PROPOSAL FOR A REGULATION OF THE EUROPEAN PARLIAMENT AND THE COUNCIL ON THE LAW APPLICABLE TO CONTRACTUAL OBLIGATIONS, ROME I

Abstract

Since the Treaty of Amsterdam entered into force, judicial cooperation in civil matters between Member States of the EC has been transferred from the third to the first pillar of the EU. The Treaty gave the EC institutions the power to regulate private international law issues through adoption of regulations - secondary legislation with direct effect on the whole territory of the EC. With regard to choice of law rules for contracts, European Commission has used these newly established prerogatives in 2003 to initiate substitution of the Rome Convention on the Law Applicable to Contractual Obligations by a Community Regulation. In December 2005, the Commission presented the proposal for a Regulation on the Law Applicable to Contractual Obligations (Rome I). Replacement of the Convention by a Regulation would bring in a number of changes. Adoption of a Regulation would mean that the Member States have no longer power to enter reservations. Furthermore, the two Protocols to the Convention which allow the Court of Justice to interpret the Convention’s rules would become unnecessary. Apart from the changes of formal nature, the Commission proposed some adaptations of the Convention’s rules aiming to modernize and improve those rules. The most significant changes of the substance are inspired by ambition to increase certainty and predictability of the applicable law. This refers in particular to the general conflict of laws rules (Article 3 – Freedom of choice and Article 4 – Applicable law in the absence of choice). In addition, the Commission’s proposal deviates from the rules of the Convention on a number of other issues (scope of the application, the law applicable to consumer contracts, individual employment contracts, formal validity of the contract, etc.). From the perspective of Serbian law, changes that have been proposed bring European choice of law rules for contracts much closer to the rules of the Serbian PIL Code. In the event that the Regulation is indeed adopted, this would make legislator’s task of bringing choice of law rules for contracts in conformity with the European model much easier.