Convention on the law applicable to contractual obligations (Rome Convention)

SUMMARY OF:

Convention 80/934/EEC on the law applicable to contractual obligations opened for signature in Rome on 19 June 1980

WHAT IS THE AIM OF THE CONVENTION?

The convention establishes uniform rules concerning the law applicable to contractual obligations in the EU.

KEY POINTS

The convention on the law applicable to contractual obligations was opened for signature in Rome on 19 June 1980 for the then 9 European Economic Community (EEC) countries now EU. It entered into force on 1 April 1991. In due course, all the new members of the EEC signed the convention. When the convention was signed by Austria, Finland and Sweden, a consolidated version was drawn up and published in the Official Journal in 1998. A further consolidated version was published in the Official Journal in 2005, following the accession of 10 new countries to the convention.

The Convention was replaced, among all EU countries except Denmark, by Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I Regulation). The Rome Convention continues to apply to Denmark. It continues to apply to contractual obligations concluded before the entry into application of the Rome I Regulation.

The convention applies to contractual obligations in situations involving a choice between national laws — even where the law it designates is that of a non-contracting country — with the exception of:

questions involving the status or legal capacity of natural persons;
contractual obligations relating to wills, matrimonial property rights or other family relationships;
obligations arising under negotiable instruments (bills of exchange, cheques, promissory notes, etc.);
arbitration agreements and agreements on the choice of court;
questions governed by the law of companies and other corporate and unincorporated bodies;
the question of whether an agent is able to bind a principal to a third party (or an organ to bind a company, or a corporate or unincorporated body);
the constitution of trusts and questions relating to their organisation;
evidence and procedure;
contracts of insurance that cover risks in the territories of the EU countries (excluding reinsurance contracts).

The signatories to a contract may choose the law applicable to the whole or a part of the contract, and select the court that will have jurisdiction over disputes. By mutual agreement, they may change the law applicable to the contract at any time (principle of freedom of choice).

If the parties have not made an explicit choice of applicable law, the contract is governed by the law of the country with which it is most closely connected, according to, for example, the place of habitual residence or place of central administration of the party performing the contract, or the principal place of business or another place of business of the party performing the contract.

However:

where the contract concerns immovable property, the law applicable by default is that of the country in which the property is situated;
where the contract concerns the transport of goods, the applicable law is determined according to the place of loading or unloading, or the principal place of business of the consignor.

To protect the rights of the consumer, the supply of goods or services to a person is covered by special conditions, according to the principle of the protection of the weaker party. Unless the parties decide otherwise, such contracts are governed by the law of the consumer’s country of residence. In no circumstances may the choice of law disadvantage the consumer or deprive him or her of the protection of more favourable law in his or her country of residence. These rules do not apply to contracts of carriage or contracts for the supply of services in a country other than the consumer’s country of residence.

In the case of employment contracts, one of the following will apply:

the law of the country in which the employee habitually carries out his work;
the law of the country in which the company that employed the worker has its place of business;
the law of the country with which the employment contract is most closely associated.

If the parties decide to select another law to apply to the contract, this choice may not be at the expense of the protection of the worker.

FROM WHEN DOES THE CONVENTION APPLY?

It has applied since 1 January 1991.

MAIN DOCUMENTS

Convention 80/934/EEC on the law applicable to contractual obligations opened for signature in Rome on 19 June 1980 (OJ L 266, 9.10.1980, pp. 1-19)

Corrigendum to the Convention on the law applicable to contractual obligations opened for signature in Rome on 19 June 1980 (OJ L 58, 5.3.1983, p. 14)