Rome 1 Regulations: Applicable Law in Absence of Choice PDF

**[21/11/24]** Rome 1 regulations offer freedoms to European systems What happens when there is not a choice of law? -- you will normally find this is the case because it is a sophistication to lay out the jurisdiction etc, normally no specific provision So what rule is applied by default? **Art...

**[21/11/24]** Rome 1 regulations offer freedoms to European systems What happens when there is not a choice of law? -- you will normally find this is the case because it is a sophistication to lay out the jurisdiction etc, normally no specific provision So what rule is applied by default? **Art 4 of regulation** -- applicable law in the absence of choice 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: Re Articles 5-8, indicating certain types of contractual regulations where mandatory provision established to prevail over choice of law, consumer contracts 6, insurance contracts 7, individual employment contract 8 NEED TO READ AND UNDERSTAND HOW THE FREEDOM OF CHOICE PRINCIPLE IS LIMITED AND NUANCED, NEGOTIATION POWER OF BOTH PARTIES TEND TO BE DIFFERENT, IN ORDER TO AVOID ABUSE THE REGULATION ESTABLISHEDS LIMITATIONS, imagine in consumer contract in which the company (stronger party) imposes the application of its local law despite the fact the consumer is domiciled is in a completely different state -- is unfair to allow freedom of choice a. a contract for the sale of goods shall be governed by the law of the country where the seller has his habitual residence; how do we define habitual residence is established in art 19 of regulation, which reads for the purposes of these regulations the habitual residence of companies of companies and other bodies shall be the place of central administration Relation between Vienna convention with case of Spanish seller, Hungarian buyer, both have habitual residence of member states for Vienna and should rule that contractual relationship, and this article 41a indicating law applicable to the habitual residence law of the seller -- conflict here - Rome 1 regulation will never be lex specialis, given the fact it never deals with substantive law - Vienna is substantive law given the fact it's the final point of destination -- would point towards application here, which is also the conclusion reached by article 25 of Rome 1 Regulation -- relationship with existing international conventions - Need to understand how to identify the law applicable to sale of goods contracts when looking on an international sphere b. a contract for the provision of services shall be governed by the law of the country where the service provider has his habitual residence; In case of provision of services, same as above c. a contract relating to a right *in rem* legal action concerning property including also IP rights in immovable property or to a tenancy of immovable property shall be governed by the law of the country where the property is situated; we can exert these types of right against everyone, don't need to enter into an agreement with you to make you liable for disrespect to my property -- different to a contractual relationship d. notwithstanding point (c), a tenancy of 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; nuance in this paragraph, must determine the lex contractus through a different rule, rationale between these two types of elements is the following -- if we reach the conclusion that we are dealing with a right in rem in immoveable property or a long duration tenancy, more adequate to reach the conclusion that law governing that contract is more linked to the very place where the immoveable property is situated because the long duration of the ride justifies the fact that it is the very place where that immovable property is located is the place where the law should rule this relationship, where it is temporary it is not so urgent to subject that relationship to the law of the place where the things exist -- approach from regulation seems justified or fair to subject the regulation to the habitual residence of the parties e. a franchise contract shall be governed by the law of the country where the franchisee has his habitual residence; - allows the other party to use IP to develop company of same vibe, the franchisee then pays a fee f. a distribution contract shall be governed by the law of the country where the distributor has his habitual residence; distributor establishes agreement with a princi0ple saying I am an independent company not your employee and will buy your products to distribute them in a certain region, this is the kind of contractual relationship g. 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; The point is -- leaving aside h (don't need to know) what happens in those cases in which we cannot apply the rules mentioned in paragraph 1 or the contract encompasses multiple of these contracts? Solved by paragraph 2... h. 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 **\[[F1](https://www.legislation.gov.uk/eur/2008/593/article/4#commentary-key-7fe7495f7ef89b2291f039ecf9c07c4a)**in Part 1 of Schedule 2 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001**\]**, in accordance with non-discretionary rules and governed by a single law, shall be governed by that law. - This para one tries to follow that of the lex contractus shall be the law of the party who affects the characteristic performance 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 characteristic performance of the contract has his habitual residence. Describes the formula we apply to identity lex contractus incase contract is it none of the above or it combines multiple cases How can we identity characteristic performance? The performance other than paying the price -- what is the most common performance in a contract? Paying, so it is the others In SoG agreement, the party who delivers the goods is the one who develops the characteristic performance, given the other party just delivers money 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. Establishes an exception -- this article 1 being an effort of precision, para 2 tries to cover scenarios where these provisions cannot be applied, now a nuance indicating in cases where it is clear that the contract we are analysing is manifestly more closely connected, the law of that country should apply, this is for lawyers to persuade that is is CLEAR -- manifestation of persuasion, room to try to justify the application of other legal systems which would be more favourable for the client However, restrictive interpretation of this paragraph, e.g a company in London who managed the rights and organisation of concerts given by the Gallagher brothers, case took place before Rome regulation entry into force but convention that proceeds it followed same idea, with same exception today represented in paragraph 3, this company organised a concert in Munich, very day in which the show was scheduled, one of the brothers was too drunk and was unable to perform so concert was cancelled, claims for compensation of damages and there was a relevant issue concerning the law applicable to the contractual relationship between the company and the German entity who organised in munich the show. Rome convention golden rule -- law of habitual residence of party who affects the contract, law applicable had to be English law given the fact that the one who provided a service was the company - English court reached conclusion that German law applied in this case because it was **clear** from circumstances that contract was more closely connected with German legal system - that place of performance, place of organisation of the show took place, domicile of the companies linked to organisation of the show, money to pay the services 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. -- governs not an exception but a situation not contemplated in paras 1 and 2, what is the contractual relationship where there is no characteristic performance? Swaps? So far, identified basic principles through which we can establish the lex contractus Even in spite of this election of LC, you need to know there are certain rules that cannot be excluded from the application to the contract by the mere fact that we elect as lex contractus the law of a certain system - Remember that when we studied art 3 of regulation, we were told art 3 establishes exceptions - If every element of the contract points towards a legal system and despite that we apply another law , regulation allows this but warns us that that system to which every element of the contract points towards, shall be obliged at least in those provisions of such law that cannot be derogate from by agreement -- mandatory rules/laws - Pre requisite for application of para 3 is every element of the contract are located in a certain state Nuances in para 3 and 4 -- these limitations are not the only ones you can see in the regulation e.g art 12 with problems concerning the consequences of total or partial breach of contract and the legal powers of the court to order the enforcement of the contract, we know here art 12 establishes limitations in application of lex contractus Also limitations where weaker party e.g art 5,6,7 etc, but point is there is a special rule concerning a special limitation which is art 9... see below **[27/11/24]** Weaker party law -- consumer contracts e.g law tries always to make sure the law to be selected by the parties will have certain links with consumers domicile -- NEED TO READ THIS BIT BY MYSELF Art 4 -- DEFAULT RULE TO ESTABLISH LEX CONTRAZCTUS -- LAW APPLICBALE TO CONTRACT EXCEPT WHERE RULE 1 ESTBALISHEES MANDATORY RULES(above) **Overriding Mandatory provisions -- art 9 -**mandatory provisions that cant be derogated from in the agreement e.g where pre requisite does not concur such mandatory provisions such mandatory provisions can be derogates from by agreement e.g under Spanish law commentators usually suggest a mandatory rule that does not belong to overriding mandatory provisions (public ordser) are the limitations established in inheritance law bu virtue of which the aprty who is granting a last will have no power to prevent their sons or daughters from receiving a certain amount of the inheritance -- that rule established in Spanish inheritance law is a mandatory law, however it as assumed it does not belong ot Spanish public order, reasoning because in certain areas of Spain this does not exist, therefore they are mandatory law but from the perspective of Spanish Public Order, such limitations do not belong to the core \- need to understand mandatory provisions and public order/overriding mandatory provisions are different - ;atter being the most important legal provisions for the legal order 1\. Overriding mandatory provisions are provisions the respect for which is regarded as crucial by a country for safeguarding its public interests, such as 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. Definition inside, teleological definition, definition by which the concept is linked to the need to safeguard the most basic structure of the legal system 2.Nothing in this Regulation shall restrict the application of the overriding mandatory provisions of the law of the forum -- latin for court. Law where the case is being heard In two first paragraphs we are dealing with the lex of the forum, the court who is solving the dispute identifies under its own law, certain overriding mandatory provisions which must be applied to that contract See far below 3 analysis 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**. Here the court is told that under other legal system there are other overriding mandatory provisions that that court should take into account. Why? The fact that obligations have been performed in that other legal system in opposition to other overriding mandatory provisions is hat justifying the court to apply this -- even if court applying has no problem whatsoever with the contract at stake 1. The effect that flows from this provision -- to override the contractual obligations, unlike what is established in 1 and 2, now is not mandatory for the court, belongs to sovereignty of the court deciding the case -- Rome 1 does not mandate this effect 2. Linking factor is different -- has nothing to do with court dealing with the place but the place where the obligations have been performed 3. Another pre requisite for application of these provisions -very strict "insofar render unlawful" suggests that it must be clear that according to ORMP the contract would be rendered unlawful -- apparently the entire contract There are little authority re the application of this mechanism, there are some Rome I article 9c English examples Fleet agreement between Spanish and English cmpanmy - By virtue of which spnaish party had to tansport certain cargo from English company from one point to another, the fee was agreed -- law related to the fleet agreement was law of England and wales and courts of England were competent - When Spanish company delivered to Spanish coast which was one agreed, problem was recent royal decree from the king established a limitation for the fee which could be collected for this kind of party - Spanish party said I can only pay a part of the price we agree because Spanish king has issued decree preventing this - The English party was disagreed and therefore a litigation commenced before the courts of England and the English judge Needless to say that many years before the entry into force of Roman regulation but applying the same rational said given the fact that the place of performance of the contract is Spain and given the fact that these rules establishing a limitation of the price have been issued by the king itself due to reasons of public order which were the ones invoked by the Spanish king I English courts must observe said committee to Spanish authorities and Spanish legal system given its link with the performance of the obligation in spite of the fact that the low governing this contract with the laws of England and Wales and as a result I will dismiss to claim from the English plaintiff and grant the defendant the right to limit the payment Another case, ofc before Rome 1 - There was an agreement between between an if I\'m not wrong between an English company and an Indian company these agreements were subject to the laws of England and the competent courts were English chords and the point was that this company the Indian one what is transporting some type of material called jute don\'t ask me what\'s that because I don\'t know jute from South Africa to India and at that moment there was an international embargo freezing against South Africa due to the appetite regime so when the Indian party wanted to collect its fees the English one suggested that the contract was not on void because it wasn\'t in violation of overriding mandatory provisions resulting from if you want the international legal system as a result of the embargo against the appetite regime in South Africa and these arguments was again embraced by the English court if you want these cases a little bit different because precisely one might say that the existence of these quote unquote international embargo one might say also affected the English legal system in any case as you can see the rational behind it is the possibility for a national court to invoke overriding mandatory provisions belonging to another legal system in order to consider then just sit and performance of obligation cannot be enforced OK so these are the peculiarities of Article 9 of the regulation Case C381/98 -- inGMAR CASE ON ANGENCY CONTRACT - Agent English -- happened when UK was member of the Union, principle was located in California - Agency contract (tbd) is the contract whereby an independent party has the expertise and the resources is the intermediary in business negations and transactions to conclude etc on behalf of the principles - contract SUBJECT TO LAWS OF c and competent court were English, there is an EU DIRECTIVE WHICH IN Case of termination for agency agreement, the agent should be compensated for benefits that the principles will keep after termination as a result of the clients brought by agent to principle - This right not contemplated under the laws of California, English agent asked for this compensation, Californian company said no we explicitly excluded this compensation under out agreement - Agent went to court in England AND ASKED FOR THIS COMPENSATION AND SUGGESTED IN ANY CASE THIS SORT OF RIGHT HAD TO BE GRANTED IN FAVOUR OF THE AGENT DESPITE THE LEX CONTRACTUS BEING SUBJECT TO CALIFRONIA - English court elevated a preliminary question to ECJ in Luxembourg and court said given the link where the contract and the EU, it was a mandatory provision which could not be derogates from by agreement and as result the Californian company had to pay - EU directive 17-19 and the type of mandatory nature ensured California party had to pay because these provision had to be applied in these contractual relations This judgement had big impact - This being said to be mandatory is significant - In courts understanding the guarantee of this compensation was at the essence of European market, unless European agents had this guarantee no one could pay this sort of compensation and therefore EU agents will compete in unequal conditions with other agents -- which is the rationale for the rule -- this was the courts position - **Comments on paragraph(para) 1 -- not sure when it goes from para 1 notes to 2 but have made an educated guess** Rome 1 establishes limitation to choice of law by parties -- this means law eventually established by the parties will protect these kinds of interests of workers or consumers because the freedom remaining with the parties under Rome 1 will lead them to the legal systems which are close to the legal systems of consumers or workers -- overriding laws regarding labour laws are not relevant given Rome 1 already limits the choice of parties when it comes to these kinds of contractual relationships THEREFORE -- if you are analysing contract other than labour contract, insurer etc, the overriding mandatory provisions that may impact this kind of contractual relationship What happens when we are infront of competition law in relation to a mandatory overriding agreement? - These sort of provisions (competition law) belong to an EU public order, competition law belongs to the core of the legal system, and provisions that govern this relation 101 and 102, are overriding mandatory provisions Consequence when we are infront of an overriding mandatory provision? - Applies instead of the law governing the contract that we have chose - Court must apply ORMP instead of any other provision flowing from lex contractus Court must ask itself: - What is law governing contract -- art 3 - But art 9 -- are there any overriding mandatory provisions of the law of the court? **2.Notes on paragraph(para) 2 - Questions containing competition law -- belong to EU court law under an EU court** Overring mandatory provisions examples - Competition - Fundamental rights In family law -- identification of these is easier, e.g in Spain there have been cases in which a woman is asking for divorce compensation against her husband, but she was married under the law of Morocco for e.g and she was not the only wife of the same husband -- polygamy. She has the right under Spanish law to ask for compensation within the sphere of divorce legal process, point is must the Spanish court recognise the validity of a polyamorous marriage and grant this compensation flowing from a divorce? - In this case you can see there are institutions re constitutional principles at odds linked to fundamental rights MAYBE SEND HIM AN EMAIL ABOUT THIS? E.g the prohibition of drugs or weapons in different legal jurisdictions e.g if in Spain Spanish law would be obliged to override the rule concerning the commercialisation of these prohibited things