Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I)
Date: 2008-06-17
Institutions: Council of the European Union, European Parliament
Subjects: European judicial area, commercial law, judicial cooperation in criminal matters in the EU, jurisdiction, law of obligations, mutual recognition principle

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REGULATION (EC) No 593/2008 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of 17 June 2008

on the law applicable to contractual obligations (Rome I)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

(6)

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

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Economic and
Social Committee (1),

Acting in accordance with the procedure laid down in Article 251
of the Treaty (2),

Whereas:

(1)

The Community has set itself the objective of maintaining
and developing an area of freedom, security and justice. For
the
the progressive establishment of
Community is to 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.

such an area,

(7)

(8)

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 applicable and the free
movement of judgments, for the conflict-of-law rules in the
Member States
law
irrespective of the country of the court in which an action
is brought.

to designate the same national

The substantive scope and the provisions of this Regulation
should be consistent with Council Regulation (EC) No 44/
2001 of 22 December 2000 on jurisdiction and the
recognition and enforcement of judgments in civil and
commercial matters (5)
(Brussels I) and Regulation (EC)
No 864/2007 of
the
Council of 11 July 2007 on the law applicable to non-
contractual obligations (Rome II) (6).

the European Parliament and of

Family relationships should cover parentage, marriage,
affinity and collateral relatives. The reference in Article 1(2)
to relationships having comparable effects to marriage and
other
interpreted in
accordance with the law of the Member State in which
the court is seised.

family relationships

should be

(2) According to Article 65, point (b) of the Treaty, these
measures are to include those promoting the compatibility
of the rules applicable in the Member States concerning the
conflict of laws and of jurisdiction.

(9) Obligations under bills of exchange, cheques and promis-
sory notes and other negotiable instruments should also
cover bills of lading to the extent that the obligations under
the bill of lading arise out of its negotiable character.

(3)

The European Council meeting in Tampere on 15 and
16 October 1999 endorsed the principle of mutual
recognition of judgments and other decisions of judicial
authorities as the cornerstone of judicial cooperation in
civil matters and invited the Council and the Commission
to adopt a programme of measures to implement that
principle.

(4) On 30 November 2000 the Council adopted a joint
Commission and Council programme of measures for
implementation of the principle of mutual recognition of
decisions in civil and commercial matters (3). The pro-
gramme identifies measures relating to the harmonisation
of conflict-of-law rules as those facilitating the mutual
recognition of judgments.

(5)

The Hague Programme (4), adopted by the European
Council on 5 November 2004, called for work to be
pursued actively on the conflict-of-law rules regarding
contractual obligations (Rome I).

(1) OJ C 318, 23.12.2006, p. 56.
(2) Opinion of the European Parliament of 29 November 2007 (not yet
published in the Official Journal) and Council Decision of 5 June
2008.

(3) OJ C 12, 15.1.2001, p. 1.
(4) OJ C 53, 3.3.2005, p. 1.

(10) Obligations arising out of dealings prior to the conclusion
of the contract are covered by Article 12 of Regulation (EC)
No 864/2007. Such obligations
should therefore be
excluded from the scope of this Regulation.

(11) The parties' freedom to choose the applicable law should be
one of the cornerstones of the system of conflict-of-law
rules in matters of contractual obligations.

(12) An agreement between the parties to confer on one or
more courts or tribunals of a Member State exclusive
jurisdiction to determine disputes under
the contract
should be one of the factors to be taken into account in
law has been clearly
determining whether a choice of
demonstrated.

(13) This Regulation does not preclude parties from incorporat-
ing by reference into their contract a non-State body of law
or an international convention.

(5) OJ L 12, 16.1.2001, p. 1. Regulation as last amended by Regulation

(EC) No 1791/2006 (OJ L 363, 20.12.2006, p. 1).

(6) OJ L 199, 31.7.2007, p. 40.

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(14) Should the Community adopt,

in an appropriate legal
instrument, rules of substantive contract law,
including
standard terms and conditions, such instrument may
provide that the parties may choose to apply those rules.

(15) Where a choice of law is made and all other elements
relevant to the situation are located in a country other than
the country whose law has been chosen, the choice of law
should not prejudice the application of provisions of the
law of that country which cannot be derogated from by
agreement. This rule should apply whether or not the
choice of law was accompanied by a choice of court or
tribunal. Whereas no substantial change is intended as
compared with Article 3(3) of the 1980 Convention on the
Law Applicable to Contractual Obligations (1) (the Rome
Convention), the wording of this Regulation is aligned as
far as possible with Article 14 of Regulation (EC) No 864/
2007.

(16) To contribute to the general objective of this Regulation,
legal certainty in the European judicial area, the conflict-of-
law rules should be highly foreseeable. The courts should,
however, retain a degree of discretion to determine the law
that is most closely connected to the situation.

(17) As far as the applicable law in the absence of choice is
concerned, the concept of ‘provision of services’ and ‘sale of
goods’ should be interpreted in the same way as when
applying Article 5 of Regulation (EC) No 44/2001 in so far
as sale of goods and provision of services are covered by
that Regulation. Although franchise and distribution
contracts are contracts for services, they are the subject of
specific rules.

(18) As far as the applicable law in the absence of choice is
concerned, multilateral systems should be those in which
trading is conducted, such as regulated markets and
multilateral trading facilities as referred to in Article 4 of
Directive 2004/39/EC of the European Parliament and of
the Council of 21 April 2004 on markets in financial
instruments (2), regardless of whether or not they rely on a
central counterparty.

(19) Where there has been no choice of law, the applicable law
should be determined in accordance with the rule specified
for the particular type of contract. Where the contract
cannot be categorised as being one of the specified types or
where its elements fall within more than one of
the
specified types, it should be governed by the law of the
country where the party required to effect the characteristic
performance of the contract has his habitual residence. In
the case of a contract consisting of a bundle of rights and
obligations capable of being categorised as falling within
the specified types of contract, the
more than one of
characteristic performance of
should be
the contract
determined having regard to its centre of gravity.

(1) OJ C 334, 30.12.2005, p. 1.
(2) OJ L 145, 30.4.2004, p. 1. Directive as last amended by Directive

2008/10/EC (OJ L 76, 19.3.2008, p. 33).

(20) Where the contract is manifestly more closely connected
with a country other than that indicated in Article 4(1) or
(2), an escape clause should provide that the law of that
other country is to apply.
In order to determine that
country, account should be taken, inter alia, of whether the
contract in question has a very close relationship with
another contract or contracts.

(21)

In the absence of choice, where the applicable law cannot
be determined either on the basis of the fact that the
contract can be categorised as one of the specified types or
as being the law of the country of habitual residence of the
party required to effect the characteristic performance of
the contract, the contract should be governed by the law of
the country with which it is most closely connected. In
order to determine that country, account should be taken,
inter alia, of whether the contract in question has a very
close relationship with another contract or contracts.

third sentence, of

(22) As regards the interpretation of contracts for the carriage of
goods, no change in substance is intended with respect to
Article 4(4),
the Rome Convention.
Consequently,
single-voyage charter parties and other
contracts the main purpose of which is the carriage of
goods should be treated as contracts for the carriage of
goods. For the purposes of
the term
‘consignor’ should refer to any person who enters into a
contract of carriage with the carrier and the term ‘the
carrier’ should refer to the party to the contract who
undertakes to carry the goods, whether or not he performs
the carriage himself.

this Regulation,

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

(24) With more specific reference to consumer contracts, the
conflict-of-law rule should make it possible to cut the cost
settling disputes concerning what are commonly
of
relatively small claims and to take account of
the
development of distance-selling techniques. Consistency
with Regulation (EC) No 44/2001 requires both that there
be a reference to the concept of directed activity as a
condition for applying the consumer protection rule and
that the concept be interpreted harmoniously in Regulation
(EC) No 44/2001 and this Regulation, bearing in mind that
a joint declaration by the Council and the Commission on
Article 15 of Regulation (EC) No 44/2001 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 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

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whatever means. In this respect, the language or currency
which a website uses does not constitute a relevant factor.’.

(25) Consumers should be protected by such rules of

the
country of their habitual residence that cannot be derogated
from by agreement, provided that the consumer contract
has been concluded as a result of the professional pursuing
his commercial or professional activities in that particular
country. The same protection should be guaranteed if the
professional, while not pursuing his commercial or
professional activities in the country where the consumer
has his habitual residence, directs his activities by any
means to that country or to several countries, including
that country, and the contract is concluded as a result of
such activities.

(26) For the purposes of this Regulation, financial services such
as investment services and activities and ancillary services
provided by a professional to a consumer, as referred to in
sections A and B of Annex I to Directive 2004/39/EC, and
contracts for the sale of units in collective investment
undertakings, whether or not covered by Council Directive
85/611/EEC of 20 December 1985 on the coordination of
laws, regulations and administrative provisions relating to
in transferable
for collective investment
undertakings
securities (UCITS) (1), should be subject to Article 6 of this
Regulation. Consequently, when a reference is made to
terms and conditions governing the issuance or offer to the
public of transferable securities or to the subscription and
redemption of units in collective investment undertakings,
that reference should include all aspects binding the issuer
or the offeror to the consumer, but should not include
those aspects involving the provision of financial services.

(27) Various exceptions should be made to the general conflict-
of-law rule for consumer contracts. Under one such
exception the general rule should not apply to contracts
relating to rights in rem in immovable property or tenancies
of such property unless the contract relates to the right to
use immovable property on a timeshare basis within the
meaning of Directive 94/47/EC of the European Parliament
and of the Council of 26 October 1994 on the protection
of purchasers in respect of certain aspects of contracts
relating to the purchase of the right to use immovable
properties on a timeshare basis (2).

(28)

It is important to ensure that rights and obligations which
constitute a financial instrument are not covered by the
general rule applicable to consumer contracts, as that could
the
lead to different
instruments issued, therefore changing their nature and
preventing their fungible trading and offering. Likewise,
whenever such instruments are issued or offered,
the
contractual relationship established between the issuer or
the offeror and the consumer should not necessarily be

laws being applicable to each of

(1) OJ L 375, 31.12.1985, p. 3. Directive as last amended by Directive
2008/18/EC of the European Parliament and of the Council (OJ
L 76, 19.3.2008, p. 42).
(2) OJ L 280, 29.10.1994, p. 83.

subject to the mandatory application of the law of the
country of habitual residence of the consumer, as there is a
need to ensure uniformity in the terms and conditions of an
issuance or an offer. The same rationale should apply with
regard to the multilateral systems covered by Article 4(1)(h),
in respect of which it should be ensured that the law of the
country of habitual residence of the consumer will not
interfere with the rules applicable to contracts concluded
within those systems or with the operator of such systems.

(29) For the purposes of this Regulation, references to rights and
obligations constituting the terms and conditions govern-
ing the issuance, offers to the public or public take-over
to the
transferable securities and references
bids of
subscription and redemption of units in collective invest-
ment undertakings should include the terms governing,
inter alia, the allocation of securities or units, rights in the
event of over-subscription, withdrawal rights and similar
matters in the context of the offer as well as those matters
referred to in Articles 10, 11, 12 and 13, thus ensuring that
all relevant contractual aspects of an offer binding the issuer
or the offeror to the consumer are governed by a single law.

(30) For the purposes of this Regulation, financial instruments
and transferable securities are those instruments referred to
in Article 4 of Directive 2004/39/EC.

(31) Nothing in this Regulation should prejudice the operation
of a formal arrangement designated as a system under
Article 2(a) of Directive 98/26/EC of
the European
Parliament and of
the Council of 19 May 1998 on
settlement finality in payment and securities settlement
systems (3).

(32) Owing to the particular nature of contracts of carriage and
insurance contracts, specific provisions should ensure an
adequate level of protection of passengers and policy
holders. Therefore, Article 6 should not apply in the
context of those particular contracts.

(33) Where an insurance contract not covering a large risk
covers more than one risk, at least one of which is situated
in a Member State and at least one of which is situated in a
third country, the special rules on insurance contracts in
this Regulation should apply only to the risk or risks
situated in the relevant Member State or Member States.

(34) The rule on individual employment contracts should not
prejudice the application of
the overriding mandatory
provisions of the country to which a worker is posted in
the European
accordance with Directive 96/71/EC of
Parliament and of
the Council of 16 December 1996
concerning the posting of workers in the framework of the
provision of services (4).

(3) OJ L 166, 11.6.1998, p. 45.
(4) OJ L 18, 21.1.1997, p. 1.

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(35) Employees should not be deprived of

the protection
afforded to them by provisions which cannot be derogated
from by agreement or which can only be derogated from to
their benefit.

(36) As regards individual employment contracts, work carried
out in another country should 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 should not preclude the
employee from being regarded as carrying out his work in
another country temporarily.

(37) Considerations of public interest justify giving the courts of
the Member States the possibility, in exceptional circum-
stances, of applying exceptions based on public policy and
overriding mandatory provisions. The concept of ‘over-
riding mandatory provisions’ should be distinguished from
the expression ‘provisions which cannot be derogated from
by agreement’ and should be construed more restrictively.

(38)

In the context of voluntary assignment, the term ‘relation-
ship’ should make it clear that Article 14(1) also applies to
the property aspects of an assignment, as between assignor
and assignee, in legal orders where such aspects are treated
separately from the aspects under the law of obligations.
However, the term ‘relationship’ should not be understood
as relating to any relationship that may exist between
assignor and assignee. In particular,
it should not cover
preliminary questions as regards a voluntary assignment or
a contractual subrogation. The term should be strictly
limited to the aspects which are directly relevant to the
voluntary assignment or contractual subrogation in ques-
tion.

(39) For the sake of

legal certainty there should be a clear
definition of habitual residence, in particular for companies
and other bodies, corporate or unincorporated. Unlike
Article 60(1) of Regulation (EC) No 44/2001, which
establishes three criteria, the conflict-of-law rule should
proceed on the basis of a single criterion; otherwise, the
parties would be unable to foresee the law applicable to
their situation.

(40) A situation where conflict-of-law rules are dispersed among
several
instruments and where there are differences
between those rules should be avoided. This Regulation,
however, should not exclude the possibility of inclusion of
conflict-of-law rules relating to contractual obligations in
provisions of Community law with regard to particular
matters.

This Regulation should not prejudice the application of
other instruments laying down provisions designed to
contribute to the proper functioning of the internal market
in so far as they cannot be applied in conjunction with the
this Regulation. The
law designated by the rules of

application of provisions of the applicable law designated
by the rules of this Regulation should not restrict the free
movement of goods and services as regulated by Commu-
nity instruments, such as Directive 2000/31/EC of the
European Parliament and of the Council of 8 June 2000 on
in
certain legal aspects of
particular electronic commerce,
in the Internal Market
(Directive on electronic commerce) (1).

information society services,

(41) Respect for international commitments entered into by the
Member States means that this Regulation should not affect
international conventions to which one or more Member
States are parties at the time when this Regulation is
adopted. To make the rules more accessible, the Commis-
sion should 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.

(42) The Commission will make a proposal to the European
Parliament and to the Council concerning the procedures
and conditions according to which Member States would be
entitled to negotiate and conclude, on their own behalf,
agreements with third countries in individual and excep-
tional cases, concerning sectoral matters and containing
provisions on the law applicable to contractual obligations.

(43) Since the objective of this Regulation cannot be sufficiently
achieved by the Member States and can therefore, by reason
of the scale and effects of this Regulation, be better achieved
at Community level, the Community may adopt measures,
in accordance with the principle of subsidiarity as set out in
Article 5 of the Treaty. In accordance with the principle of
proportionality, as set out in that Article, this Regulation
does not go beyond what is necessary to attain its objective.

(44)

(45)

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 to the Treaty establishing the
European Community, Ireland has notified its wish to take
part
the present
Regulation.

in the adoption and application of

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 to the Treaty establishing
the European Community, and without prejudice to
Article 4 of the said Protocol, the United Kingdom is not
taking part in the adoption of this Regulation and is not
bound by it or subject to its application.

(46)

In accordance with Articles 1 and 2 of the Protocol on the
position of Denmark, annexed to the Treaty on European
Union and to the Treaty establishing the European
Community, Denmark is not taking part in the adoption
of this Regulation and is not bound by it or subject to its
application,

(1) OJ L 178, 17.7.2000, p. 1.

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HAVE ADOPTED THIS REGULATION:

(j)

CHAPTER I

SCOPE

Article 1

Material scope

1. This Regulation shall apply, in situations involving a conflict
laws, to contractual obligations in civil and commercial
of
matters.

It
shall not apply,
administrative matters.

in particular,

to revenue, customs or

2. The following shall be excluded from the scope of this
Regulation:

(a)

(b)

(c)

(d)

(e)

(f)

questions involving the status or legal capacity of natural
persons, without prejudice to Article 13;

obligations arising out of family relationships and relation-
ships deemed by the law applicable to such relationships to
have comparable effects,
including maintenance obliga-
tions;

obligations arising out of matrimonial property regimes,
property regimes of relationships deemed by the law
applicable to such relationships to have comparable effects
to marriage, and wills and succession;

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;

arbitration agreements and agreements on the choice of
court;

questions governed by the law of companies and other
bodies, corporate or unincorporated, such as the creation,
by registration or otherwise,
internal
organisation or winding-up of companies and other bodies,
corporate or unincorporated, and the personal liability of
officers and members as such for the obligations of the
company or body;

legal capacity,

(g)

the question whether an agent is able to bind a principal, or
an organ to bind a company or other body corporate or
unincorporated, in relation to a third party;

insurance contracts arising out of operations carried out by
referred to in
organisations other
than undertakings
Article 2 of Directive 2002/83/EC of
the European
the Council of 5 November 2002
Parliament and of
concerning life assurance (1)
the object of which is to
provide benefits for employed or self-employed persons
belonging to an undertaking or group of undertakings, or
to a trade or group of trades, in the event of death or
survival or of discontinuance or curtailment of activity, or
of sickness related to work or accidents at work.

3. This Regulation shall not apply to evidence and procedure,
without prejudice to Article 18.

4.
In this Regulation, the term ‘Member State’ shall mean
Member States to which this Regulation applies. However, in
Article 3(4) and Article 7 the term shall mean all the Member
States.

Article 2

Universal application

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

CHAPTER II

UNIFORM RULES

Article 3

Freedom of choice

1. A contract shall be governed by the law chosen by the
parties. The choice shall be made expressly or clearly demon-
strated by the terms of the contract or the circumstances of the
case. By their choice the parties can select the law applicable to
the whole or to part only of the contract.

2. 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 made 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 11 or adversely affect
the rights of third parties.

3. Where all other elements relevant to the situation at the time
of the choice are located in a country other than the country
whose law has been chosen, the choice of the parties shall not
prejudice the application of provisions of the law of that other
country which cannot be derogated from by agreement.

(h)

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

4. Where all other elements relevant to the situation at the time
of the choice are located in one or more Member States, the

(i)

obligations arising out of dealings prior to the conclusion
of a contract;

(1) OJ L 345, 19.12.2002, p. 1. Directive as last amended by Directive

2008/19/EC (OJ L 76, 19.3.2008, p. 44).

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parties' choice of applicable law other than that of a Member
State shall not prejudice the application of provisions of
Community law, where appropriate as implemented in the
Member State of the forum, which cannot be derogated from by
agreement.

5. The existence and validity of the consent of the parties as to
the choice of
the applicable law shall be determined in
accordance with the provisions of Articles 10, 11 and 13.

Article 4

Applicable law in the absence of choice

1. To the extent that the law applicable to the contract has not
been chosen in accordance with Article 3 and without prejudice
to Articles 5 to 8, the law governing the contract shall be
determined as follows:

a contract for the sale of goods shall be governed by the law
of the country where the seller has his habitual residence;

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

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

(c), a tenancy of

notwithstanding point
immovable
property concluded for temporary private use for a period
of no more than six consecutive months shall be governed
by the law of the country where the landlord has his
habitual residence, provided that the tenant is a natural
person and has his habitual residence in the same country;

a franchise contract shall be governed by the law of the
country where the franchisee has his habitual residence;

characteristic performance of
residence.

the contract has his habitual

3. Where it is clear from all the circumstances of the case that
the contract is manifestly more closely connected with a country
other than that indicated in paragraphs 1 or 2, the law of that
other country shall apply.

4. Where the law applicable cannot be determined pursuant to
paragraphs 1 or 2, the contract shall be governed by the law of
the country with which it is most closely connected.

Article 5

Contracts of carriage

1. To the extent that the law applicable to a contract for the
carriage of goods has not been chosen in accordance with
Article 3, the law applicable shall be the law of the country of
habitual residence of the carrier, provided that the place of
receipt or the place of delivery or the habitual residence of the
consignor is also situated in that country. If those requirements
are not met, the law of the country where the place of delivery as
agreed by the parties is situated shall apply.

2. To the extent that the law applicable to a contract for the
carriage of passengers has not been chosen by the parties in
accordance with the second subparagraph, the law applicable
shall be the law of the country where the passenger has his
habitual residence, provided that either the place of departure or
the place of destination is situated in that country. If these
requirements are not met, the law of the country where the
carrier has his habitual residence shall apply.

The parties may choose as the law applicable to a contract for the
carriage of passengers in accordance with Article 3 only the law
of the country where:

(a)

the passenger has his habitual residence; or

(b)

the carrier has his habitual residence; or

a distribution contract shall be governed by the law of the
country where the distributor has his habitual residence;

(c)

the carrier has his place of central administration; or

a contract
for the sale of goods by auction shall be
governed by the law of the country where the auction takes
place, if such a place can be determined;

a contract concluded within a multilateral system which
brings together or facilitates the bringing together of
multiple third-party buying and selling interests in financial
instruments, as defined by Article 4(1), point
(17) of
Directive 2004/39/EC, in accordance with non-discretion-
ary rules and governed by a single law, shall be governed by
that law.

(d)

the place of departure is situated; or

(e)

the place of destination is situated.

3. Where it is clear from all the circumstances of the case that
the contract, in the absence of a choice of law, is manifestly more
closely connected with a country other than that indicated in
paragraphs 1 or 2, the law of that other country shall apply.

Article 6

Consumer contracts

2. Where the contract is not covered by paragraph 1 or where
the elements of the contract would be covered by more than one
of points (a) to (h) of paragraph 1, the contract shall be governed
by the law of the country where the party required to effect the

1. Without prejudice to Articles 5 and 7, a contract concluded
by a natural person for a purpose which can be regarded as being
outside his trade or profession (the consumer) with another

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

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person acting in the exercise of his trade or profession (the
professional) shall be governed by the law of the country where
the consumer has his habitual residence, provided that
the
professional:

Article 7

Insurance contracts

(a)

pursues his commercial or professional activities in the
country where the consumer has his habitual residence, or

(b)

by any means, directs such activities to that country or to
several countries including that country,

and the contract falls within the scope of such activities.

2. Notwithstanding paragraph 1, the parties may choose the
law applicable to a contract which fulfils the requirements of
paragraph 1, in accordance with Article 3. Such a choice may
not, however, have the result of depriving the consumer of the
protection afforded to him by provisions that cannot be
derogated from by agreement by virtue of the law which, in
the absence of choice, would have been applicable on the basis of
paragraph 1.

1. This Article shall apply to contracts
referred to in
paragraph 2, whether or not the risk covered is situated in a
Member State, and to all other insurance contracts covering risks
situated inside the territory of the Member States. It shall not
apply to reinsurance contracts.

2. An insurance contract covering a large risk as defined in
Article 5(d) of the First Council Directive 73/239/EEC of 24 July
1973 on the coordination of laws, regulations and adminis-
trative provisions relating to the taking-up and pursuit of the
business of direct insurance other than life assurance (2) shall be
governed by the law chosen by the parties in accordance with
Article 3 of this Regulation.

To the extent that the applicable law has not been chosen by the
parties, the insurance contract shall be governed by the law of
the country where the insurer has his habitual residence. Where
it is clear from all the circumstances of the case that the contract
is manifestly more closely connected with another country, the
law of that other country shall apply.

3.
If the requirements in points (a) or (b) of paragraph 1 are not
fulfilled, the law applicable to a contract between a consumer
and a professional shall be determined pursuant to Articles 3 and
4.

In the case of an insurance contract other than a contract
3.
falling within paragraph 2, only the following laws may be
chosen by the parties in accordance with Article 3:

4.

Paragraphs 1 and 2 shall not apply to:

(a)

the law of any Member State where the risk is situated at the
time of conclusion of the contract;

(a)

(b)

(c)

(d)

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;

(b)

the law of the country where the policy holder has his
habitual residence;

a contract of carriage other than a contract relating to
package travel within the meaning of Council Directive 90/
314/EEC of 13 June 1990 on package travel, package
holidays and package tours (1);

a contract relating to a right in rem in immovable property
or a tenancy of immovable property other than a contract
relating to the right to use immovable properties on a
timeshare basis within the meaning of Directive 94/47/EC;

rights and obligations which constitute a financial instru-
ment and rights and obligations constituting the terms and
conditions governing the issuance or offer to the public and
public take-over bids of transferable securities, and the
subscription and redemption of units in collective invest-
ment undertakings in so far as these activities do not
constitute provision of a financial service;

(e)

a contract concluded within the type of system falling
within the scope of Article 4(1)(h).

(1) OJ L 158, 23.6.1990, p. 59.

(c)

in the case of life assurance, the law of the Member State of
which the policy holder is a national;

(d)

for insurance contracts covering risks limited to events
occurring in one Member State other than the Member
State where the risk is situated, the law of that Member
State;

(e) where the policy holder of a contract falling under this
paragraph pursues a commercial or industrial activity or a
liberal profession and the insurance contract covers two or
more risks which relate to those activities and are situated
in different Member States, the law of any of the Member
States concerned or the law of the country of habitual
residence of the policy holder.

Where, in the cases set out in points (a), (b) or (e), the Member
States referred to grant greater freedom of choice of the law
applicable to the insurance contract,
the parties may take
advantage of that freedom.

(2) OJ L 228, 16.8.1973, p. 3. Directive as last amended by Directive
2005/68/EC of the European Parliament and of the Council (OJ
L 323, 9.12.2005, p. 1).

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To the extent that the law applicable has not been chosen by the
parties in accordance with this paragraph, such a contract shall
be governed by the law of the Member State in which the risk is
situated at the time of conclusion of the contract.

4. The following additional rules shall apply to insurance
contracts covering risks for which a Member State imposes an
obligation to take out insurance:

(a)

the insurance contract shall not satisfy the obligation to
take out insurance unless it complies with the specific
provisions relating to that insurance laid down by the
Member State that imposes the obligation. Where the law
of the Member State in which the risk is situated and the
law of the Member State imposing the obligation to take
out insurance contradict each other, the latter shall prevail;

(b)

by way of derogation from paragraphs 2 and 3, a Member
State may lay down that the insurance contract shall be
governed by the law of the Member State that imposes the
obligation to take out insurance.

5.
For the purposes of paragraph 3, third subparagraph, and
paragraph 4, where the contract covers risks situated in more
than one Member State, the contract shall be considered as
constituting several contracts each relating to only one Member
State.

For the purposes of this Article, the country in which the
6.
risk is situated shall be determined in accordance with Arti-
cle 2(d) of the Second Council Directive 88/357/EEC of 22 June
1988 on the coordination of laws, regulations and adminis-
trative provisions relating to direct insurance other than life
assurance and laying down provisions to facilitate the effective
exercise of freedom to provide services (1) and, in the case of life
assurance, the country in which the risk is situated shall be the
country of the commitment within the meaning of Article 1(1)
(g) of Directive 2002/83/EC.

Article 8

Individual employment contracts

1. An individual employment contract shall be governed by the
law chosen by the parties in accordance with Article 3. Such a
choice of law may not, however, have the result of depriving the
employee of the protection afforded to him by provisions that
cannot be derogated from by agreement under the law that, in
the absence of choice, would have been applicable pursuant to
paragraphs 2, 3 and 4 of this Article.

2. To the extent that the law applicable to the individual
employment contract has not been chosen by the parties, the
contract shall be governed by the law of the country in which or,
failing that, from which the employee habitually carries out his
work in performance of the contract. The country where the

work is habitually carried out shall not be deemed to have
changed if he is temporarily employed in another country.

3. Where the law applicable cannot be determined pursuant to
paragraph 2, the contract shall be governed by the law of the
country where the place of business through which the employee
was engaged is situated.

4. Where it appears from the circumstances as a whole that the
contract is more closely connected with a country other than
that indicated in paragraphs 2 or 3, the law of that other country
shall apply.

Article 9

Overriding mandatory provisions

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

irrespective of

its political,

such as

2. Nothing in this Regulation shall restrict the application of
the overriding mandatory provisions of the law of the forum.

3.
Effect may be given to the overriding mandatory provisions
of the law of the country where the obligations arising out of the
contract have to be or have been performed, in so far as those
overriding mandatory provisions render the performance of the
contract unlawful. In considering whether to give effect to those
provisions, regard shall be had to their nature and purpose and
to the consequences of their application or non-application.

Article 10

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, in order to establish that he did not
consent, may rely upon the law of the country in which he has
his habitual residence 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 paragraph 1.

Article 11

Formal validity

(1) OJ L 172, 4.7.1988, p. 1. Directive as last amended by Directive
2005/14/EC of the European Parliament and of the Council (OJ
L 149, 11.6.2005, p. 14).

1. A contract concluded between persons who, or whose
agents, are in the same country at the time of its conclusion is

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formally valid if it satisfies the formal requirements of the law
which governs it in substance under this Regulation or of the law
of the country where it is concluded.

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

2. A contract concluded between persons who, or whose
agents, are in different countries at the time of its conclusion is
formally valid if it satisfies the formal requirements of the law
which governs it in substance under this Regulation, or of the
law of either of the countries where either of the parties or their
agent is present at the time of conclusion, or of the law of the
country where either of the parties had his habitual residence at
that time.

3. 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 where the act was done, or of the law of the
country where the person by whom it was done had his habitual
residence at that time.

4.
Paragraphs 1, 2 and 3 of this Article shall not apply to
contracts that fall within the scope of Article 6. The form of such
contracts shall be governed by the law of the country where the
consumer has his habitual residence.

5. Notwithstanding paragraphs 1 to 4, a contract the subject
matter of which is a right in rem in immovable property or a
tenancy of
to the
requirements of form of the law of the country where the
property is situated if by that law:

immovable property shall be subject

(a)

those requirements are imposed irrespective of the country
where the contract is concluded and irrespective of the law
governing the contract; and

(b)

those requirements cannot be derogated from by agree-
ment.

Article 13

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 the law
of another country, only if the other party to the contract was
aware of that incapacity at the time of the conclusion of the
contract or was not aware thereof as a result of negligence.

Article 14

Voluntary assignment and contractual subrogation

1. The relationship between assignor and assignee under a
voluntary assignment or contractual subrogation of a claim
against another person (the debtor) shall be governed by the law
that applies to the contract between the assignor and assignee
under this Regulation.

2. The law governing the assigned or subrogated claim shall
determine its assignability, the relationship between the assignee
and the debtor, the conditions under which the assignment or
subrogation can be invoked against the debtor and whether the
debtor's obligations have been discharged.

3. The concept of assignment in this Article includes outright
transfers of claims, transfers of claims by way of security and
pledges or other security rights over claims.

Article 12

Scope of the law applicable

Article 15

Legal subrogation

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

(a)

interpretation;

(b)

performance;

Where a person (the creditor) has a contractual claim against
another (the debtor) and a third person has a duty to satisfy the
creditor, or has in fact satisfied the creditor in discharge of that
duty, the law which governs the third person's duty to satisfy the
creditor shall determine whether and to what extent the third
person is entitled to exercise against the debtor the rights which
the creditor had against the debtor under the law governing their
relationship.

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

(d)

the various ways of
prescription and limitation of actions;

extinguishing obligations,

and

(e)

the consequences of nullity of the contract.

Article 16

Multiple liability

If a creditor has a claim against several debtors who are liable for
the same claim, and one of the debtors has already satisfied the
claim in whole or in part, the law governing the debtor's
obligation towards the creditor also governs the debtor's right to

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claim recourse from the other debtors. The other debtors may
rely on the defences they had against the creditor to the extent
allowed by the law governing their obligations towards the
creditor.

that country other than its rules of private international law,
unless provided otherwise in this Regulation.

Article 17

Set-off

Where the right to set-off is not agreed by the parties, set-off
shall be governed by the law applicable to the claim against
which the right to set-off is asserted.

Article 21

Public policy of the forum

The application of a provision 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.

Article 18

Burden of proof

Article 22

States with more than one legal system

1. The law governing a contractual obligation under this
Regulation shall apply to the extent
in matters of
contractual obligations, it contains rules which raise presump-
tions of law or determine the burden of proof.

that,

1. 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.

2. A contract or an act intended to have legal effect may be
proved by any mode of proof recognised by the law of the forum
or by any of the laws referred to in Article 11 under which that
contract or act is formally valid, provided that such mode of
proof can be administered by the forum.

2. A Member State where different territorial units have their
own rules of law in respect of contractual obligations shall not
be required to apply this Regulation to conflicts solely between
the laws of such units.

CHAPTER III

OTHER PROVISIONS

Article 19

Habitual residence

1.
For the purposes of this Regulation, the habitual residence of
companies and other bodies, corporate or unincorporated, shall
be the place of central administration.

The habitual residence of a natural person acting in the course of
his business activity shall be his principal place of business.

is concluded in the course of

2. Where the contract
the
operations of a branch, agency or any other establishment, or if,
under the contract, performance is the responsibility of such a
branch, agency or establishment, the place where the branch,
agency or any other establishment is located shall be treated as
the place of habitual residence.

For the purposes of determining the habitual residence, the
3.
relevant point in time shall be the time of the conclusion of the
contract.

Article 20

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

Article 23

Relationship with other provisions of Community law

With the exception of Article 7,
this Regulation shall not
prejudice the application of provisions of Community law which,
in relation to particular matters, lay down conflict-of-law rules
relating to contractual obligations.

Article 24

Relationship with the Rome Convention

1. This Regulation shall replace the Rome Convention in the
Member States, except as regards the territories of the Member
States which fall within the territorial scope of that Convention
and to which this Regulation does not apply pursuant
to
Article 299 of the Treaty.

2.
In so far as this Regulation replaces the provisions of the
Rome Convention, any reference to that Convention shall be
understood as a reference to this Regulation.

Article 25

Relationship with existing international conventions

1. This Regulation shall not prejudice the application of
international conventions to which one or more Member States
are parties at the time when this Regulation is adopted and which
lay down conflict-of-law rules relating to contractual obligations.

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2. However, this Regulation shall, as between Member States,
take precedence over conventions concluded exclusively between
two or more of them in so far as such conventions concern
matters governed by this Regulation.

(b)

an evaluation on the application of Article 6, in particular
as regards the coherence of Community law in the field of
consumer protection.

Article 26

List of Conventions

shall notify the
1. By 17 June 2009, Member States
Commission of the conventions referred to in Article 25(1).
After that date, Member States shall notify the Commission of all
denunciations of such conventions.

2. Within six months of receipt of the notifications referred to
in paragraph 1, the Commission shall publish in the Official
Journal of the European Union:

2. By 17 June 2010, the Commission shall submit to the
European Parliament, the Council and the European Economic
and Social Committee a report on the question of
the
effectiveness of an assignment or subrogation of a claim against
third parties and the priority of the assigned or subrogated claim
over a right of another person. The report shall be accompanied,
if appropriate, by a proposal to amend this Regulation and an
assessment of the impact of the provisions to be introduced.

Article 28

Application in time

(a)

a list of the conventions referred to in paragraph 1;

This Regulation shall apply to contracts concluded after
17 December 2009.

(b)

the denunciations referred to in paragraph 1.

Article 27

Review clause

1. By 17 June 2013, the Commission shall submit to the
European Parliament, the Council and the European Economic
and Social Committee a report on the application of
this
Regulation. If appropriate, the report shall be accompanied by
proposals to amend this Regulation. The report shall include:

(a)

a study on the law applicable to insurance contracts and an
assessment of
to be
introduced, if any; and

the impact of

the provisions

CHAPTER IV

FINAL PROVISIONS

Article 29

Entry into force and application

This Regulation shall enter into force on the 20th day following
its publication in the Official Journal of the European Union.

It shall apply from 17 December 2009 except for Article 26
which shall apply from 17 June 2009.

This Regulation shall be binding in its entirety and directly applicable in the Member States in
accordance with the Treaty establishing the European Community.

Done at Strasbourg, 17 June 2008.

For the European Parliament

The President

H.-G. PÖTTERING

For the Council

The President

J. LENARČIČ