Article 3the new displacement
173. The basic rule in Article 3(1) (place where
the damage occurs) is retained, though amended to refer to the
place where damage "occurs" rather than "arises".
Such amendment does not in our view remove the need for the Regulation
to define "damage", as we have recommended above (paragraph
174. A new Article 3(2) would provide for the
displacement of the basic rule in Article 3(1) where "the
non-contractual obligation is manifestly more closely connected
with another country". There follows a list of factors which
may be taken into account in determining whether an obligation
has a manifestly closer connection with a country other than that
where the damage occurs. The stated intention of this new approach
is to provide flexibility and to enable the forum court to depart
from the basic rule where the rule in Article 3(1) might be inappropriate.
175. In broad terms the approach is similar to
that in the Private International Law (Miscellaneous Provisions)
Act 1995. The principal difference is that the 1995 Act does not
apply generally to non-contractual obligations but is restricted
to tort and delict. Whether the approach is suitable for all non-contractual
obligations (excepting those arising from an infringement of intellectual
property rightsArticle 8) needs the most careful consideration.
For the reasons given above (see paragraphs 136 to 137) we are
not persuaded that the Regulation should extend beyond tort and
delict. The Government appeared to share that view and will no
doubt want to consult further and take expert advice as to the
potential implications of extending Article 3 to all non-contractual
176. The list of "factors" set out
in Article 3(2) is different and longer than its counterpart in
the 1995 Act. It identifies some factors with precision, though
some uncertainty remains. Most of the factors listed in Article
3(2) appear to be derived from the present text: factor (a), habitual
residence of the parties, derives from Articles 3(2) and 9(2)
of the Commission's text; factor (b), pre-existing relationship,
from Articles 3(3) and 9(1); factor (c), country where goods or
services are marketed, in part from Article 4; and factor (e),
place of unjust enrichment, from Article 9(3). Factors (d), (f)
and (g) are new. The significance of (d), existing contract of
insurance, is unclear. So is its relationship with Article 14
(Direct action against insurer), where the law governing the contract
is relegated into a secondary position. No explanation is given
as to what relationship there is, if any, between factor (e) expectations
of the parties and Article 10 (Freedom of choice). Exactly what
sort of issue factor (g), "the need for certainty and uniformity",
is intended to address is also unclear, the lack of clarity being
unfortunate bearing in mind that the essential purpose of the
Regulation is to provide certainty and uniformity by the designation
of common rules. Finally, it should be noted, first, that the
list is not exhaustive and, second, that the draft does not rule
out the possibility that more than one factor may be relevant
in a particular case.
177. The new approach may be less friendly to
the victim than the Commission's text. It may also encourage litigation
for although the proposal has the benefit of flexibility it has
little to commend it in terms of certainty and predictability.
Where the Commission gives the victim a choice, for example, as
regards product liability claims (Article 4) the new approach
requires the forum court to decide, no doubt having heard the
arguments of the parties. The burden will lie on the party, whether
claimant or defendant, wishing to displace the basic rule in Article
3(1) to show that another law would in the particular circumstances
be "manifestly more closely connected" with the non-contractual
obligation in question.
178. The Draft Report proposes that Article 6
be amended so that law applicable to violations of privacy or
of rights relating to the personality should be determined in
accordance with the rules in Article 3 or, where it is clear from
all the circumstances that the non-contractual obligation is more
closely connected with another country, the law of that other
country. It proposes that "a manifestly closer connection"
may be deemed to exist with the country of publication or broadcast
having regard to factors such as the number of sales per Member
State as a proportion of total sales, audience figures, language
of publication and the audience to which the publication is principally
179. Article 6 would thus be recast as a variant
of the amended Article 3. The basic rule remains, as in Article
3, that the law of the place where the damage occurs will govern.
The burden would be on the defendant publisher or broadcaster
to displace the basic rule. We note that the new draft uses the
words "may be deemed" (emphasis added). The publisher,
if it wishes to displace the place of damage rule, will have to
produce evidence identifying the "country of publication"
(apparently to be determined by sales/audience figures) and then
seek to persuade the forum court that that country's law was "more
closely connected" with the obligation in question.
180. This is not a country of origin ruledefined
by reference to the place where the editorial control over publication
is exercised. Nor would the new rule necessarily lead to the same
result as the E-Commerce Directive (that is the home State). Indeed,
though there are rules in the Regulation aimed at safeguarding
the provisions of the Directive (Article 23), the reference to
the Internet in the proposed amendment to Article 6 may cast doubt
on the effects of the Directive.
181. The draft claims that the new rule will
"make for more legal certainty for publishers and result
in a straightforward rule applying to all publications".
But whether it is better than the existing rule is [certainly]
debatable. One uncertainty (what are "fundamental rules"
of the law of the forum?) has been replaced by another. We wonder
how easily and often a court would be prepared to depart from
the basic rule in Article 3. The possibility of alternative governing
laws will inevitably open up the possibility for legal argument.
Other non-contractual obligations
182. The draft Report's approach to Article 9
is quite radical. Whether given the diversity and complexity of
the issues involved it is appropriate to roll all non-contractual
obligations into Article 3 requires the most thorough and careful
consideration. Some assistance in the choice of law decision may
be given by the listed factors, particularly factors (a), (b)
and (e). We invite the Government to consult experts and other
183. The Rapporteur's text is an innovative approach
which demands closer consideration than we have been able to give
itwe did not receive the document until we had finished
taking evidence on the Commission's text. We are concerned, however,
that in the attempt to be both comprehensive and flexible greater
uncertainty may be created. We remain to be convinced that there
is a problem to which Rome II is the solution.