The two Rome Regulations affecting contractual (Rome I) and non-contractual (Rome II) choice of law, which provide that the court will uphold the parties’ choice of law clause, are EU measures. Following the UK’s exit from the EU, they will probably cease to have effect. The law of England and Wales will, absent any agreement to the contrary, revert to its common law position.
What will change?
Insofar as contractual claims are concerned, the position is unlikely to change significantly. This is because the common law rules are similar to the provisions of Rome I. An express choice of the parties will continue to be given effect subject to any public policy issues. In the absence of such choice, English and Welsh courts will apply the law of the country with which the contract has its closest and most real connection.
The position is less clear with regard to non-contractual liability (e.g. tortious claims). This is because English and Welsh common law did not give the parties the express right to choose the law applicable to non contractual obligations, prior to Rome II. Instead, the applicable law will be based on the law of the country where the tort occurred. Unless the UK adopts measures which mirror Rome II in consequence of its exit from the EU there may be a void relating to choice of law for non-contractual liability.
Should I be worried?
No. Choosing English law for your contracts is still a good choice; the system will remain stable yet flexible, with the scope for it to continue to evolve in the right direction. The best advice now in relation to having an effective choice is to spell out the choice of law by demonstrating in the contract an unequivocal choice of English and Welsh law. Use of standard contractual wording should continue to provide adequate protection for a post-Brexit regime, although as the direction of travel of the UK’s exit negotiations becomes clearer then parties may be well advised to review the position again.
Eversheds’ expert prediction
Our view is that the English and Welsh courts are unlikely to move very far away from the spirit of the Rome Regulations, and will therefore continue to uphold the parties’ choice wherever possible. This may, in practice, be easier for contractual obligations (where the common law mirrors the Rome I Regulation) than non-contractual obligations where, in the absence of the UK adopting new measures to reflect Rome II, a void may be created. In either event, an express choice of law clause, covering both contractual and non-contractual liabilities, should be the best way to ensure the parties’ choice is respected.