Ince & Co’s shipping and trade practice is built on the fact that our clients choose to do business on contracts that provide for English law. We have, therefore, been taking a close interest in the European Commission’s efforts to regulate the law that parties can choose in their sale contracts and contracts of carriage when doing business.
The background to this is the Rome Convention 1980 which established uniform rules for choice of law between the member states. This was implemented into English law by the Contracts (Applicable Law) Act 1990. In December 2005 the European Commission published its proposal to replace the Convention with a Regulation – called
The Rome 1 Regulation was agreed by the Council and the European Parliament in December 2007 and should be formally adopted shortly. It will then come into force in 18 months time. The
Article 4 deals with sale contracts. If the parties forget to put a choice of law clause in their sale contract, then the governing law will be that of the place where the Seller has his habitual residence. Article 5 deals with “contracts of carriage” – both goods and people. So far as the carriage of goods is concerned, if the parties have failed to include a choice of law clause then the contract will be governed by the law of the country where the carrier has its habitual residence, provided the place of receipt or place of delivery or the habitual residence of the consignee is also in that country. If it is not then the law of the country where the agreed place of delivery is situated shall apply.
As regards passengers, there is not complete freedom of choice. The parties are limited to choosing the place where the carrier has his habitual residence/place of central administration, the place where the passenger has his habitual residence or the place of departure/destination. As a result of this, it will not be possible for a non
Article 6 deals with consumer contracts, but does so expressly without prejudice to contracts of carriage. Therefore, for container lines contracting with members of the public (as opposed to professional shippers and freight forwarders) there should be no problem with them continuing to insert English law in their bills of lading and seaway bills.
If anybody is interested in providing comments on this to the UK Ministry of Justice, the closing date is 25 June 2008.