Applicable Law: Mechanisms to Determine Which Country’s Laws Apply to a Contractual or Tortious Claim Issued in the Courts of England and Wales
In the context of international disputes, determining the applicable law is a crucial step in resolving contractual or tortious claims. The courts of England and Wales follow specific rules and principles to ascertain which country’s laws govern a dispute. These mechanisms ensure consistency, fairness, and predictability in legal proceedings involving cross-border elements.
Determining Applicable Law in Contractual Claims
For contractual claims, the determination of applicable law is primarily governed by the Rome I Regulation (Regulation (EC) No 593/2008). Key considerations include:
- ★ Choice of Law by the Parties: The Rome I Regulation respects the parties' autonomy to choose the governing law of their contract. This choice must be expressed or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case.
- ★ Default Rules in Absence of Choice: If the parties have not chosen an applicable law, the Rome I Regulation provides default rules based on the nature of the contract. For example, contracts for the sale of goods are generally governed by the law of the seller's habitual residence, while service contracts are governed by the service provider's habitual residence.
- ★ Mandatory Rules and Public Policy: Even when the applicable law is chosen, the courts may apply mandatory rules of the forum (England and Wales) if they are crucial to public interest, such as consumer protection laws. The courts may also refuse to apply a chosen law if it is manifestly incompatible with the forum's public policy.
Determining Applicable Law in Tortious Claims
The Rome II Regulation (Regulation (EC) No 864/2007) governs the applicable law for non-contractual obligations, including tortious claims. The regulation sets out several principles:
- ★ General Rule: The law applicable to a non-contractual obligation arising out of a tort or delict is the law of the country in which the damage occurs, regardless of where the event giving rise to the damage occurred or where the indirect consequences are felt.
- ★ Common Habitual Residence: If both parties are habitually resident in the same country at the time the damage occurs, the law of that country will apply.
- ★ Closer Connection: In cases where the tort is more closely connected with another country, the law of that country may apply. This could be due to a pre-existing relationship between the parties, such as a contract, that is closely connected to the tort.
- ★ Public Policy and Overriding Mandatory Provisions: Similar to contractual claims, the courts can apply the forum's mandatory rules or refuse to apply foreign law if it conflicts with the forum's fundamental principles of public policy.
Case Law
Example - Application of Rome I: *Dexia Crediop SpA v Comune di Prato* [2017] EWCA Civ 428
This case involved the application of the Rome I Regulation in determining the applicable law for a financial derivatives contract. The Court of Appeal confirmed that the parties' express choice of law was upheld, demonstrating the primacy of party autonomy under Rome I.
Example - Rome II and Tortious Claims: *Kainz v Pantherwerke AG* [2014] EUECJ C-45/13
This case addressed the Rome II Regulation's rules on determining the applicable law for product liability claims. The European Court of Justice held that the applicable law was the law of the country where the damage occurred, highlighting the importance of the location of the harm in tort claims.
Examples
Example 1 - Contractual Dispute with Choice of Law Clause
Scenario:
Two businesses from different countries enter into a sales contract, specifying English law as the governing law. A dispute arises, and the court applies English law to resolve the issue, as per the choice of law clause, demonstrating the parties' autonomy under Rome I.
Example 2 - Tortious Claim Without Common Habitual Residence
Scenario:
A German manufacturer and an English consumer are involved in a product liability dispute. The defective product caused damage in England. Under Rome II, the applicable law is English law, as the damage occurred in England, despite the manufacturer's residence in Germany.
Conclusion
Determining the applicable law in contractual and tortious claims is a critical aspect of resolving international disputes in the courts of England and Wales. The Rome I and Rome II Regulations provide clear frameworks for identifying the governing law, prioritizing party autonomy in contracts and the location of damage in torts. Understanding these mechanisms ensures that parties can predictably ascertain their rights and obligations, fostering fairness and efficiency in cross-border legal proceedings.