Examination of Witness (Questions 100-119)
29 JANUARY 2004
Sir Peter North CBE QC DCL FBA
Q100 Lord Neill of Bladen: I was really
rather intrigued, when you were talking about the borderline between
tort and delict. It came to the back of my memory the discussions
one used to have about bad faith in the contractual process and
that the lack of it would give you culpa in contrahendo
and whether that is settled by Rome I, or whether you could have
debates about whether bad faith in the course of negotiation was
tortuous in character or whether it was contractual.
Sir Peter North: I think that is a very good
example of the sort of definitional issue which arises. I took
the example from Rome I because it is specifically addressed in
the text, but these classification issues are going to arise in
any court . I think, if we have both Rome I and Rome II Regulations,
with an assumption that it is very clear as to what the dividing
line is between the two, which it is not, then it will be the
European Court of Justice which is the body which will have to
determine that. If you like, it is a litigation-creating gap,
which lawyers might say is great but the world outside would not.
Chairman: Somebody will have to pay for it.
Q101 Lord Neill of Bladen: My point is,
legislation is not covered by Rome I, there is nothing definitional
there about what is a contract? It is an unfair question.
Sir Peter North: There are provisions, and I
am racking my brain now, I have to confess, as to what is not
covered but there is not a clear definition of what is contractual.
Q102 Chairman: If the Regulation were to
be brought in, as part of European law, presumably it would be
necessary for the 1995 Act provisions to be repealed?
Sir Peter North: In whole or in part. In part
if the Regulation's scope was limited to intra-Community Member
State matters. There would be an issue then as to whether the
whole of Part III of the 1995 Act should be replaced for the rest
of the world. It is the point I was making earlier. Certainly
Part III would have to be replaced for those matters covered by
the agreed scope of the Regulation.
Q103 Chairman: If the Regulation set it
as it is at the moment, would not Article 2 require the whole
of the 1995 Act provisions to go?
Sir Peter North: It would point in that direction,
yes.
Q104 Chairman: Then we would have a very
interesting state of affairs, and very pleasant for lawyers, if
it were held then to be on challenge that it was outside the scope
of Article 85, the Regulation?
Sir Peter North: Yes, and that is why I think
there is an important argument to be had as to whether by free
choice, if the rules are reasonably satisfactory, we can apply
them by our own sovereign decision to the circumstances which
would not be covered.
Q105 Chairman: The leading of substantive
Articles really is Article 3. How would you regard that, is that
a lex loci delicti, a lex damni rule, or what is
it?
Sir Peter North: I had not come across the phrase,
the lex damni rule, until a list of questions was suggested
to me that you might wish to raise, but it seems to me to be about
right. Clearly it is not the same as the similar provision in
Section 11 of the 1995 Act. I suppose one has to ask whether the
description really matters very much. The rule in Article 3 is
formulated in a way different from Section 11, because Section
11 says that the applicable law is the law of the country in which
the events constituting the tort or delict in question occur;
so it is not focused on the damage, but then goes on to say, in
section 11(2), that well, actually, it is the law of the country
where death is suffered, or it is the law of the country where
property damage is suffered. That is actually clothing Section
11 of our Act with a lot of the characteristics of Article 3,
but, the fall-back provision in the 1995 Act says that in any
other case, which is not death or personal injury or damage, the
applicable law is that of the country in which the most significant
element, or elements, of the events occur. So there is a general
view which you can use to look at how you apply the overriding
rule of what is the law of the country in which the events constituting
the act occurred. At that point, you are into a rule which is
really rather different from Article 3, as I read it, because
Article 3 drives you continually down the route of having to look
for the law of the country where the damage occurred, or was going
to occur. It is not as dramatically different as one might think,
because the two most obvious cases of potential difference, death
and personal injury, on the one hand, and damage to property,
on the other, are elided together by Section 11(2) of our Act.
Q106 Chairman: Would it not be necessary,
in order to make sense out of Article 3, to have some description
of what actually is meant by `damage' for the purpose of application
of the Article?
Sir Peter North: Absolutely, yes.
Q107 Chairman: Which, at the moment, is
absent?
Sir Peter North: Yes. I agree entirely.
Q108 Chairman: As we are on Article 8(3),
the third paragraph says, notwithstanding paragraphs one and two,
it is clear that the non-contractual obligation is manifestly
more closely connected. You have referred, I think, substantially,
as did some of the other commentators who sent in their views,
and that is the adverb which is used, is it not, in the 1995 Act?
Sir Peter North: Yes. The Act is substantially
more appropriate. I think there is a broader issue here, perhaps
broader than obviously is revealed, though, to be fair to the
Commission, it is touched on in their covering material. There
is clearly a concern in relation to Rome I that what I might call
the let-out clause, contained in Article 4, of Rome I, says that
if there has not been a choice of the applicable law for a contract
then, you can go to, if you like, a general connection rule. I
think there is a perception that courts in this country have jumped
rather quickly to the general connection rule without going through
looking at the rigour of whether one presumption or another presumption
applies. That is perceived by some in the Commission as being
rather too liberal an approach, let me put it like that. That
concern, I think, blows into the drafting of Article 3(3) in Rome
II. I think that is why the phrase `manifestly more closely connected'
has been included, or at least, one of the reasons that it is
there, so that you cannot slide out of applying Article 3(3) too
easily, as it might be thought courts have slid out of applying
the equivalent provision in Rome I.
Q109 Chairman: I think, manifestly would
be a stricter word than substantially?
Sir Peter North: Yes.
Q110 Chairman: Coming down to Article 4,
the point has been made, in a number of responses to us, that
there ought to be a distinction drawn between product liability
in consumer contracts and product liability in cases where it
is business-business on either side of the litigation equation.
Do you have a view on that front?
Sir Peter North: Yes. It is, again, commented
on in my written response. Article 4 seems clearly to be drafted
with consumer protection in mind, and the Commission's Explanatory
Memorandum suggests that. It is, however, not limited to consumer
cases, though it is very much a protective rule for consumers.
I see no justification for it in a business-to-business environment.
In fact, I would start the other way round. I would ask, what
is the argument for having any of these special rules in Articles
4-8? Why are they taken out of the generality of the main rule?
If there is a very good case for any one of them, well, put it
in, in relation to that case. There is an argument, though I am
ambivalent about the strength of it, in terms of consumer protection
in product liability cases; well then, put it in as a consumer
protection measure, but not as a general measure.
Q111 Chairman: Article 5, unfair competition,
this has caused a lot of head-scratching in the responses we have
received. That is mainly, I think, because unfair competition
is not an expression which we have in our domestic law, a list
of types of liability, and again it is a categorisation problem.
I am told, and I do not know whether this is within your own knowledge
as well, that it comes from German law, and the suggestion has
been made that this must have been drafted by a German lawyer
who was familiar with the German law of unfair competition. If
one looks over the page to Article 8, which speaks of infringement
of intellectual property rights, practically every infringement
of intellectual property rights could be represented as being
an item of unfair competition?
Sir Peter North: Yes. I hardly need to say it
in this company, but as soon as you start to have exceptional
rules you have got to define "exception" Before I came
here, I cast my mind back to the 1995 Act, because I was a Law
Commissioner at the time when the reports which led to that Act
were being prepared, though I had no responsibility for the ultimate
draft Bill and Report of May 1986. I had left the Law Commission
by then. We were involved in an exercise of asking whether we
ought to have rules which separated out such matters as unfair
competition, product liability, and the like. The clear view then,
which was the view that Parliament later accepted in the 1995
Act, was that, no, we should not. It added nothing to the justice
or the clarity of the law to do that, and I think we are back
in the same debate here as to whether this approach is justified.
The line I would take is not an unthinking line because in the
world in which we live now, 20 years on, commercial issues have
changed. Nevertheless, one must still ask what is the real case,
and what is the limit of that case, for an exceptional rule from
the generality, rather than this terribly broad-brush assumption?
Q112 Chairman: That would run right down
4, 5, 6, 7 and 8?
Sir Peter North: Yes.
Q113 Lord Neill of Bladen: On unfair competition,
take the case of stealing of customer lists. Now, by touching
the right button, a fraudulent person can obtain an international
list of some rival and then proceed to lobby and try to get the
trade of those customers. I think my first question is, would
that fall within the rule of Article 5(1), unfair competition,
and, if so, how does the rule work, if it is my example, an international
list? We are told the law should be the law of the country where
competitive relations, or the collective interest of consumers,
are, or are likely to be, directly and substantially affected,
will end up in chaos in a dozen different countries, or is that
resolved by some other provision?
Sir Peter North: No, I do not think it is. I
think my retort to a distinguished silk would be there is a lot
of work for lawyers in there.
Q114 Lord Neill of Bladen: You would argue,
we do not need an Article 5 there at all?
Sir Peter North: I would not be quite so dogmatic.
I would be perfectly prepared to see an argument which said, "Here
is a real sort of problem which needs to be governed by a rule
different from the general rule." Rather than the drafting
at the moment, which seems to be, "Here's a category, let's
have a separate rule for it." I do not think the case for
that is argued.
Q115 Lord Neill of Bladen: The only special
rule we have got is defamation, and that is after a lot of agonising
following the Queen's Speech. It is a real difficulty, is it?
That finally took defamation out of the new Act?
Sir Peter North: Yes. I can say it in this place
that that was essentially a political judgment rather than a detailed
law reform, analysed judgment.
Q116 Chairman: I cannot remember. What did
the Law Commission recommend about that?
Sir Peter North: Defamation should be covered
by the general rule, and it was powerfully argued in this place
that that should not be the case. One might say that the time
available for a Bill from the Law Commission to be considered
is limited, and you might say the Lord Chancellor of the day took
the view that a Bill with the exclusion of provision for defamation
in it was better than no Bill at all. I think I would say that.
Q117 Chairman: There is special treatment
for defamation and other privacy violations in Article 6, which
says it is to the law of the forum where the Article 3 law would
be contrary to the fundamental principles of the forum as one's
freedom of expression and information?
Sir Peter North: Again, I think the difficulty
with that is that it is a very unclear rule; it is a very litigation-creating
provision. Again, there will be those in the legal profession
who would regard that as rather a good thing. Whether all the
judiciary would, My Lord, I am not so sure. It is not very helpful,
I think, to have a provision like that, if it is, in fact, going
to be cast into legislative form, which it will be, as a Regulation.
Q118 Lord Neill of Bladen: That is contrary
to Recital (4), and we have already touched on part of that, the
proper function of the internal market creates a need in order
to improve the predictability of the outcome of litigation, certainty
unto the law. This, for example, is actually creating uncertainties?
Sir Peter North: Yes. I think it is a very vague
provision.
Q119 Chairman: The reference in the Article
to the fundamental principles of the forum as regards freedom
of expression and information sounds as though the draftsman has
in mind countries with written constitutions?
Sir Peter North: I was just about to say, I
wonder who in this place is going to define them. There will be
very varied views. It does seem to me that it will be an extremely
difficult provision on which to advise clients as to whether they
have to contemplate complying with the law of state A and state
B. It is very unclear.
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