International Contracts – Rome Regulation in Force and whose terms apply?

by Kidd Rapinet on December 4, 2009

Does your company ever do business abroad? If so, you need to know about the Rome I Regulation. This EU regulation comes into force on 17 December 2009 as to the UK regulations which go with it – The Law Applicable to Contractual Obligations (England and Wales and Northern Ireland) Regulations 2009. The regulations makes it clear that throughout the EU if you choose English law in your contract then that will apply.

Philip Astles, a partner in Kidd Rapinet’s Slough office says:

“The simplest way to deal with which laws apply to many international contracts is to state in the contract which laws apply, such as English law. You should also deal with ‘jurisdiction’ – which courts will hear the dispute, which you may well want to have as the English courts. Again, there is a regulation – the Brussels Regulation which in Europe deals with this. Other EU countries should respect this choice because of the terms of the regulations. However, plenty of companies foolishly do not have written contracts and then the Rome I and Brussels Regulations need to be scrutinised carefully for EU contracts. If the other party is outside the EU, then the position can be even more complicated, even if you have chosen national law, so do take legal advice. You also may need advice on whether your standard terms of sale or those of the buyer apply and we can fully advise you on that and ensure you have good contract terms which will protect you if there is a dispute. If you have a dispute which is not about contract law, then a different regulation called Rome II applies in Europe.”

Always ensure it is clear if your terms or the buyer’s terms apply. In November, in Tekdata, the Court of Appeal had to look at the difficult issue of “battle of the forms”. It decided the traditional route of whoever sends their terms last before the contract is made / goods shipped will prevail.

Finally, if you do international contracts, note that on 1st December the Lisbon Treaty came into force. The Treaty on the Functioning of the European Union now contains the EU competition rules (which ban restrictive agreements and abuse of a dominant position) – to be known as TFEU. What were Articles 81 and 82 of the Treaty of Rome (EU competition law) are now known as “Articles 101 and 102 TFEU”. Most of the other treaty numbering has changed too.

When was the last time you had your terms checked to ensure they are fully up-to-date and your contract procedures looked at to see if you are successfully incorporating your standard terms of business into contracts with other parties? Now may be a good time for a review. Call Philip Astles on 01753 532541 for more information.