in doing so.

follows

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The regulation is not intended to cover the entire area
3.1.2
of conflict between civil law systems, not even to the extent of
making it applicable to individual cases, for example to the
evaluation of a contract
law case. The Commission is well
advised not to aim too high and thereby make the project
the exclusion of questions involving the
unwieldy. Thus,
status or legal capacity of natural persons (Article 1(2)(a)) is
justified, as these matters are traditionally dealt with in conflict-
of-law rules by means of separate instruments (so far, nearly
always multilateral agreements (7)) in view of their social impli-
cations. The exclusion of obligations arising from family
relations and maintenance, and from property, marriage,
wills and successions (Article 1(2) (b), (c)) is warranted for
similar reasons, or should be dealt with in separate legal instru-
ments.

3.1.3
The exclusion of obligations arising under the bills of
exchange or cheques (Article 1(2)(d)), is justified by the fact
that these matters are adequately dealt with in separate agree-
ments (8), the scope of which extends beyond the Community
and the continued existence of which should not be called into
question.

3.1.4
The exclusion of arbitration agreements and agree-
ments on the choice of court (Article 1(2)(e)) has to do with
the fact that these matters are covered by international civil
procedural law, as they can be better dealt with in this context
and to some extent are also regulated in agreements whose
applicability extends beyond the EU. The same arguments apply
to evidence and procedure issues (Article 1(2)(h)).

The exclusion of company and association law
3.1.5
matters and issues concerning legal persons in Article 1(2)(f) is
unavoidable, as the issues in question are so closely bound up
with the company statute as to require regulation in this
context. Trusts are a specific feature of Anglo-American law.
They were already excluded in the Rome Convention (Article 1
(2)(g)), which the regulation rightly follows (Article 1(2)(g)).

3.1.6
The exclusion of obligations arising out of a pre-
contractual relationship (Article 1(2)(i)) refers to matters of
tort. These are part of the proposed Rome II regulation and
their exclusion is therefore justified.

3.1.7
The Committee is pleased to note that Ireland intends
to become a party to the regulation on a voluntary basis. It
regrets that the United Kingdom has not decided to follow
suit. In Denmark the regulation will not apply (Art. 1(3)) until
an agreement on application is concluded by Denmark and the

(7) Cf. the various Hague Conventions,

for example the Convention
relating to the settlement of the conflict of the laws concerning
marriage of 12.6.1902, the Convention on the law applicable to main-
tenance obligations towards children of 24.10.1956, the Convention
on the law applicable to maintenance obligations of 2.10.1973, etc.
(8) The Geneva Convention providing a uniform law for bills of exchange
and promissory notes of 7 June 1930 and the Geneva Convention
providing a uniform law for cheques of 19 March 1931.

It would be unfortunate if

into
Community or until Denmark voluntarily transposes it
national law. The Committee urges the Commission to use all
possible means to bring about the application or adoption of
the regulation in these two countries. Opting out by individual
Member States would undermine the objective of Europe-wide
harmonisation of conflict-of-law rules which the regulation is
intended to achieve.
the Rome
Convention continued to apply to those countries as there will
be discrepancies between the Rome Convention and the Rome I
regulation. This might mean that, depending on the location of
the court before which a case is heard — a matter which,
despite the Brussels and Lugano Conventions and Council Regu-
lation (EC) No 44/2001 on jurisdiction and the recognition and
enforcement of
is still
somewhat arbitrary — the same case could produce different
judgements. Such a state of affairs would be difficult to accept
in the Community.

judgments (the Brussels I regulation)

3.1.8
The regulation requires the specified law to be applied,
whether it is the law of a Member State or that of a third
country (Article 2). In so doing it follows a recognised standard
in conflict of laws, which prohibits discrimination against other
systems of law. The Committee endorses this approach. If the
circumstances of a case require that a system of law be applied,
it makes no difference whether or not it is that of a Member
State.

3.2 General rules on applicable law (Articles 3, 4)

3.2.1
Article 3(1) declares that in principle it is the law
chosen by the parties which applies. The Committee welcomes
this provision, which reflects the principle of contractual
freedom, which is a basic principle of contract law and ties in
with the acknowledged standard of private international law. It
is broadly consistent with the provisions of Article 3(1) of the
Rome Convention, which are generally felt to be appropriate.
The Committee endorses this approach. However, it sees a risk
that, when applying this standard in practice, courts could
attempt to establish a hypothetical will of the parties without
adequate evidence to support it. Such a risk should be ruled out
and this point should ideally be clarified in the recitals (No 7).
Article 3(3) puts such emphasis on the freedom of choice of
applicable law that the parties may choose a different law at any
time. Although the Committee welcomes this in principle,
it
feels that there is a potential threat to the protection of consu-
mers, who might be unable to fully anticipate the consequences
of such a step. The Committee suggests that such subsequent
changes in the law chosen to apply to consumer contracts
should — in line with the rule on agreements on the choice of
jurisdiction (Article 17(1), Brussels
regulation) –only be
allowed after a dispute has arisen, as the consumer will then be
on the alert and will act more cautiously.

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On the basis of the parties' agreement on the choice
3.2.2
of courts, the third sentence of Article 3(1) presumes that they
have chosen the law of the Member State in which the
court is situated (unless they have explicitly chosen a different
law). This provision reflects an endeavour to align forum and
law. Alignment usually makes it simpler to pass judgment.
However, the Committee has its doubts as to whether such strict
wording of the rule would not interfere with the intention of
the parties. It would be better to tone down and re-word the
rule so that
the second
it simply guides interpretation of
sentence, for example as follows:

‘In particular, this choice should take account of the court
chosen by the parties.’

3.2.3
The Committee would like to discuss one aspect in
greater depth, as it is of central importance for the future of the
European legal area, i.e. the possible creation of an ‘optional
instrument’ or 26th regime by the European Community. This
would mean that the parties could opt for Community civil law,
an idea which is currently under discussion. Work has begun on
a Common Frame of Reference (CFR), which could represent a
first step in this direction. Article 3(2) includes a clause which
gives parties the option of such supranational rules. At present
this possibility is not straightforward in private international
law, and the Committee therefore strongly welcomes this devel-
opment. This would for the first time allow parties to use Euro-
pean standard contracts, which to a large extent would be genu-
inely harmonised and would represent a significant step towards
completion of the Internal Market (9).

3.2.4
Article 4(1) includes rules on the law applicable to a
variety of contracts; in terms of content, these amplify the provi-
sions of Article 4(2) of the regulation, which are taken from the
Rome Convention. Under the Rome Convention, these rules
could only have been derived by interpreting Article 4(2).
Although the Commission's proposed rules can be seen as
ensuring greater legal certainty, this happens at the price of
rigidity and inflexibility, barring any exceptions even when indi-
vidual circumstances may warrant
them. The Committee is
concerned that this is a retrograde step relative to the Rome
Convention which could have negative repercussions, as cases
are conceivable in which the rigid rules on the applicable law
could, exceptionally, result in an inappropriate solution. In such
exceptional cases, the option for judges to apply a more appro-
priate law might possibly lead to a more satisfactory outcome.
Admittedly, if the goal of legal certainty and predictability in
terms of the applicable law is to be met, such waivers cannot

(9) If an optional instrument/26th regime ever comes into being, this
would then claim to be the best of all possible systems of civil law. If it
were agreed to apply this instrument rather than a national system of
law, there would logically no longer be any need to align it with
national laws or allow interference on the grounds of national manda-
tory rules (or even public policy considerations — Article 20). Instead,
choice of the optional instrument would lead to a fully unrestricted
application of this set of rules, as it would represent the generally
acknowledged standard in the EU. As Article 3(2) already allows in
principle for the choice of such an instrument, this would also be the
logical place to create the conditions enabling the benefits of the
optional instrument to be put into practice. It should be explicitly
stated that Article 8 is without effect if it is agreed to apply a suprana-
tional system of law (the same applies to public policy — Article 20).

under any circumstance be allowed to result in judges invoking
the applicable law in an arbitrary way; they will therefore have
to give very careful consideration and deliver a very solidly
reasoned judgement. With this in mind, the Committee suggests
considering an amendment to the regulation.

3.2.5
The Committee understands what the Commission is
trying to achieve in Article 4(1)(f). However, it would point out
that, because of the grounds on which they are substantiated,
many industrial property rights are assignable under condi-
tions that differ from those provided for under the law of the
rightholder's country of habitual residence. As Article 4(1) does
not establish applicability of the law of the place of habitual
residence in substantiating the legal relationship, a change
in the applicable law due to a subsequent change in the right-
holder's country of habitual residence would raise difficulties in
such cases in relation to the legal basis of property rights. The
Committee recommends that the Commission look into this
problem and propose an appropriate solution.

3.3 Specific rules on applicable law (Articles 5-17)

the proposed text stipulates that

3.3.1
The Rome Convention rules on consumer contracts
have often been criticized and there have been numerous calls
for their revision; Article 5 is a thorough re-working. The
Committee feels that the Commission has taken a step in the
right direction, as the complex application of two different sets
of laws to the same case required by Article 5 of the Rome
Convention will be avoided in future. There is no doubt that a
consumer who signs contracts with a person who pursues a
trade or profession needs protection, including in the area of
conflict-of-law rules. In most cases, this is ensured by applying
the law of the Member State in which the consumer has
his habitual residence (Article 5(1)), as this is the law which
consumers know (best), the language of which they can speak
and on which it is easiest to obtain professional advice. In addi-
tion,
the
company must have been directed to or conducted in the
country in which the consumer has his habitual residence.
Professionals tend to prefer application of home-country rules,
as this is more convenient for them; the Commission's proposal
serves their interests by allowing this in other cases, in line with
the Rome Convention. However,
the Committee wonders
whether it is really necessary to deprive the parties to consumer
contracts within the meaning of paragraph 2 of any possibility
of choosing applicable law. In the Committee's view, it is much
more likely that consumers would also benefit from the possibi-
lity of choosing the applicable law, at least provided that certain
protective measures are in place, which they — as the less
experienced and weaker party to the contract — undeniably
need. The Committee therefore recommends that the Commis-
sion review these provisions once again with the above in mind.

the activity of

3.3.2
The provisions for employment contracts (Article 6)
reflect the fact that employees are in particular need of protec-
tion. These provisions are taken from Article 6 of the Rome
Convention, with additional provisions to duly reflect develop-
ments in the field of dependent employment. The addition of
the words ‘or from which’ is a change arising from ECJ case law

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relating to Article 18 of the Brussels Convention. However, in
the absence of a precise definition in the regulation itself or of
clarification in the recitals, the Committee is unclear as to what
constitutes ‘temporary’ work in another country (Article 6(2)(a)).
It is vital to put this right, as the ‘temporary’ nature of employ-
ment is of particular relevance to the rule for determining the
applicable law. Nor can this shortcoming be remedied by falling
back on Article 2 of the directive on posting workers (10), as
this does not contain a precise definition either. Moreover, the
Committee finds it difficult to understand why a provision is
needed for ‘territory subject to no national sovereignty’ (Article
6(2)(b)). Perhaps this refers to drilling platforms in international
waters. This should at
least be clarified in the explanatory
memorandum.

3.3.3
Article 7 deals with representation in legal transac-
tions, an area which is only partially regulated in the Rome
Convention, and does not include the legal relationship between
agents and third parties. Closure of
this loophole is timely
(Article 7(2)). It is difficult to answer the question of which law
should be applied here as the interests of both agents and third
In cases of agents exceeding their
parties are concerned.
authority or acting without authority, third parties are usually
more in need of protection. The proposed text aims to strike a
balance between the interests of both sides and therefore meets
with the Committee's approval.

3.3.4
The issue of mandatory rules is a difficult one; where
possible, the results of the choice of law by the parties should
not be impeded more than absolutely necessary, and application
should not be hindered by rules which are extraneous to the
governing law. Article 8 is broadly consistent with Article 7(2)
of the Rome Convention. The regulation takes into account rele-
vant ECJ case law (11) in defining mandatory rules and making
them applicable. For those applying the law, such cases are asso-
ciated with the difficulty that there is no longer a uniform basis
for assessing a case, and that non-harmonised or even contradic-
tory rules are supposed to be applied and brought in line with
one another. This is time-consuming, technically complicated
and results in greater legal uncertainty. However, given the situa-
tion with regard to alignment of national laws, the Committee
does not feel that there is any alternative, especially seeing that
even legal theorists are overwhelmingly in favour of applying
such rules in conflict-of-law cases.

On the whole, the remaining Articles 10–17 present
3.3.5
few problems
in the Committee's view and no detailed
comments are necessary, especially when they simply take over
the provisions of the Rome Convention.

3.3.6
Given the growing frequency of distance contracts,
Article 10 (formal validity of the contract) meets the need for
simpler rules on formal validity of contracts or unilateral acts by
introducing additional rules on the applicable law.

Voluntary assignment and contractual subrogation
3.3.7
of the creditor's rights from the creditor to a third party
discharging the debt, which is a feature of many systems of law,
serve the same purpose in economic terms (12). The proposed
text does well to deal with both in Article 13. Article 13(3)
introduces a new conflict-of-law rule on the question of which
law should determine whether the assignment may be relied on
against
third parties. This rule rightly follows the solution
adopted by the United Nations Convention on the assignment
of receivables in international trade of 12 December 2001.

3.3.8
Article 14 includes a conflict-of-law rule for a statu-
tory subrogation, which is a feature of most systems of law. A
conflict-of-law rule is therefore necessary. Article 15 completes
Article 14 with a conflict-of-law rule on joint liability of
multiple debtors in the case of statutory subrogation. Although
it would have made sense to combine this with Article 14 in a
single rule, no change is needed here.

3.4 Other provisions/final provisions (Articles 18 — 24)

3.4.1
The matters dealt with in Chapters III and IV are predo-
minantly technical rules consistent with general standards in
conflict of laws and require no detailed comment. This applies
in particular to Article 19 (Exclusion of renvoi), which is consis-
tent with Article 15 of the Rome Convention, Article 21 (States
with more than one legal system), which is consistent with
Article 19 of the Rome Convention, Article 20 (Public policy),
which is consistent with Article 16 of the Rome Convention
and Article 23 (Relationship with existing international conven-
tions), which is consistent with Article 21 of the Rome Conven-
tion.

3.4.2
The habitual place of residence (Article 18) of a
person plays a central role in current private international law
when determining the applicable law. Although determining the
habitual place of residence of a natural person is unproblematic,
doubts may arise in relation to legal persons. The regulation
disposes of such doubts in an appropriate way by declaring the
main place of business to be the decisive criterion. It would not
have been appropriate to model this provision on Article 60 of
Council Regulation (EC) No 44/2001, as this regulation gener-
ally takes the place of permanent residence rather than that of
habitual residence as the criterion, and also as the threefold
solution adopted there would have meant less legal certainty.

3.4.3
Sub-paragraph (c) of Article 22 is difficult to under-
stand. What it seems to be stipulating is that Community legal
acts adopted at a later stage may include conflict-of-law
rules of their own, which could override application of the
regulation. However, existing achievements
in harmonising
private international law should be preserved in future. Dispersal
legal sources with substantively divergent rules is to be
of
avoided. If the need for special rules should arise in future, they
should be integrated into the regulation.

The Committee suggests deleting sub-paragraph (c).

(10) Directive 96/71/EC of the European Parliament and of the Council of
16 December 1996 concerning the posting of workers in the frame-
work of the provision of services (OJ. L 18, 21.1.1997, p. 1).

(11) Cases C-369/96 and C-374/96 of 23.11.1999.

(12) Note: this is only clear from the French language version of the
proposal; incomprehensibly, in the German language version it has
not been translated, as German law lacks an equivalent legal instru-
ment. However, for the sake of completeness it should at least be para-
phrased.

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3.5 Annex I

3.5.1
The third and fourth items listed in the Annex are the
‘second non-life insurance Directive’ and the ‘second life assur-
ance Directive’. Apart from the fact that the latter directive has
been repealed and that presumably the intended reference is to
the life assurance Directive (13) which replaced it, both of these
bullet points cause problems, although the Committee would
not go so far as to call for their deletion. However, it would defi-
nitely draw the Commission's attention to the major problems
to which the proposal gives rise. A golden opportunity to
simplify and harmonise conflict-of-law rules and to solve
problems in the relevant area is being squandered as a result.
Used in conjunction with Article 22 (a), the third and fourth
bullet points of Annex I would mean that the regulation could
insurance
not be applied to conflict of
contracts (14) covering risks located within the EU, as this is
regulated by these two directives.

laws on direct

3.5.2
However, conflict-of-law rules on insurance contracts
covering risks located outside the EU, on insurance of risks
inside the EU (although only if contracts are concluded with a
non-EU insurance company) and on re-insurance contracts are
very much within the scope of the regulation. This would perpe-
tuate a situation which has already led to confusion on the part
of those applying the law (15). Since enactment of the insurance
directives, the conflict-of-law rules for insurance contracts differ
from general conflict-of-law rules for contracts (Article 1(3) of
the Rome Convention), even though insurance contracts also
entail contractual obligations. There were no objective reasons
for drawing this distinction, other than that at the time of
concluding the Rome Convention work had not yet begun on
the second generation of
insurance directives, and it was
decided to wait and see what kind of regulatory framework
would emerge before determining the conflict-of-law rules (16).
However, this reason no longer applies.

3.5.3
Private international law rules were at odds with the
directives, which are influenced by regulatory law. Without

Brussels, 13 September 2006.

specialist knowledge, lawyers applying the law would not expect
to find them. The division between various cross-cutting and
sector-specific legal sources complicates private international
law on insurance. For the sake of legal consistency, a compre-
hensive approach superseding special rules would be desirable.

3.5.4
There is no point in incorporating the private interna-
tional law of the directives in the Rome I regulation without
substantive changes, as it would maintain different rules for
insurance contracts with risks located inside and outside the EU
without good reason. This cannot be justified by reference to
regulatory law. Insurance companies are regulated according to
the country of establishment principle, which in any case tends
to lead to a discrepancy between regulation and risk location for
cross-border operations. The situation for insurance contracts
covering risks inside and outside the EU is not the same. It
makes sense to bring insurance contracts covering risks located
inside the EU within the scope of the regulation's general rules
on applicable laws. Due to the introduction of rules on the
choice of law by the regulation, the insurance sector and its
clients in the non-consumer segment would in future benefit
from enhanced choice-of-law options. An intelligent choice of
law from the contract law perspective would make it possible to
offer identical products throughout Europe, obviating much of
the necessity to develop separate products. In the past, problems
in this area have deterred insurance companies from making
much use of the freedom to provide services for anything less
than coverage of major risks. In terms of choice of law, only
consumers are in general need of protection, including in the
area of insurance. Compared to them, businesses and the self-
employed enjoy a lesser degree of protection, but do not have
full freedom in choice of law, and do not require any special
protection. They have sufficient business experience to under-
stand the risks which they are taking in operating outside their
home country's system of law or to recognise when they need
legal advice.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

(13) Directive 2002/83/EC of the European Parliament and of the Council
of 5 November 2002 concerning life assurance, OJ. L 345,
19.12.2002, 1.

(14) In distinction to re-insurance contracts.
(15) At present, the situation is as follows: according to Article 1(3) of the
Rome Convention, insurance contracts are excluded from the scope of
the Convention, provided that they are direct insurance contracts, but
only if the risk is located in the EU. When this happens cannot be
deduced from the Rome Convention itself, but from the insurance
directives. However, the Rome Convention applies to re-insurance
contracts and to risks located outside the EU.

(16) Giuliano/Lagarde, Rome Convention on the law applicable to contrac-

tual obligations, OJ C 282, 31.10.1980, p. 13.