What’s the jurisdiction?

Published: 21st August 2008

Having certainty in knowing which countries laws will apply to a contract does matter. In the event of a dispute this issue will have a big impact on the costs and logistics of the action, and may well have insurance implications too.

The Council of the EU has announced that the UK has advised it that it wishes to accept, in its entirety, the Regulation on the law applicable to contractual obligations (Rome I).

The UK plans to seek permission for the Regulation to apply to contracts concluded after 17 December 2009, as will be the case in all other Member States except Denmark.

The Rome Convention applies to contractual obligations in any situation involving a choice between the laws of different countries.

Under the Rome Convention, parties are free to choose the law to govern their contract. In the absence of party choice, Article 4 of the Rome Convention provides that a contract will be governed by the law of the country with which it is most closely connected. It will be assumed that this will be the country where the party who is to effect the performance which is characteristic of the contract has his habitual residence or, in the case of a corporate entity, the country where is has its central administration.

These regulations cover contractual disputes, which are not to be confused with other disputes such as negligence claims. The jurisdiction in those circumstances is handled by a different regulation, called Rome II.

The general rule under Rome II is that the law applicable to non-contractual obligations will be the law of the country in which the damage occurs (or is likely to occur). This will be the country where the harmful physical impact occurs, irrespective of the place in which the event giving rise to the damage occurs, or the place where the indirect consequences of the damage are felt.

If you are involved in sending students abroad it will be worth your while reviewing the arrangements that cover that activity. These are complex issues with potentially serious consequences, if you would like further information please contact Mace & Jones.