When in Rome: An Examination of Article 4 of the Rome Regime on the Governing Law of International Contracts

• Date: 01 January 2010

When in Rome: An Examination of Article 4

of the Rome Regime on the Governing Law

of International Contracts

GR ACE O’CO NNOR*

Introduction

Parties to international contracts should ideally choose jurisdiction and

governing law claus es; those who ign ore such clauses do so at their own

peril. In the absence of choice , it falls to Private International Law, or

Conflict of Laws, to provide a safety net.

As far as the 27 EU Member States are concerned, the Brussels I Regulation1

sets out a series of jurisdictional rules to be applied in determination of the

appropriate forum to hear a dispute between parties domiciled in different

EU Member States. Until 17 December 2009, it was the Rome Convention2

that decided the law to be applied to the disputed contract, independent of

the eventual choice of court. This could , by way of exampl e, result in an

Irish court applying the law of another state, either an EU Member State or

a third country, to a particular contract because the parties failed to specify

the applicable law.

Much like the substitution of the Brussels I Regu lation for the 1968

Brussels Convention, the Rome Convention has been replaced by the

RomeI Regulation,3rendering its provisions directly effe ctive in a ll EU

Member States (except Denmark)4and applicable as and from 17 December

* Grace O’Connor, Trainee Solicitor with Willia m Fry, BCL (Law with French L aw),

University College Dublin; Certificat Supérieur de Droit Français, Université Pantheon-

Assas (Paris II).

The author would like to thank Richard Breen for his helpful comments. Any errors

remain the author’s own.

1Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the

recognition and enforcement of judgments in civil and commercial matters, [2001]

OJ L/12/1.

2Convention on the Law Applicable to Contractual Obligations opened for signature

in Rome on 19 June 1980 (80/934/EEC).

3Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17

June 2008 on th e law appl icable to contractual obligat ions ( Rome I), [2008] OJ

L/177/6.

4By virtue of a Protocol on the Position of Denmark annexed to the Treaty on European

Union and the Treaty establishing the European Community, the Regulation does not

apply in that Member State, rather the Convention does.

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2009. The relationship betwe en the Brussels I Regulation a nd the Rome I

Regulation (and t he Rome Convention before it – the “Rome Regime”) is

important in the determination of jurisdiction in the absence of a juris -

diction clause. Under certain provis ions of the Brussels I Regulation, such

as Article 5(1), jurisdiction to hear contractual disputes is given to the place

of performance of the obligation in questio n.5The plac e of performance

usually dep ends on th e governing law of the contract. Hence, we look to

Articles 4 to 9 of the Rome Regime to determine the governing law so that

jurisdiction may ultimately be established.

This article will discuss the controversial amendment to Article 4, which

deals with the governing law of the contract in the absence of express

agreement.

The Article 4 “Presumptions”

In the absence of an express choice by the parties of the governing law of a

contract, any dispute will, in the first place, call for the identification of the

applicable law. This identification was assisted, or indeed hindered, by the

series of pres umptions in Article 4 of the Rome Conven tion (“the

Convention”).6

It is suggested that the presumptions at Article 4 of the Convention have,

thus far, been subject to skewed interpretation by national courts loat h to

renounce the familiarity of national rules. The author contends that the

abuse of the close connection test at Article 4(5) of the Convention will

continue, albeit in the new guise of the reformulated Article 4(3) of the

Rome I Regulation (“the Regulation”), until the European Court of Justice

(the “ECJ”) delivers a coherent decision.

The recent case of Intercontainer Interfrigo (ICF) SC v Balkenende

Oosthuizen BV and MIC Operations BV7was the first occasion on which

the ECJ was asked to consider the Convention. In relation to the status of

Article 4(2) of the Convention, their response was lacklustre. Such a position

is unsurpris ing given tha t, at the da te of the de cision, the R egulation was

two months from entry into force. Nonetheless, this reference fro m the

Dutch S upreme C ourt represented a neglec ted oppo rtunity to clarify the

status of the presumption. The Grand Chamber of the ECJ merely stated the

law to be as it appears on the face of the Convention:

5This convoluted method emanates from two ECJ decisions handed down on the same

day: Case 12/76 Industrie Tessili Italiana v Dunlop AG, [1976] ECR 1473 and Case

14/76 De Bloos v Boyer, [1976] ECR 1497.

6Clarkson and Hill, The Conflict of Laws (3rd ed) (Oxford: OUP, 2006) 185.

7Case C–133/08 Intercontainer Interfrigo (ICF) SC v Balkenende Oosthuizen BV and

MIC Operations BV (ECJ 6 October 2009).

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