Vitorino’s green paper in the pipeline to update cross-border contracts laws

Date: 07/03/02

By Peter Chapman

JUSTICE chief António Vitorino is set to rekindle fierce debate over whose laws take precedence in cross-border contract disputes.

Aides say a green paper will be produced by the Portuguese commissioner before the summer break on the need to update a 1980 legal convention known as 'Rome I' and to turn it into a binding EU regulation.

The move follows controversy over two earlier efforts to add conventions to European law after EU leaders agreed at the 1997 Amsterdam summit to bolster the Union's role in justice and home affairs policy.

But industry experts are already predicting a lobbying skirmish over the rule change if the EU executive opts to strengthen consumers' rights as they did last year in updating a similar legal instrument known as the Brussels Convention.

The outcome of that discussion gave consumers the right to initiate court action in cross-border cases in their own country.

The existing Rome Convention protects consumers' domestic 'mandatory rights' if they sign foreign contacts.

But legal experts say strengthening this provision could have serious ramifications for those companies operating across the Union.

According to Mike Pullen, a partner with UK law firm DLA, it could mean that all of a firm's standard contracts are 'declared null and void' in a particular country if a court finds it denies a consumer's rights enshrined in local contract law.

Another debate is raging over plans to launch a regulation known as 'Rome II', governing non-contractual legal disputes.

Critics say the draft rules could undermine the EU's single market by giving precedence in such legal rows to the country where the 'damage' takes place.

They say firms operating legally at home could become embroiled in lawsuits across the Union simply because they fail to comply with foreign laws, such as those covering 'unfair competition' and defamation.

Vitorino's aides insisted last week that the Rome II plan was still on course amid claims that it had been quietly dropped in response to industry opposition.

Justice Commissioner António Vitorino is set to rekindle fierce debate over whose laws take precedence in cross-border contract disputes.