Chapter 5: Conclusions and Recommendations
184. The Regulation raises a serious question
of vires. The Commission has not shown a convincing case
of "necessity" within the meaning of Article 65 TEC.
Further, on any construction of Articles 61 and 65 of the EC Treaty
there must be the most serious doubts that the proposal can have
universal application and can be used to harmonise substantive
rules of damages (Articles 2 and 24 respectively). We urge both
the Council and the Parliament to give the most careful consideration
to the issue (paragraph 72).
185. There is no evidence of which we are aware
that there are such problems in the application of the Member
States' conflicts rules in this area as require the introduction
of a Community measure. The justification provided by the Commission
in its Explanatory Memorandum is unconvincing and fails to pay
due regard to the views of industry, commerce, the media and legal
practitioners. We invite the Council and the Parliament to look
critically at the question whether there is a real practical need
for the Regulation (paragraph 76).
186. There has been a failure on the part of
the Commission adequately to comply with the Protocol on Subsidiarity
and Proportionality (paragraph 78).
187. The Commission's proposal would not meet
the standards now set in the Inter-Institutional Agreement on
Better Regulation. We invite the European Parliament to call on
the Commission to produce a justification of the legal basis as
well as an account of its 2002 consultation (paragraph 79).
188. We do not find the Government's reasons
for having opted in compelling. We have some doubts whether Ministers
at the time of opting in fully understood the implications of
the Protocol for measures adopted by qualified majority voting
189. Consideration needs to be given to whether
the exclusion of auditors' liability in Article 1(2)(d) should
be limited, perhaps to auditors' liability to the company and
its members (paragraph 85).
190. The nature and extent of the exclusion in
Article 1(2)(e) (trusts) needs to be clarified (paragraph 86).
191. Article 2 (Universal application) should
be deleted. The scope of the Regulation would then need to be
defined. It will be necessary therefore to identify the factors
which would connect a case to the Community and, in order to bring
the regulation within the scope of Article 65 TEC, the factors
that relate to the functioning of the internal market (paragraphs
93 and 94).
192. Article 3 should define what is meant by
"damage" and make clear the distinction between "damage"
and "indirect consequential damage" (paragraph 100).
193. There should be as few special rules as
possible (paragraph 102).
194. We do not believe that a case has been made
for a special rule on product liability (Article 4). If additional
consumer protection is needed (and we do not rule that out) then
that is a matter to be addressed in the context of the Product
Liability Directive (paragraph 106).
195. Article 5 (Unfair competition) appears to
be unnecessary. The retention of Article 5 is almost certain to
give rise to unnecessary problems of classification (paragraph
196. It would be preferable for Article 6 (Defamation
and privacy) to prescribe a country of origin rule (paragraph
197. Article 7 should be deleted. If Article
7 is to remain it should make clear, possibly by reference to
the Environmental Liability Directive, to what environmental damage/violations
it relates (paragraph 134).
198. We invite the Government to give further
consideration to Article 8 (Intellectual property) and in particular
to consider whether in the light of the views of our witnesses
intellectual property rights should be excluded from the scope
of Rome II (paragraph 137).
199. Article 9 (Non-contractual obligations other
than tort or delict) should be deleted. If it remains its scope
must be more clearly defined (paragraph 144).
200. We invite the Government to consider the
desirability of the inclusion of Article 12(1) (Mandatory rules)
and, if it remains, whether the Regulation should contain express
provision for Member States to derogate from Article 12(1) (paragraph
201. We are not persuaded that the Regulation
needs to make provision for direct actions against insurers (Article
14). Certainly the matter requires further consideration, including
consultation with the insurance industry (paragraph 150).
202. Some redrafting of Article 23 (Relationship
with other provisions of Community law) may be necessary to safeguard
the E-Commerce Directive (paragraph 162).
203. Article 24 is ultra vires Articles
61 and 65 TEC. Were Article 24 to remain, it should be made clear
whether "non-compensatory damages" is restricted to
"exemplary or punitive damages" and precisely to what
sorts of "non-compensatory damages" it relates (paragraphs
164 and 170).
Recommendation to the House
204. The Committee considers that the Rome II
Regulation raises important questions to which the attention of
the House should be drawn and makes this Report to the House for