This paper critically evaluates the relevant provisions of the Rome 1 Regulations (CE, 593/ 2008), in the absence of the choice of law on the part of the parties. It emphasizes on the principle of the autonomy of the parties in regard to the choice of law.
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Running head: DISPUTES CONCERNING ONLINE TRANSACTIONS Disputes Concerning Online Transactions Name of the Student Name of the University Author Note
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1DISPUTES CONCERNING ONLINE TRANSACTIONS From the very beginning choice of law in contract has been considered as a major issue affecting the business structure of UK. It is noteworthy to mention here that such issue has been observed in case of business enterprises entering on advice in case of cross border transactions and consumers of UK buying goods and services from abroad1. It is worth noting that the economic activity involved in such process is immense. It is evident that the financial markets of UK are involved in dealing with various international transactions on a regular basis. The business involved extends beyond the City of London, along with Edinburg and Glasgow. It is worthwhile to refer here that choice of law has been proved to be beneficial in assisting traders, investors and consumers in creating status in relation to the contracts and in determining their values. In 1980, uniform rules for choice of law have been established between the EU Member States by the Rome Convention of 1980. After the implementation of such uniform rules in UK in through the Contracts (Applicable Law) Act 1990, it has received worldwide recognition. However, proposal to replace the Rome Convention with a newly implemented Regulation has been proposed by the European Commission in December 2007. After several negotiations in this regard, on December 2007 a final conclusion was met and as a result of it gave rise to a newly formulated Rome 1 Regulations which came into effect on 17 December 20092. Therefore, the intention of this paper is to critically evaluate the relevant provisions of the Rome 1 Regulations (CE, 593/ 2008), in the absence of the choice of law on the part of the parties. It is worthwhile to mention here that the Rome 1 Regulations applied to all of the United Kingdom including its Member States. In the perspective of modern authors, for the purpose of 1Aikens, Richard, and Andrew Dinsmore. "Jurisdiction, Enforcement and the Conflict of Laws in Cross-Border Commercial Disputes: What Are the Legal Consequences of Brexit?." European Business Law Review 27.7 (2016): 903-920. 2Albornoz, María Mercedes, and Nuria González Martín. "Towards the uniform application of party autonomy for choice of law in international commercial contracts."Journal of Private International Law12.3 (2016): 437-465.
2DISPUTES CONCERNING ONLINE TRANSACTIONS providing certainty, legality, party autonomy and the protection of weaker sections of the society, the Rome 1 Regulation formulated general number of policies3. In this regard, contemporary scholars opined that the most important principle of the Rome 1 Convention was party autonomy which created rights on the part of the commercial parties for the purpose of determining the presence of law that will be applicable to their contract in relation to the inclusion of a new clause- the choice of law. Therefore, modern autocrats were of the opinion that as a result of prolonged commercial practice, it has been beneficial on the part of the parties to ensure legality and certainty. According to modern scholars, the purpose of the Rome 1 Regulation has to provide the parties in contract with sufficient knowledge regarding the law which will be applicable to the nature of their contract. In this regard, it is noteworthy to mention here that, in cases where there is a right on the parties to make choice regarding the law concerned and as a result of it they could evaluate the legality of their contracts. However, the Regulation has proved to be beneficial in avoiding litigation and reduced the burden on courts to a great extent. It is worth mentioning that the primary objective of the Rome 1 Regulation was to emphasize on the protection of the weaker parties4. Therefore, a number of provisions were included in the Regulation for the purpose of ensuring that the relevant rules can be applied wherever applicable. In this regard, certain modifications were made by the Rome 1 Regulation in relation to the choice of an unlimited party in cases where the parties are entrusted with less bargaining power5. In this context, it can be stated that the underlying principles regarding the 3Babić, Davor. "Rome I Regulation: binding authority for arbitral tribunals in the European Union?."Journal of Private International Law13.1 (2017): 71-90. 4Chvosta, Ondrej. "The Art of Advocacy before Common Law and Civil Law Courts: Finding the Governing Law."Int'l Trade & Bus. L. Rev.18 (2015): 294. 5Crawford, Elizabeth B., and Janeen M. Carruthers. "Connection and coherence between and among European instruments in the private international law of obligations."International & Comparative Law Quarterly63.1 (2014): 1-29.
3DISPUTES CONCERNING ONLINE TRANSACTIONS autonomy of the party has been depicted in Article 3 of the Rome 1 Regulation (CE, 593/ 2008)6. Articles in relation to specific contracts, for instance, consumer contracts and contracts related to carriage for passengers are contained in Articles 6 and 5(2) of the Regulation. Authors were of the opinion that in both the case, for the purpose of securing better protection to consumers, the limitation of party autonomy has been established. It has been argued by scholars that requisite degree of flexibility has been maintained by the Regulation with the inclusion of displacement provisions with the help of which the general exceptions has been overridden. The provisions of displacement were found in Article 4 (3) in case of the applicable law in the absence of choice and on contracts of carriage as stated in Article 5 (3). The relevant provisions of the Rome 1 Regulation can be critically evaluated in relation to the absence of choice on the part of the parties. Article 3 of the Rome Regulation 1 emphasizes on the principle of the autonomy of the parties in regard to the choice of law. However, the terms depicted in such regulation are relatively similar to those contained in Article 3of the Rome Convention. In this regard, it has been argued that, two clarifications are there in the Rome 1 Regulation7. There two clarifications can be emphasized as- firstly, the choice of law on the part of the parties need not be necessarily formulated in express terms. In this regard, it can be argued that the choice of law should be sufficiently demonstrated by the parties in relation to the terms contained in the contract or in reference to the circumstances of the case involved8. Therefore, as a result of such clarity, additional flexibility has been entrusted to the parties in contract, which has proved to be beneficial in reflecting commercial practices to 6Dickinson, Andrew. "Territory in the Rome I and Rome II Regulations."The Hamburg Lectures on Maritime Affairs 2011-2013. Springer, Berlin, Heidelberg, 2015. 69-125. 7Fallah, Mohammad Reza, and Batoul Dustmohamamdi. "Mistakes in Electronic Contracts in Iranian Law and UN Convention on the Use of Electronic Communications in Electronic Contracts." J. Pol. & L. 9 (2016): 88. 8Hay, Peter. "European Conflicts Law after the American Revolution-Comparative Notes."U. Ill. L. Rev.(2015): 2053.
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4DISPUTES CONCERNING ONLINE TRANSACTIONS some extent. The second clarification was regarding the position of the contracting parties in relation to an agreement conferring exclusive jurisdiction on the courts in case of any contractual dispute9. It has been argued by contemporary authors that, such factors regarding clarification shall be taken into consideration during the determination of the fact that whether the choice of law was clearly demonstrated on the part of the parties. The provisions regarding the applicable law in the absence of choice are contained in Article 4 of the Rome Regulation 1. In this regard, it can be noted that the general choice of legal rules which operates in cases when there has been failure on the part of the parties to choose an applicable law for the purpose of their contract under Article 3. It is worthwhile to mention here that, the effect of Article 4 does not show significant difference from that of the Articles of the Rome Convention which has been appropriately applied by the UK Courts from the very beginning. However, modern autocrats emphasized on the fact that the provisions of the Rome Convention was based on a certain test which involves the application of law in connection with the contract in concern. However, the test had to undergo various presumptions. Modern authors were of the perspective that the presumptions provided by the Rome Convention would not be appropriately applied to the circumstances of the case if the nature of the contract is such that is in close connection with another country. However, the legal and the conceptual framework of the Rome Convention was complex in nature and involved uncertainty. Modern scholars were of the view that the Rome Convention provided the National Courts of the Member States with an option for the purpose of interpreting the provision in divergent way in relation to their distinct national traditions. Therefore, as a result of this it gave rise to uncertainty regarding the fact that the concerned provision will be interpreted by the European Court of Justice. 9Maultzsch, Felix. "Party autonomy in European private international law: uniform principle or context-dependent instrument?." Journal of private international law 12.3 (2016): 466-491.
5DISPUTES CONCERNING ONLINE TRANSACTIONS According to the perspectives of contemporary authors, these kinds of issues were not observed under Article 4 of the Rome Regulation10. It is evident that from the very beginning, the Rome Regulation has adopted a distinct, clearer and much simpler structure. However, the initial proceedings started with the application of various types of specific choice of legal rules in relation to the appropriate kind of contract as depicted in Article 4 (1). It can be stated that in case where the rules are inconclusive in nature, then these are subjected to general rules as contained in Article 4 (2). The rules regarding general displacement are contained in Articles 4(3) and 4 (4) of the Rome Regulation 1. According to modern scholars, the provisions has been formulated for the purpose of creating necessary appropriate degree of flexibility in case of those situations where the application of specific choice of law rules would not be able to produce sufficient results. Therefore, as a result of it, there has been a mixture of specific law rules in association with the rules of displacement by striking an adequate and reasonable predictable balance between the objectives of certainty and flexibility in competition. Therefore, authors were of the opinion that the Rome Regulation has been formulated for improving the relevant provisions which are depicted in the Rome Convention representing beneficial results for both business and legal transactions. It is noteworthy to mention here that the provisions of Article 4 deserve considerable recognition regarding two main aspects. Firstly, as a result of the choice of law rule as depicted in Article 4(1) (h) this has been proved to be beneficial in creating specific rule for certain kinds of financial contracts which has been efficiently defined by the Markets in Financial Instruments Directive11. It is true that such instrument has provided a harmonized regulatory regime for the 10Mills, Alex. "Private international law and EU external relations: Think local act global, or think global act local?."International & Comparative Law Quarterly65.3 (2016): 541-579. 11Nita, M. C. "Regulation (EC) No. 593/2008 (Rome I) Special Rules to Determine Applicable Law to International Carriage Contracts."Conf. Int'l Dr.. 2015.
6DISPUTES CONCERNING ONLINE TRANSACTIONS purpose of investment services across the Member States of the European Economic Area (EEA). From the very beginning, the provisions of Article 4 (1) (h) have been ensuring certainty regardingtheapplicationoflawwhileregulatingthegovernanceofspecifiedfinancial transactions. The second important aspect regarding the provision of Article 4(3) is that it provided a rule of displacement in case of situations where it can be clearly concluded from the circumstances of the concerned case that the contract in general is in close connection with the country other than the country which has been included in Article 4(1) of the Rome Regulation. According to modern authors there is a close distinction between the fact regarding identification in accordance with the specific choice of law rules and the rules in relation to the displacement of the choice of law rules as contained in Article 4 (1) in case of specific situations in the favor of the law of the country of habitual residence of the party whose motive is to effect the actual performance of the contract. Contemporary scholars were of the view that the rule contained in Article 4(3) deals with the application of the law of the country in concern with closest connection. In this regard, modern autocrats were of the opinion that in particular mush emphasis must be laid upon the value of the contest in relation to the contracts in concern, which has been providing utmost importance to the single law that may be applicable to the transaction as a whole other than the application of different laws to the component parts of the transaction12. It has been observed that these kinds of cases usually arise in regard to the letters of financial credit of indemnities of bank. However, appropriate clarification concerning such issue has been depicted in Recitals 20 12Passarelli,Gianluigi."Donation:shortnotesbetweenItalianCivilLawandEUPrivateInternational Law."Cuadernos de derecho transnacional7.2 (2015): 476-482.
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7DISPUTES CONCERNING ONLINE TRANSACTIONS and 2113. Finally, it can be stated that the terms of Article 4 represented an alteration and improvement on the Rome Convention. The provisions of Article 5 of the Rome Regulation can also be emphasized which deals with the contracts of carriage. In this regard, it is worth stating that the provisions of Article 5 of the Rome 1 Regulation has been covering both contracts for the carriage of goods and contracts for the carriage of passengers. It is worthwhile to mention here that Article 5 (1) in association with the general rule of displacement as contained in Article 5(3) has formulated rules in relation to the contract for the carriage of goods. It is worth mentioning that these Articles are relatively similar to those of the Rome Convention. However, modern authors opined that, the freedom of the parties regarding the choice of the applicable law is exercised in regard to the contracts for the international carriage of goods remains the same. Therefore, it can be opined that the provisions of Article 5(2) in association with the general rule of displacement in Article 5(3) has formulated the rules relating to contracts for the carriage of passengers. In this regard, it is noteworthy to mention here that the Rome Convention no such specific rules for such contracts were there in the Rome Convention. It has been observed that as a result of this, the provisions of Articles 3 and 4 of the Rome Conventions would be applicable to such cases. Therefore, scholars were of the opinion that as a result of the inclusion of such special rule in case of such contracts in Rome 1 Regulation, it enumerated as a result of desire on the part of the Member States for the purpose of creating a larger degree of consumer protection provisions in relation to such field. However, it has been clear on the part of the commercial operators that from the very beginning party autonomy was an essential element in this field. It can be observed that such autonomy has been depicted in the second indent of Article 5(2) in case where choices of law that has been 13Pertegás, Marta, and Brooke Adele Marshall. "Party Autonomy and its Limits: Convergence Through the New Hague Principles on Choice of Law in International Commercial Contracts."Brook. J. Int'l L.39 (2014): 975.
8DISPUTES CONCERNING ONLINE TRANSACTIONS permitted are listed14. From the perspective of an operator, it can be emphasized that among all the choices of law, two of them shall prove to have utmost importance in case of the law of the country where the position of the carrier is habitually resident and in case of law of the country where there is a place of central administration on the part of the carrier. It has been emphasized by modern scholars that, the availability of a former choice of law should be appropriately used in situations where there has been an issue of travel tickets that took place in an operator’s office. However, the availability of the latter choice of law would prove to be beneficial in case of international operators and incase of those situations where there has been issuance of tickets through one or many branches which are situated in other parts of the world15. Therefore, in the opinion of contemporary authors, the second option which is in existence shall prevent undesirable and unmanageable proliferation of different existing laws that would be reflecting the fact that at present there are various countries in which there may be presence of different branches16. In the perspective of modern scholars, as a result of it, there may b e managerial loss to the UK business structure and the kind of business firms at present which in the future would provide active service to foreign carriers who in the future wishes to apply the provisions of UK laws to their contracts17. The provisions of Article 6 of the Rome Regulation 1 govern the choice of law that is applicable in case of consumer contracts. However, according to the viewpoint of modern 14Piñeiro, Laura Carballo. "Port state jurisdiction over labour conditions: A private international law perspective on extra-territoriality."The International Journal of Marine and Coastal Law31.3 (2016): 531-551. 15Weller, Matthias. "Mutual trust: in search of the future of European Union private international law."Journal of Private International Law11.1 (2015): 64-102. 16Reich, Norbert, and Hans-W. Micklitz. "Economic law, consumer interests and EU integration."European consumer law(2014): 1-65. 17Reuleaux, Matthias, and Thomas E. Christensen. "Cape Town Convention and “Qualifying Declarations”: Analysis of Ratification Approach and Transaction Practice in Recent Contracting States (2015–2016)."Air and Space Law42.4 (2017): 403-421.
9DISPUTES CONCERNING ONLINE TRANSACTIONS scholars, the scope of the relevant provision as depicted in the Rome Convention was restricted in the sense that it was applicable to the contracts involved in the supply of goods and services. In this regard, it is worth mentioning that the provisions of Article 6 of the Rome 1 Regulation, has no such limitations in its scope. According to contemporary scholars, it is essential in such cases that a single law has to apply. Therefore, for this purpose, special exclusions has been implemented for the purpose of such transactions so that the subject-matter of single law could be applied18. It can be observed that in recent era, these specific kinds of contracts has been rightly excluded from the purview of Article 6 and as a result of it there is a right on the part of the parties to continue to choose the relevant law which shall be applicable without any prior restriction. However, the most important exclusions that could be applied to the upcoming financial context can be referred to the provisions of Article 6(4) of the Rome 1 Regulation. It can be argued that, the restrictions that have been imposed efficiently supported the perspectives of the MiFID which has created greater recognition with the establishment of a high degree of harmonization in such field which involves an important degree of consumer protection. However, it is worth mentioning that since time immemorial, these exclusions has been avoiding various limitations on the part of the parties regarding the choice of the applicable law in the relevant field, in which there has been presence of contracts which has been extensively covered by the Rome Regulation. In this regard, reasonable costs could have been imposed in the process of evaluating the different applicable laws at present, where there have been contracts with different individuals from the Member States. In this regard, contemporary authors laid much emphasis on the purpose of the MiFID which from the starting has initiated with an intention to foster the growth of a thriving internal market in the investment services at present for the 18Wahab, Mohamed S. Abdel. "Brexit’s Chilling Effect on Choice of Law and Arbitration in the United Kingdom: Practical Reflections Between Aggravation and Alleviation."Journal of International Arbitration33.7 (2016): 463- 481.
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10DISPUTES CONCERNING ONLINE TRANSACTIONS purpose of delivering savings to the MiFID regulated firms and to their existing clients. Therefore, as a result of it, this enabled the firms to depend upon the regulatory laws and the laws relating to home-state public relations for the purpose of making a valid deal throughout the European Economic Area. Authors opined that, it has been clarified by Recital 31 of the Rome 1 Regulation regarding the fact that in real Regulation does not intend to prejudice the operational functions of a system within the provisions of Article 2 of the Settlement Finality Directive (98/25/EC19. Therefore, as a result of it the participants involved in such system shall be able to identify the relevant law and thereby able to choose the law governing the concerned system. The provisions regarding insurance contract are contained in Article 7 of the Rome 1 Regulation. It is worthwhile to refer here that the provisions regarding choice of law in relation to insurance has been previously included by the Rome Convention in case of risks related to direct insurances situated outside the purview of communities and reinsurance risks and by the Insurance Directives as applicable to direct insurance risks situated within the scope of the Community20. Therefore, authors were of the opinion that, Article 7 of the Rome 1 Regulation has been regarded as the consolidation of the rules as depicted in the purview of the Rome Convention and the Insurance Directives. In this context, it can be rightly commented that the provision has the power to retain the importance of the current law in practice while ensuring the fact that the relevant rules of law are applicable to the present situation that is situated in a single instrument. In this regard, these measures should be beneficial in facilitating various reforms in the complex area of law in the near future. 19Viarengo, Ilaria. "Choice of law agreements in property regimes, divorce, and succession: stress-testing the new EU Regulations."ERA Forum. Vol. 17. No. 4. Springer Berlin Heidelberg, 2016. 20Spillenger, Clyde. "Risk Regulation, Extraterritoriality, and Domicile: The Constitutionalization of American Choice of Law, 1850-1940."UCLA L. Rev.62 (2015): 1240.
11DISPUTES CONCERNING ONLINE TRANSACTIONS It is worth noting that the limitation which governs the party autonomy in case of choice of law applicable to special cases has been regulated by Article 5.2 of the Rome Convention. Modern authors emphasized on the part that from the very beginning the article has been effectively dealing with consumer contracts and has been enabling the consumers to bind themselves towards the protection of mandatory set of rules21. It has been considered by few authors that, the nature of these mandatory rules needs to be internationally mandatory. In this regard, it is noteworthy to mention here that, the provisions of Article 5.2 efficiently deals with the scope of consumer protection and mandatory rules that has been included however the scope of these rules are limited to the protection of the interests of the consumers. In the conclusion, it can be stated that while evaluating the subject-matter of the party autonomy limitation of choice of law caused as a result of mandatory, protective mandatory and internationally mandatory rules, it is essential to have knowledge regarding the distinctive features of these rules. The limitation of choice of law by mandatory rules is usually carried on for the purpose of preventing internationalization of contracts which are domestic in nature for the purpose of avoiding mandatory rules of domestic law. Therefore, it can be efficiently argued that the limitations of party autonomy in the choice of law rules that has been an outcome as a result of the implementation of protective mandatory rules which has been enacted for the purpose of protecting the weaker section of the parties in a legal relation. From the starting, the internationally mandatory rules formed an efficient part of the public order which has been creating limitations to party autonomy in case of choice of law rules in a distinctive way. It can be finally concluded that the Court is at the authority to give effect to these internationally 21Saghir, Wael. "Applicable Law on Demobilized and Dematerialized Securities."IALS Student Law Review4.2 (2017): 19-24.
12DISPUTES CONCERNING ONLINE TRANSACTIONS mandatory rules which forms the larger part of the law of a foreign country while deciding the application of chosen law.
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13DISPUTES CONCERNING ONLINE TRANSACTIONS References: Aikens, Richard, and Andrew Dinsmore. "Jurisdiction, Enforcement and the Conflict of Laws in Cross-Border Commercial Disputes: What Are the Legal Consequences of Brexit?."European Business Law Review27.7 (2016): 903-920. Albornoz, María Mercedes, and Nuria González Martín. "Towards the uniform application of party autonomy for choice of law in international commercial contracts."Journal of Private International Law12.3 (2016): 437-465. Babić, Davor. "Rome I Regulation: binding authority for arbitral tribunals in the European Union?."Journal of Private International Law13.1 (2017): 71-90. Chvosta, Ondrej. "The Art of Advocacy before Common Law and Civil Law Courts: Finding the Governing Law."Int'l Trade & Bus. L. Rev.18 (2015): 294. Crawford, Elizabeth B., and Janeen M. Carruthers. "Connection and coherence between and among European instruments in the private international law of obligations."International & Comparative Law Quarterly63.1 (2014): 1-29. Dickinson, Andrew. "Territory in the Rome I and Rome II Regulations."The Hamburg Lectures on Maritime Affairs 2011-2013. Springer, Berlin, Heidelberg, 2015. 69-125. Fallah, Mohammad Reza, and Batoul Dustmohamamdi. "Mistakes in Electronic Contracts in Iranian Law and UN Convention on the Use of Electronic Communications in Electronic Contracts."J. Pol. & L.9 (2016): 88. Hay, Peter. "European Conflicts Law after the American Revolution-Comparative Notes."U. Ill. L. Rev.(2015): 2053.
14DISPUTES CONCERNING ONLINE TRANSACTIONS Maultzsch, Felix. "Party autonomy in European private international law: uniform principle or context-dependent instrument?." Journal of private international law 12.3 (2016): 466-491. Mills, Alex. "Private international law and EU external relations: Think local act global, or think global act local?."International & Comparative Law Quarterly65.3 (2016): 541-579. Nita, M. C. "Regulation (EC) No. 593/2008 (Rome I) Special Rules to Determine Applicable Law to International Carriage Contracts."Conf. Int'l Dr.. 2015. Passarelli,Gianluigi."Donation:shortnotesbetweenItalianCivilLawandEUPrivate International Law."Cuadernos de derecho transnacional7.2 (2015): 476-482. Pertegás, Marta, and Brooke Adele Marshall. "Party Autonomy and its Limits: Convergence ThroughtheNewHaguePrinciplesonChoiceofLawinInternationalCommercial Contracts."Brook. J. Int'l L.39 (2014): 975. Piñeiro, Laura Carballo. "Port state jurisdiction over labour conditions: A private international lawperspectiveonextra-territoriality."TheInternationalJournalofMarineandCoastal Law31.3 (2016): 531-551. Reich,Norbert,andHans-W.Micklitz."Economiclaw,consumerinterestsandEU integration."European consumer law(2014): 1-65. Reuleaux, Matthias, and Thomas E. Christensen. "Cape Town Convention and “Qualifying Declarations”: Analysis of Ratification Approach and Transaction Practice in Recent Contracting States (2015–2016)."Air and Space Law42.4 (2017): 403-421. Saghir, Wael. "Applicable Law on Demobilized and Dematerialized Securities."IALS Student Law Review4.2 (2017): 19-24.
15DISPUTES CONCERNING ONLINE TRANSACTIONS Spillenger, Clyde. "Risk Regulation, Extraterritoriality, and Domicile: The Constitutionalization of American Choice of Law, 1850-1940."UCLA L. Rev.62 (2015): 1240. Viarengo, Ilaria. "Choice of law agreements in property regimes, divorce, and succession: stress- testing the new EU Regulations."ERA Forum. Vol. 17. No. 4. Springer Berlin Heidelberg, 2016. Wahab, Mohamed S. Abdel. "Brexit’s Chilling Effect on Choice of Law and Arbitration in the UnitedKingdom:PracticalReflectionsBetweenAggravationandAlleviation."Journalof International Arbitration33.7 (2016): 463-481. Weller, Matthias. "Mutual trust: in search of the future of European Union private international law."Journal of Private International Law11.1 (2015): 64-102.