Rome II: Agreement Reached in the Conciliation Committee
As stated on press releases published by the Council and the Commission (DG Freedom, Security and Justice), an agreement has been reached on the text of the Rome II Regulation, during the first official meeting of the Conciliation Committee that was held yesterday evening (the Conciliation Committee had been convened, pursuant to Art. 251(3) of the EC Treaty, after the formal rejection by the Council of the Parliament’s Legislative resolution at second reading: for further details on the steps of the complex procedure that has lead to the agreement, see the Rome II section of our site).
According to a statement by Diana Wallis, Rapporteur on Rome II in the European Parliament, prior to the official meeting of yesterday the institutions involved in the codecision procedure (Council and Parliament, the Commission playing a mediating role) had held six informal meetings in order to facilitate the negotiations (so called “trialogues”: for an overview of the conciliation stage, see the “codecision” section of the Commission’s website).
The content of the agreement is summarized as follows in the Council’s press release, with particular reference to the controversial issues (that were emphasized by the Commission in its opinion on the EP Second reading):
As a general rule, the draft Regulation sets out that the law applicable to a tort/delict is the law of the country where damage occurred. Only in certain limited, duly justified circumstances, the general rule will be derogated from and special rules applied. The draft Regulation contains special rules in matters of product liability, unfair competition, environmental damage, infringements of intellectual property and industrial action. In the context of a global compromise package, the Conciliation Committee settled all the questions arising from the amendments adopted by the European Parliament in second reading.
The agreement includes notably:
Violation of privacy or rights relating to the personality:
While it was agreed that legal actions connected with those rights will be excluded from the scope of this Regulation, the Commission was asked through a review clause to present, not later than 31 December 2008, a study on the situation in the field of the law applicable to non-contractual obligations arising out of violations of privacy and rights to relating to personality, taking into account rules relating to freedom of the press and freedom of expression in the media. Violations of privacy resulting from the handling of personal data will be also dealt with in the Commission’s study.
Damages in personal injury cases:
This question arises primarily in connection with traffic accidents which have connection with more than one State. In particular, the issue of the quantification of damages in personal injury cases was discussed. The solution agreed provides, on the one hand, for a recital with criteria for the quantification of damages to be applied by judicial authorities in accordance with national compensation rules. On the other hand, the Commission undertook to examine the specific problems resulting for EU residents involved in road traffic accidents in a Member State other than the Member State of their habitual residence and to prepare a study on all options before the end of 2008. This study would pave the way for a Green Paper.
Unfair competition and acts restricting free competition:
A compromise solution was found. It will allow for the application of one single law, while at the same time limiting, as far as possible, “forum shopping” by claimants.
The Commission will prepare a study on the effects on the way in which foreign law is treated in the different jurisdictions and on the extent to which courts in the Member States apply foreign law in practice pursuant to this Regulation.
Other issues that were settled by the Conciliation Committee concern the relationship with other Community law instruments, the definition of environmental damage for the purposes of this Regulation, and a provision on punitive damages in the context of public policy.
The consolidated text resulting from the agreement (so called “joint text”) is not yet available, subject to legal linguistic revision: however, technical details on the joint text are provided by the statement released by Diana Wallis on her website, with specific reference to the amendments adopted by the European Parliament at second reading on the basis of the Council’s common position.
Once the linguistic revision completed, the Regulation shall be endorsed by the Parliament (absolute majority of votes cast) and the Council (qualified majority voting procedure) to be adopted, within six weeks from the date of approval of the joint text, pursuant to Art. 251(5) of the EC Treaty: the Parliament’s vote is scheduled in the plenary session of 10 July 2007 (see the OEIL page on Rome II).
It is entirely possible that the Regulation will be published in the Official Journal in July 2007 (following the Parliament’s vote in plenary and the expected signature of its President and the Council’s). If no change has been made to the provisions on the application in time, it will start to apply in early 2009 (see art. 32 of the Council’s Common Position), to events giving rise to damage which occur after its entry into force (art. 31; the date of entry into force is on the twentieth day following that of the publication on the O.J., except otherwise specified).
(Many thanks to Andrew Dickinson and Janeen Carruthers for the tip-off, and to Martin George and Edouard Dirrig for providing additional information and clarifications)
I am happy to hear that the European institutions, at least apparently as far as I take from this post, preserved the original Commission’s proposal and rejected the Parliament’s draft. In the latter, the default rule (lex loci laesionis) had been replaced by the choice of the law made by the parties. Art. 3 of the Commission’s proposal evidently terrorized the lobbies of business, which feared that applying the law of the injury mean to increase the standard of liability when victims suffered a harm in a State with a higher liability standard.
Moreover, art. 7 conferred to the victims the right to choose both law, the lex loci laesionis and the lex loci actus. This would have increased the standards in the place of firms’ locations in the case of environmental torts. The Parliament cancelled this norm and replaced it with the default rule (choice made by parties). This solution was, in my view, terribly wrong. Economically speaking, there is something different between entitling victims with a freedom of choice (Commission’s art. 7) and giving them the right to contract the law applicable (Parliament’s draft). In this case, since in the absence of the parties’ choice the default rule (lex loci laesionis) would govern, the tortfeasor has no incentives to negotiate the applicable law because he would pay damages according to the lex loci laesionis.
Stating it in Calabresi/Melamed’s terms, under the Commission’s proposal victims had a property right as to the choice of law, while in the Parliament’s draft this entitlement disappeared. Could we see therefore in the Parliament an action of the lobbies of industrial firms?
Anyway, the preservation of the original place-of-injury rule and of the specific rule on environmental torts really represent an extraordinary measure to increase the environmental protection in the European context.
PHD, Bocconi University
LLM, Yale Law School
In response to Matteo Winkler’s comment posted on 17 May 2007 I wished to make the following clarifications:
First, the European Parliament’s first reading deleted Article 7 of the Commission’s proposal because it was considered that the general rule, which is sufficiently flexible, could cater perfectly well for environmental damage. Parliament was concerned that the introduction of a special rule, although arguably of symbolic or political value, was in fact liable to prejudice legal certainty. In the final phases of the legislative process, the Parliament introduced and refined a definition of “environmental damage” which proved satisfactory to all institutions.
Second, it must be strongly emphasised that neither lobbies nor any industrial firms had any hand in Parliament’s position on this issue. Indeed, all drafting was carried out by the Rapporteur, assisted by the institution’s Secretariat. It is worth noting that I was not even approached by any interest groups on this issue. The only feedback received was from a seminar organised by the Parliament at which academics, including from the US and Switzerland, presented their views on the issue.
Finally, the conferral of property rights should in no way be the concern of private international law. We should be concerned with choosing the best possible solution for civil justice. The Parliament has been guided by this ambition throughout the legislative process.
Diana Wallis MEP