AWA: Academic Writing at Auckland

I  Introduction

Over the years, the European Union (EU) has worked steadily towards the eventual goal of European integration. In legal terms, it has opted to create unified private international law rules applicable to all EU Member States through instruments such as the Brussels, Rome I and Rome II Regulations. These govern jurisdiction and choice of law respectively. Not only does this achieve certainty and uniformity among legal judgments, it also goes towards making the EU internal market function better.

However, the academic Richard Fentiman believes that this is far from the case. He argues that this unification of private law has been so influenced by the push for greater European integration that the Regulations miss the actual point of “[achieving] the optimal conflicts result.”[1] To that end, he contends that the resulting uniformity of decision that is achieved subverts the true purpose of creating proper choice of law mechanisms in favour of the project of European integration, a move actively aided by the Regulations themselves.[2]

Hence, this Opinion will set out to explore Fentiman’s views: it will first briefly summarise the core of his argument that EU private international law rules support European integration over conflicts resolution, then critically discuss and evaluate this in the specific contexts of Rome I and Rome II. Apart from examining Fentiman’s arguments, this Opinion will also draw upon the works of other academics and relevant case law to build a broader framework for analysis. Ultimately, it is through such a discussion that a conclusion can be reached as to whether he is essentially correct about the state of private international law in the EU.
 

II  Fentiman, the EU and choice of law  

Fentiman bases his argument on the case of Owusu v Jackson. Here, the European Court of Justice (the Court) ruled that an English court could not decline to exercise its jurisdiction mandated by the Brussels Regulation on the grounds of forum conveniens, and that the purpose of the Brussels Regulation extended to improving the EU internal market by promoting European integration.[3]

Hence, it is from Owusu that Fentiman draws the implication that the EU Regulations do not aim to create better private international law rules, but instead ease the way as “further building [blocks]” of European integration.[4] This is because the Court’s ruling in Owusu suggested that for the integration of private international rules to be successful, the Court itself had to apply uniformity of decision.[5]  Effectively, this means that the Court will disregard well-known choice of law rules for “higher policy [objectives]” dictated by the “supranational aspirations” of the EU.[6]

III  Fentiman and the Rome I Regulation  

A   Overview

The Rome I Regulation governs the choice of law in relation to contractual matters and replaced the Convention on the Law Applicable to Contractual Obligations 1980 (the Rome Convention).[7] Fentiman argues that the uniformity of decision which the Court has committed itself to will seriously undermine the effectiveness of Rome I. Taken together with the resulting absence of judicial discretion, this ensures that the Regulation will fail to reach the optimal conflicts results.[8] He also criticises the “comfortingly ambiguous” wording of the Regulation, noting that it conceals “profound conceptual differences” which it does not adequately address.[9]  

B Analysis of Rome I

1 Article 4

Article 4 of Rome I is at the centre of much academic debate, as it deals with the important matter of how to determine the applicable law in a contract where no express choice of law is stated. The starting point is Article 4(1), which provides for several categories of contracts to determine the applicable governing law.[10] If the contract either fails to fall under any of these categories or falls in more than one, then the provisions of Article 4(2) are to be followed.[11] It is when the exceptions in Articles 4(3) and 4(4) come into effect that the main problems arise, for they state that should Articles 4(1) or 4(2) fail to resolve the absence of choice, the law of the “manifestly more closely connected” or “most closely connected” country will apply.[12]

The problem comes when the Court will take a restrictive interpretation to the exception provisions in light of the Dutch case Société Nouvelle des Papeteries de l’Aa v BV Machinenfabriek BOA.[13] This case held that the applicable law would only be displaced when it does not have a significant connection with the contract in question.[14] In Fentiman’s view, this kind of judicial interpretation combined with the language in Article 4 suggest a purely geographical approach which is not at all conducive to finding the optimal applicable law.[15] Furthermore, there are no indications or factors to assess what to be “manifestly more closely connected” or “more closely connected” actually means, apart from some minor guidance in Recitals 20 and 21.[16]

The consequence of this is that it ties into the bigger question surrounding the circumstances uniformity of decision and when the exceptions in 4(3) and 4(2) would come into effect. Since the Court would apply a restrictive interpretation, this would curtail its judicial discretion to apply the exceptions. Fentiman believes that although such a move would improve legal certainty and the functioning of the EU internal market, this uniformity of decision would eschew optimal conflicts resolution in support of the law “being simpler” or integrated.[17] Thus, he comes to the drastic view that the exceptions in Article 4 are “drastically reduced in significance” and the Article itself evidence of the drive towards European integration.[18]

Other academic commentators share Fentiman’s views on Article 4. For instance, Tang criticises the restrictive approach to the exceptions in Article 4 for much of the same reasons as Fentiman did. Similarly, she notes that the Court’s restrictive interpretation mean that the exceptions would never be invoked and uniformity of decision ensured.[19] Furthermore, Ritaine points towards the rich diversity of legal culture in Europe to illustrate why the uniformity of decision in Article 4 is disagreeable and why true uniformity is impossible.[20] Due to how common and civil lawyers differ in their interpretation of Article 4, Rome I would be superficially branding two distinct sets of legal reasoning together for no sound reason: this is hardly supportive of finding the optimal conflicts result.[21]

However, some academic commentators have given more positive reactions to Article 4 and do not regard it as unfavourable. Magnus does agree that it is more restrictive than it was in the Rome Convention but states that the presence of judicial discretion nevertheless “remains… inevitable.”[22] He acknowledges that Article 4 has created further problems in addition to the pre-existing ones, but believes that legal certainty has not fully overshadowed the ability of the Court to be flexible.[23] Likewise, Vernooij states that while Article 4 acquires legal certainty at the expense of judicial flexibility, the “manifestly more closely connected” exception can be more readily invoked than at first glance.[24]

For example, this sort of flexibility can be seen in Ferguson Shipbuilders Ltd v Voith Hydro GmbH & Co. KG and Bank of Baroda v The Vysya Bank. In both cases, it was the place of performance of a contract that was able to be identified as the critical factor which overrode 4(2).[25] Vernooij is also optimistic that Rome I is a building block towards an optimal conflicts framework rather than for European integration.[26] Moreover, Alférez says that although the application of 4(3) and 4(4) is theoretically restricted, in practice they work as rebuttable presumptions to ensure the integrity of 4(1) and 4(2) and as what he calls “last resort [clauses].”[27] Overall, Fentiman’s should not mistake the lack of judicial discretion and the promotion of uniformity of decision in Article 4 as automatically meaning that European integration has supplanted proper choice of law rules as the prime objective of Rome I.

2 Further Observations 

Other Articles of Rome I can also be taken into account in assessing Fentiman’s argument. For instance, consider Article 14: this governs the applicable law to voluntary assignment and contractual subrogation.[28] What it fails to do however is to expressly state what law should be applied to regulate the priority of assignments when third parties are involved.[29] That is why in another assessment, Fentiman argues that Article 14 “is not what it seems” and is actually a repeat of the problematic and ambiguous Article 12 of the Rome Convention.[30] Hence, it would appear that Article 14 is a temporary solution that has yet to produce a choice of law process to regulate the cross-border assignment of debts.[31] Whilst this surely does not produce an optimal conflicts result, it does not seem to back up Fentiman’s claims of European integration either.

On the other hand, Article 7 is evidence that Rome I does work towards an optimal conflicts result for its own sake and not for the supranational aspirations of European integration. Governing the choice of law in relation to insurance contracts, Merrett believes that Article 7 is a definite improvement on the “complex overlapping provisions” in the Rome Convention, having enhanced transparency and simplified the application of its provisions.[32] She also likes how the choice of law rules for both insurance and reinsurance contracts are now contained in the same legal instrument, resolving what she calls any “potential lacuna [problems].”[33] Thus on the balance, it appears that the pursuit of uniformity of decision in Rome I can produce proper optimal conflicts results without the pitfalls that Fentiman assigns to it.

IV  Fentiman and the Rome II Regulation  

A   Overview

The Rome II Regulation is yet another step towards creating a unified body of EU private international law rules and governs the choice of law in relation to non-contractual matters, including the major area of tort law.[34] Its purpose is twofold: to create greater legal certainty when dealing with cross-border tortuous disputes and to also work with Rome I in improving the functioning of the EU internal market.[35] Once more, Fentiman believes that it too is beset with conceptual difficulties and its provisions are ambiguous.[36] Additionally, he is again concerned that uniformity of decision will also adversely affect Rome II and prevent it from producing optimal conflicts result.[37]

B Analysis of Rome II

1 Article 4

Governing the general rules covering choice of law in tort, Article 4 is arguably the most important provision in Rome II and is again the focus of much debate. The starting points are Articles 4(1) and 4(2): the applicable law governing a tortious dispute will be that of either the country where the damage occurred or if possible the common habitual residence shared by the parties.[38] Yet there are also the exceptions in Article 4(3) to contend with once more, which may displace the presumptive applicable law in 4(1) or 4(2) with the law of the “manifestly more closely connected” country. Rome II goes further in detail than Rome I in this regard by detailing that this connection may be based “in particular” on a pre-existing relationship between the parties.[39]

With the contentious phrase “manifestly more closely connected” also present in Article 4 and the Court’s adoption of a restrictive interpretation in mind, Fentiman argues that like Article 4 of Rome I, its effectiveness too will be undermined. He also disapproves of the “in particular” rule, as again the Regulation offers no guidance to what it actually means or any methods of assessing it.[40] Such ambiguous language is of no assistance when determining application of the exceptions. Indeed, Fentiman states that proper choice of law rules cannot limit themselves to assessing the “mere presence” of possible connecting factors but should actually evaluate the significance of those factors.[41] With such inflexible exceptions, this is only more proof that the uniformity of decision achieved trumps judicial discretion and consequently subverts optimal conflicts results in support of European integration.

Fentiman finds strong support in the critical examination performed by Symeonides on the exceptions in Article 4. Symeonides argues that 4(3) suffers from two major defects: firstly, that it is conceived in exclusively geographical terms and secondly, that it does not allow analysis of individual issues. This absence of non-geographical factors and choice of a broader approach to tortious disputes means that the exceptions are in danger of turning into a “mechanical counting of physical contacts.”[42] Hence, he reaches the conclusion that 4(3) is an “all or nothing” provision, an escape clause that will only be utilised in the most exceptional cases. As Symeonides believes that Article 4 is “excessively skewed” in favour of uniformity of decision and against judicial flexibility, it is clear that this evidence that Rome II works towards European integration and not an optimal conflicts result.[43]

So blunt is Symeonides’ assessment that he believes the “all or nothing” nature of the exceptions in Article 4 is only “slightly better” than Rome II having no escape clauses at all.[44] In addition, Stone picks up on the point of Article 4’s rigidness and its impact on the lack of judicial flexibility. He states that it is unclear just how far 4(3) can be applied when there is no pre-existing relationship for the “manifestly more [closer]” connection to be based on.[45] In fact, he argues that the language suggests that again, this exception will be applied only very rarely. Stone is also skeptical that the exceptions of 4(3) can be used to overcome what he deems to be the “excessive width” of 4(2), qualifying Fentiman’s negative view of Rome II.[46]

Conversely, there are still academic commentators who welcome the provisions in Article 4. For instance, Kozyris directly rebuts Symeonides’ claims and states that the importance of the exceptions in 4(3) should not be overrated.[47] Whilst he concedes that these exceptions should be only invoked if absolutely necessary to avoid upsetting the uniformity of decision in Rome II, Kozyris argues that the escape clauses are just that, derivations from the norm that should be treated with utmost caution and applied in truly extraordinary circumstances.[48] In this way, the provisions of 4(3) would not be able to be used at will by the Court as “impressionistic vetoes” whenever it saw fit.[49]

Finally, Alférez holds 4(3) in a straightforward positive light. He sees that the degree of flexibility introduced by exceptions in Article 4 does allow the Court to exercise judicial discretion and derogate from the choice of law rules in 4(1) and 4(2).[50] He also believes that the pre-existing relationship between the parties is a presumption which can be used to reduce uncertainty in the “manifestly more closely connected” test. This is because this presumption supports the functioning of the escape clause and also gives some direction as to when the provision can be invoked.[51] In turn, Alférez argues that this will prevent characterisation and adaption problems when trying to differentiate between contractual and non-contractual disputes.[52] Surely, uniformity of decision in these situations would produce an optimal conflicts result and not work exclusively towards the goal of European integration.

2 Further Observations 

Additional Articles in Rome II can also be used to test Fentiman’s argument. Michaels argues that the provisions in the Regulation are in fact based explicitly on the supranational ambitions of the EU and the functioning of the EU internal market. He uses Article 7 as an example to demonstrate how the EU’s goals can exercise influence on the content of Rome II. This Article governs the choice of law when environmental damage occurs and is intricately connected with the aspirations of the EU to achieve high levels of environmental protection.[53] In this way, Michaels notes that such EU-driven Articles are liable to run counter to the wishes of individual EU Member States and prove that Rome II does in fact value European integration over an optimal conflicts result.[54]   

Furthermore, the same result can be reached with regards to Article 10, which governs the choice of law rules for unjust enrichment.[55] Chong does give it credit for successfully justifying the inclusion of the category of unjust enrichment into Rome II and argues that it works well most of time. Unfortunately, it encounters difficulties when the law of restitution comes into play which can, she believes, mean that uniformity of decision in this instance will not always lead to an optimal conflicts result.[56] In the end, it would appear on the balance that uniformity of decision in the context of Rome II at least do justify Fentiman’s views.  

V  Conclusion

In conclusion, it is clear that Fentiman’s arguments has its merits but also suffers from a few shortcomings. His view that the unification of EU private international rules and uniformity of decision will result not in optimal conflicts results but instead be directed exclusively to progress in the project of European integration is contestable: as this Opinion has shown, it can be rebutted in the context of Rome I but does find stronger backing in that of Rome II.

Although it cannot be denied that uniformity of decision is clearly the driving force behind both Regulations, it should never be forgotten that it has the potential to do more good than Fentiman would attest. The enactments of Rome I and Rome II are just the latest steps in the process begun in the Rome Convention and continued on with the Brussels Regulation in creating a better choice of law mechanism. Therefore, uniformity of decision and the legal certainty that this achieves can be of great value to the shaping and functioning of EU private international law.

Indeed, the last word should go back to Michaels, who states it should be remembered that every rule in all the EU Regulations automatically become by extension instruments of EU policy.[57] In turn, this would mean that EU choice of law rules become instruments in the pursuit of supranational EU policies, including European integration. Hence, Fentiman’s argument could ultimately be bit of a misnomer and his concern somewhat overstated. In his final judgment, he may have very well overlooked the very essence of what Rome I and Rome II were basically enacted to achieve.

Bibliography

Texts

Magnus, Ulrich “Article 4 Rome I Regulation: The Applicable Law in the Absence of Choice” in Franco Ferrari and Stefan Leible (eds) Rome I Regulation The Law Applicable to Contractual Obligations in Europe (Selliers European Law Publishers, Munich, 2009).

Plender, Richard and Michael Wilderspin The European Private International Law of Obligations (3^rd ed, Thomas Reuters, London, 2009).

Symeonides, Symeon C “Tort Conflicts and Rome II: A View from Across” in H-P Mansel and others (eds) Festschrift für Erik Jayme (Selliers European Law Publishers, Munich, 2004).

Cases

The Netherlands

Société Nouvelle des Papeteries de l’Aa v BV Machinenfabriek BOA (Hoge Raad), (1992) Nederlandse jurisprudentie 750.

United Kingdom

Bank of Baroda v The Vysya Bank Ltd [1994] 2 Lloyd’s Rep. 87.

Ferguson Shipbuilders Ltd v Voith Hydro GmbH & Co. KG 2000 SLT 29 (OH).

Journal Articles 

Alférez, Francisco J Garcimartín “The Rome I Regulation: Much Ado About Nothing?” (2008) 2 Eu.L.F. 61.

Alférez, Francisco J Garcimartín “The Rome II Regulation: On the Way Towards a European Private International Law Code” (2007) 3 Eu.L.F. 77.

Chong, Adeline “Choice of Law for Unjust Enrichment/Restitution and the Rome II Regulation” (2008) 57 ICLQ 863.

Fentiman, Richard “Choice of Law in Europe: Uniform and Integration” (2008) 82 Tul.L.Rev. 2021.

Fentiman, Richard “Trading Debts Across Borders: A European Solution?” (2010) 17 Ind.J.Global Legal Studies 245.

Kozyris, Phaedon John “Rome II: Tort Conflicts on the Right Track! A Postscript to Symeon Symeonides’ ‘Missed Opportunity’” (2008) 56 Am.J.Comp.L. 471.

Louise Merrett “Choice of Law in Insurance Contracts Under the Rome I Regulation” (2009) 5 Jour.P.I.L. 49.

Michaels, Ralf “The New European Choice-of-Law Revolution” (2008) 82 Tul.L.Rev. 1607.

Ritaine, Eleanor Cashin “Harmonising European Private International Law: A Replay of Hannibal’s Crossing of the Alps?” (2006) 34 Int'l J.Legal Info. 419.

Stone, Peter “The Rome II Regulation on Choice of Law in Tort” (2007) 4 ALR 95.

Symeonides, Symeon C “Rome II and Tort Conflicts: A Missed Opportunity” (2008) 56 Am.J.Comp.L. 173. 

Tang, Zheng “Law Applicable in the Absence of Choice - The New Article 4 of the Rome I Regulation” (2008) 71 MLR 785.

Vernooij, Nils Willem “Rome I: An Update on the Law Applicable to Contractual Obligations in Europe” (2009) 15 Colum.J.Eur.L. 71.

European Materials 

Regulation 593/2008 on the Law Applicable to Contractual Obligations (Rome I) [2008] OJ L177/6.

Regulation 864/2007 on the Law Applicable to Non-Contractual Obligations (Rome II) [2007] OJ L199/40.

Unpublished Papers

Samantha Tite “Rome I and Rome II – A Boost to Trade Confidence in Europe?” (paper presented to Vinson & Elkins LLP, Houston, November 2008).

[1] Richard Fentiman “Choice of Law in Europe: Uniform and Integration” (2008) 82 Tul.L.Rev. 2021 at 2045.

[2] Ibid.

[3] Ibid, at 2042-2043.

[4] Ibid, at 2045.

[5] Ibid.

[6] Ibid. 

[7] Richard Plender and Michael Wilderspin The European Private International Law of Obligations (3rd ed, Thomas Reuters, London, 2009) at [4-004].

[8] Fentiman, above n 6, at 2039.

[9] Ibid, at 2041.

[10] Regulation 593/2008 on the Law Applicable to Contractual Obligations (Rome I) [2008] OJ L177/11.

[11] This Article states that the contract will be governed by the law of the country of the habitual residence of the party who has to effect the characteristic performance.

[12] Regulation 593/2008, above n 10, at L177/11.

[13] Société Nouvelle des Papeteries de l’Aa v BV Machinenfabriek BOA (Hoge Raad), (1992) Nederlandse jurisprudentie 750.

[14] Ibid.

[15] Fentiman, above n 8, at 2041.

[16] Both Recitals mention that “inter alia, a very close relationship with another contract or contracts” can be taken into account.

[17] Fentiman, above n 15, at 2048.

[18] Ibid.

[19] Zheng Tang “Law Applicable in the Absence of Choice - The New Article 4 of the Rome I Regulation” (2008) 71 MLR 785 at 798. 

[20] Eleanor Cashin Ritaine “Harmonising European Private International Law: A Replay of Hannibal’s Crossing of the Alps?” (2006) 34 Int'l J.Legal Info. 419 at 436.

[21] Ibid, at 437.

[22] Ulrich Magnus “Article 4 Rome I Regulation: The Applicable Law in the Absence of Choice” in Franco Ferrari and Stefan Leible (eds) Rome I Regulation The Law Applicable to Contractual Obligations in Europe (Selliers European Law Publishers, Munich, 2009) at 49.

[23] Ibid, at 29.

[24] Nils Willem Vernooij “Rome I: An Update on the Law Applicable to Contractual Obligations in Europe” (2009) 15 Colum.J.Eur.L. 71 at 75.

[25] Ferguson Shipbuilders Ltd v Voith Hydro GmbH & Co. KG 2000 SLT 29 (OH).

Bank of Baroda v The Vysya Bank Ltd [1994] 2 Lloyd’s Rep. 87.

[26] Vernooij, above n 24, at 76.

[27] Francisco J Garcimartín Alférez “The Rome I Regulation: Much Ado About Nothing?” (2008) 2 Eu.L.F. 61 at 70.

[28] Regulation 593/2008, above n 12, at L177/14.

[29] Samantha Tite “Rome I and Rome II – A Boost to Trade Confidence in Europe?” (paper presented to Vinson & Elkins LLP, Houston, November 2008) at 2.

[30] Richard Fentiman “Trading Debts Across Borders: A European Solution?” (2010) 17 Ind.J.Global Legal Studies 245 at 247.

[31] Ibid.

[32] Louise Merrett “Choice of Law in Insurance Contracts Under the Rome I Regulation” (2009) 5 Jour.P.I.L. 49 at 53.

[33] Ibid, at 66.

[34] Plender and Wilderspin, above n 7, at [17-021].

[35] Tite, above n 29, at 2.

[36] Fentiman, above n 17, at 2041.

[37] Ibid, at 2039.

[38] Regulation 864/2007 on the Law Applicable to Non-Contractual Obligations (Rome II) [2007] OJ L199/44.

[39] Ibid. 

[40] Fentiman, above n 36, at 2039.

[41] Ibid, at 2040.

[42] Symeon C Symeonides “Rome II and Tort Conflicts: A Missed Opportunity” (2008) 56 Am.J.Comp.L. 173 at 198.

[43] Ibid, at 180. 

[44] Symeon C Symeonides “Tort Conflicts and Rome II: A View from Across” in H-P Mansel and others (eds) Festschrift für Erik Jayme (Selliers European Law Publishers, Munich, 2004) at 10.

[45] Peter Stone “The Rome II Regulation on Choice of Law in Tort” (2007) 4 ALR 95 at 114.

[46] Ibid, at 115.

[47] Phaedon John Kozyris “Rome II: Tort Conflicts on the Right Track! A Postscript to Symeon Symeonides’ ‘Missed Opportunity’” (2008) 56 Am.J.Comp.L. 471 at 481.

[48] Ibid.

[49] Ibid.

[50] Francisco J Garcimartín Alférez “The Rome II Regulation: On the Way Towards a European Private

International Law Code” (2007) 3 Eu.L.F. 77 at 84.

[51] Ibid. 

[52] Ibid.

[53] Ralf Michaels “The New European Choice-of-Law Revolution” (2008) 82 Tul.L.Rev. 1607 at 1622. 

[54] Ibid.

[55] Regulation 864/2007, above n 38, at L199/45.

[56] Adeline Chong “Choice of Law for Unjust Enrichment/Restitution and the Rome II Regulation” (2008) 57 ICLQ 863 at 897.

[57] Ibid, at 1624.