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'Rome I' Rules Approved

by Carla Johnson, Investors, London

10 December 2007

Following its endorsement on Friday by the European Council, and by the European Parliament in November, a regulation harmonising the rules concerning the law applicable to contractual obligations (to be known as Rome I) has been approved.

The regulation, building on the fundamental principle that the governing law of a contract is that agreed by the contracting parties, provides citizens and companies of the European Union the security to enter into a contract in the knowledge that courts in all the Member States will apply the same principles on those cross-border elements of contractual disputes. In turn, this will facilitate the mutual recognition of court decisions in the European Union.

The Rome I Regulation aims to ensure that a proper balance is struck between the interests of the various parties involved in a cross-border dispute and identifying the law which is most appropriate.

Consumers, in particular, will benefit from better protection under the new rules, which are fully consistent with the common rules of jurisdiction laid down by the 'Brussels I' Regulation of 22 December, 2000. As an example, the Regulation seeks to clarify the applicable law when a consumer buys a product on the internet from a company located in another Member State.

Vice-President of the Commission, and Commissioner responsible for Justice Freedom and Security, Franco Frattini, congratulated the Portuguese Presidency of the European Union on an ambitious legislative programme on civil justice matters, announcing that:

"This is an important piece of legislation both for the completion of the European Area of Justice and for the proper functioning of the internal market. With the adoption of this Regulation, harmonising the rules concerning the law applicable to contractual obligations, the European Union is providing citizens and companies operating in its territory with an ambitious legislative tool box on civil justice matters."

"This proposal will provide much needed legal certainty, benefiting the increasing cross border nature of trade and commercial transactions."

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