Examination of Witness (Questions 88-99)
29 JANUARY 2004
Sir Peter North CBE QC DCL FBA
Q88 Chairman: Sir Peter, thank you very
much indeed for coming to assist us with our inquiry into Rome
II. I know, because you told me outside, that you have flown down
from Aberdeen, arriving at two o'clock in the morning. It is an
enormous imposition to place on yourself and we are very, very
grateful to you for coming.
Sir Peter North: I am very pleased to help,
if I can, My Lord.
Q89 Chairman: Thank you. Can I start by
asking for your comments on the necessity for this Regulation?
We have got the 1995 Act Part III, which has not been in force
for that long. Broadly speaking, it seems to be approved of by
practitioners, it is clear. Why do we need this Regulation? What
problems are there in the application of the Member States' conflicts
rules in this area that have necessitated, as a practical matter,
the introduction of a Community harmonisation measure?
Sir Peter North: I do not know that there are
any. I remain to be convinced of the need for this. I think in
my submission I alluded to something like the main purpose seemed
to be one of tidiness. The arguments that are used, which are
of a rather theoretical kind say there is a need for something
here because of the operation of the internal market, seem to
me to be arguments which are justifiable in relation to the Rome
Contract Convention as seen in the debates on Rome I, as a new
Regulation, but I do not think they are valid arguments here.
The argument that you need this change because without it there
is a flaw in the operation of the Brussels Judgments Regulation,
as it has now become, is not a convincing one.
Q90 Chairman: What flaw is the possible
flaw which might justify that, in Brussels?
Sir Peter North: It is not a sound argument
I believe. The argument would be that you would not get uniformity
of approach across the Member States, because they were being
required to enforce judgments where the determination of the applicable
law was not uniform across the Member States. Therefore, that
was an inhibition, if you like, in the proper regime for free
movement of judgments. I have to say, I do not think that argument
is valid. I do not think it inhibits full faith and credit in
relation to judgments across the Community. Those arguments which
are floated to justify this—
Q91 Chairman: If that argument were valid,
it would justify, I imagine, the harmonisation of every piece
of civil law we have?
Sir Peter North: Precisely, yes. You could take
it a stage further. I think what we have is a three-stage argument.
First, you can argue that you need full faith and credit, free
movement of judgments across the Community, relevant to free movements
of persons, services, goods, whatever. You can say then, "That
is all very well but we ought to have uniformity of the rules
in determining which law should be applied," that is the
context that we have got here. You could then go on and say, "Well,
even that isn't good enough, we've got to make sure that the substantive
law is uniform across the Community," and there is an argument
afoot that, in the commercial law field, that is what should happen
and there are projects for producing uniform, harmonised proposals
for the European contract and commercial law. That is a good way
further down the track from this debate, which is the harmonisation
of choice of law in all respects.
Q92 Chairman: That, I suppose, would be
the same argument that justified Rome I?
Sir Peter North: Yes. The argument that justified
the Rome I Convention was that probably there was a good commercial
need for uniform approaches to choice of law. I have to say that
I was part of the negotiation of Rome I, on behalf of the UK.
The position there was that, probably, commercially, a uniform
approach would be quite desirable, so that every State was clear,
for example, that you could choose the law to apply to your contract,
every State was clear that if you did not then the same basic,
close connection rule, if I define it broadly like that, would
apply. In the negotiations of Rome I, it originated, as the papers
from the Commission make clear, with plans to include rules on
both contractual and non-contractual obligations. By the time
the UK was actively involved in this, the idea of including non-contractual
obligations got pretty rapidly put on one side, for two reasons.
One was "What's the need?" which is the theme we have
come back to; and the other was, "Actually, it's rather difficult,"
because in contract all the nine Member States, as it was then,
had more or less the same rules. So producing agreement on freedom
of choice, and the rule to be applied in the absence of choice,
was not actually too difficult; but the tort/delict choice of
rules across the Community was very different, and people said,
I think, "What's the point?" and it was passed over.
Q93 Chairman: This goes further actually
than simply dealing with conflict rules for delict, it tries to
deal with conflict rules for all non-contractual obligations,
which has a large area outside delict?
Sir Peter North: Yes. It leaves an interesting
issue as to what they are. In English law you can say, "I
know what torts are," in Scots law you can say, "I know
what delicts are;" we will then say probably, "We think
we know what restitution is, but what else is encompassed by this?"
and it is not readily to be found. While I think it is not an
issue that I referred to when I commented in writing, there is
quite an interesting dividing line as to whether a country would
regard an issue as a contractual issue or as a non-contractual
issue. We are not given any means of determining how to answer
that. Unlike the 1995 Act, the Regulation here does not say, "Well,
you look to the law of the forum to determine that classification
issue," and we are not given any guidance here.
Q94 Chairman: As, for instance, restitution,
after a contract has been declared void?
Sir Peter North: Yes. Is that a contractual
issue or not? There is actually a live example of that in the
Rome Convention, forgive me if I have got this wrong, I think
it is Article 10(1)(E), which talks about, the Rome Convention
says it applies to, and I am not quoting the words accurately,
the effects of nullity of a contract. When that Convention was
being negotiated the UK said, "You can't put that in because
we don't regard that as a contract issue. You can't put it in
for us, you can't put it in a contract convention, it is a restitution
issue governed by a different set of rules." As a consequence,
the Rome Convention allows a state to make a reservation in relation
to that provision and also another one, actually a more important
one, which the UK has exercised. It is not directly on point,
but it is a good example of where one group of countries regarded
a matter as a contractual issue and we regarded it as a non-contractual
issue.
Q95 Chairman: I think there are a number
of categorisation problems arising out of the proposals for Rome
II, which, if I may, I would like to come to later. On the fitting
that all of this is to be done, if it is done, under the vires
provided by, I think it is, Article 65 of the Treaty, which gives
competence to institutions to produce laws for the proper functioning
of the internal market, what is to be said about Article 2, which
gives universality to the proposed rules so that they would apply
to a case which has nothing whatever to do with the internal market,
as, for instance, commercial law where there is an accident in
the United States and the damage in England, something of that
kind, say?
Sir Peter North: I think you can read that issue
in one of two ways. Let me jump ahead to another Article, Article
10, which is a contentious one, namely on choice of the applicable
law. You could have a case which was an English-French case, where
those were the two laws involved, and for some reason the parties
were perfectly content to choose the law of New York. Article
2 would make that work and would be perfectly proper, in my view,
in making that work. If you had this case where it was entirely
an intra-Community case but the law to be applied was, for some
reason, a non-contested reason, the law of a non-Community state,
I would regard that as perfectly acceptable. The other facet of
Article 2, though I think we might argue whether it is an issue
for Article 2 or Article 1, is, if you like, the scope and the
competence argument. I see no case for, and a good case against,
the imposition of universal rules through this Regulation, which
cannot properly be, argued to relate to the function of the internal
market. I do not accept that any of it does, but, as you say,
if it did, I do not believe that it is necessarily the case with
a tort claim whose connections are entirely extraneous to the
market. I think actually it is very important that that pass is
not sold, because this situation is very un-internal market. If
the argument is accepted that it is internal market enough for
the vires of the Regulation, and then it is accepted that there
is no external competence for a Member State in a case like this,
what other case is there where that argument could be run? I think,
in the case of contract, the internal market argument is strong.
I think, in terms of the functioning of the internal market, the
argument there is strong. In quasi-contract and restitution it
is halfway; it is marginal; it depends which side you push it.
I think, in this case, i.e. tort, it is weak, and therefore if
this provision were to be implemented it seems to me that the
sovereignty of Parliament to determine what our rules are for
worldwide cases ought to be preserved. It may well be, that having
been preserved, we decide that we ought to have the same rules,
but that is our choice, not an imposition as here. For example,
if you take the Brussels Convention on Jurisdiction, that preceded
the Brussels Regulation, England and Wales said "We're going
to keep what was the Order 11 rules on service out of the Jurisdiction
for non-Convention cases," Scotland did not. Scotland said,
"We'll apply the Convention worldwide." That was a freedom
left to the United Kingdom Parliament to give Scotland the power
to do this. So here I think it would be important that, if there
were a Regulation on Rome II, it was confined within the proper
confines of the vires from Article 65 and then a decision was
taken as to whether we chose, or not, to apply those rules to
the wider world.
Q96 Chairman: Yes, I think it could be a
difficult decision to see what part of this would be within the
competence of Article 65, but that is another issue.
Sir Peter North: That is my starting-point.
Q97 Chairman: The other point about universality
is that universality is not written into Rome I, is it?
Sir Peter North: It is not written in, we have
done it, and that is my point.
Q98 Chairman: We have done it because we
wanted to do it?
Sir Peter North: Yes. Of course, one has to
realise that Rome I came into being under a very different regime;
it did not fall, even 20 years ago, under the law-making powers
of the Community. It was a Convention agreed by the nine Member
States, as it was then, in their sovereign right to have this
Convention. There was a consideration as to whether it should
be brought within the jurisdiction of the European Court of Justice
and it never was. It is a very early piece of Community law-making
and it is a route down which I do not think the Commission would
wish to go today.
Q99 Chairman: An early piece of harmonisation?
Sir Peter North: Yes.
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