Rome II (Regulation 864/2007/EC) sets out the rules that the courts of all EU member states, except Denmark, must apply to determine the law that will govern non-contractual (principally tortuous) obligations arising between parties. The Regulations aim to create greater certainty in respect of the law applicable where a dispute arises between parties doing business across borders. Rome II applies to events giving rise to damage occurring from 11 January 2009.
Rome II applies to non-contractual obligations arising in "civil and commercial" matters. It does not apply to revenue, customs and administrative matters, or to liability of the state for acts and omissions in the exercise of state authority.
The basic rule, set out in Article 4(1), is that unless otherwise provided, the law applicable to a non-contractual obligation, arising out of a tort, shall be the law of the country in which the damage occurs. It is irrelevant that the event giving rise to the damage, or indirect consequences of the event, occur in another country.
There are two exceptions to this rule. Firstly, where the claimant and defendant have their habitual residence in the same country at the time the damage occurs, the law of that country applies. Secondly, if it is clear from all the circumstances of the case that the tort is manifestly more closely connected with the law of another country, the law of that country will apply. Such a connection might be based on a pre-existing relationship between the parties, for example a contract.
The regulation contains special provisions for particular kinds of tort, including product liability, unfair competition, environmental damage, intellectual property rights and industrial action.
In order to avoid any uncertainty or adverse impacts of Rome II it is advisable for parties to consider entering choice of law agreements for non-contractual obligations. Rome II allows commercial parties, not consumers, to enter into agreements to submit non-contractual obligations to the law of their choice before the event giving rise to the damage occurs. This means that the parties are clear from the outset on the rules governing any possible tort claims. For consumer contracts, a choice of the applicable law is only possible after the event giving rise to the damage occurs. This limitation of the freedom of choice of applicable law aims to avoid abuse and protect vulnerable consumers.