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JOINT COMMITTEE ON JUSTICE, EQUALITY, DEFENCE AND WOMEN’S RIGHTS debate -
Tuesday, 14 Oct 2003

Vol. 1 No. 35

Rome II: Motion.

I thank the Minister for Justice, Equality and Law Reform, Deputy McDowell, and his officials for attending the meeting, the purpose of which is to consider a motion, referred to the joint committee by both Houses, concerning proposals for a Council regulation on non-contractual obligations - Rome II. Members have been already circulated with a copy of the original proposal document and the briefing material supplied by the Department. I invite the Minister to make his comments.

I thank the Chairman and the committee for making time available to discuss this motion relating to the exercise by Ireland of the option to take part in the adoption and proposal for a regulation of the European Parliament and Council on the law applicable to non-contractual obligations, known colloquially as Rome II. As this is a measure to which the Fourth Protocol of the Amsterdam Treaty applies, the committee will note there is a three month period within which we must notify the President of the Council of our intention to opt into any discussions from the beginning. That period will expire on 22 October, hence our desire to progress this motion as soon as possible.

Our difficulty on timing has arisen because the proposed regulation was only presented by the European Commission on 22 July last. The earliest opportunity for the Government to consider it arose on 30 September. With the Oireachtas resuming in the first week of October this presented us with a very tight deadline to be in a position to notify the Presidency of the Commission by the 22 October of our decision to opt in. The co-operation of your committee, Chairman, is very much appreciated.

Motions on which the approval of both Houses must be sought for the State to exercise an option provided under the Fourth Protocol in respect of proposals for an EU legal instrument in the civil law area, had been debated previously by the Dáil and Seanad and also by this committee. I look forward to hearing the views of the committee members who are present today. No doubt the committee is familiar with the background to this kind of motion. I do not propose to go over the constitutional and Treaty provisions in any greater detail than is necessary.

When the Treaty of Amsterdam came into operation on 1 May 1999 annexed to it was a protocol which exempted both Ireland and the United Kingdom from the provisions of Title IV of that of that treaty. That title deals with matters related to the free movement of persons and includes civil judicial co-operation. The protocol in question does, however, allow either or both countries to opt into particular measures, under specified terms and conditions.

Under Article 3 of that protocol, the State has three months from the date on which a proposal is presented to the Council of Ministers within which we can notify our wish to take part in the adoption and application of that proposal or initiative. By opting in within the three month period Ireland can actively participate in and have a real voice in the negotiations leading to the final terms of the measure as adopted. To do otherwise would disadvantage Ireland's representatives at the Council working group and also, ultimately, myself at the Council meeting.

Ireland has made a declaration under Article 3 of the protocol to take part in the adoption of measures pursuant to Title IV of the EC Treaty to the maximum extent compatible with the maintenance of the common travel area arrangements with the United Kingdom.

Of course we may accept a measure any time after it has been adopted but if an adopted measure contains provisions which do not properly take account of Irish concerns we may find ourselves at that stage unable to accept it. There are accordingly advantages to exercising the opt in to proposals which are still in draft so that we can ensure that its final form will be acceptable to Ireland. This particular measure - a proposed regulation on the law applicable to non-contractual obligations, more commonly known as Rome II - which we are discussing can be seen against the background of the development at EU level of measures geared towards the enhancement of judicial co-operation in civil matters. The overriding aim of this development is that of making access to justice easier for the individual litigant. In December 1998, the Vienna Action Plan, the aim of which was to create an area of freedom, security and justice in the European Union, was endorsed by the European Council. Subsequently, in October 1999, the Tampere European Council, in looking to the creation of a genuine European area of justice, focused on the need for better access to justice and enhanced recognition of decisions in civil and commercial matters.

The proposed Rome II regulation can be viewed as a further advance in the development of private international law rules in the Community. It continues the process initiated by the Brussels convention - subsequently the Brussels I regulation - on jurisdiction and recognition and enforcement of judgments in civil and commercial matters and the Rome Convention of 1980 on the law applicable to contractual obligations, ratified by Ireland through the Contractual Obligations (Applicable Law) Act 1991.

The Brussels regulation deals with jurisdiction rules in the broad civil areas and covers both contractual and non-contractual obligations. The purpose of Rome I Convention on the law applicable to contractual obligations was to have uniform choice of law rules in relation to contracts which would govern both member states, among themselves, and relations with non-Community countries. The main benefits of that convention were that it raised the level of legal certainty in contractual cases involving an international element by making it easier to predict the law which would be applied to a case and thereby reducing the level of forum shopping in such cases.

Thus the proposed Rome II regulation will attempt to bring consistency found with regard to private international law rules in contractual obligations to the issue of non-contractual obligations and so try to complete the development at European Union level of those rules with respect to civil and commercial obligations.

The objective of the draft regulation is to introduce clear rules governing the law that will apply in a wide range of potential disputes in regard to non-contractual obligations. This would mean that courts in all the member states could apply the same law to cross-Border disputes involving non-contractual obligations, generally known in Irish law as torts, thereby facilitating mutual recognition of court rulings in the European Union. Member states do not at present have common rules for deciding which law should apply in cases concerning non-contractual obligations, so each court applies its own national rules. Consequently, the outcome of cases can vary widely from one member state to another, prompting plaintiffs to bring their actions before the courts which will apply the most favourable legislation, known as "forum shopping". The conflict of laws rules proposed by the Commission seek to strike a balance between the interests of the person claimed to be liable, that is, the defendant, and the person sustaining the damage, that is, the plaintiff.

In regard to the question of civil liability for damage caused to others, the draft regulation specifically mentions issues such as defective products, unfair competition, violation of privacy or violation of the environment. A key element of the draft regulation is that it would provide that the law of the place where the direct damage occurred should be the law applicable.

Efforts have been under way since the mid-1990s to bring forward a Community instrument on the law applicable to non-contractual obligations. In May 2002 the Commission launched a public consultation process based on a proposal for a draft regulation with regard to developing the rules that would apply in cross-Border non-contractual disputes in any situation involving a choice between the laws of different countries. The responses from Government, business, media, consumer and other organisations were varied. Those in support of the proposal felt that a Rome II regulation would increase legal certainty. The European Consumers Association strongly supported consumers being allowed to take action where the loss occurred, if that was the best choice for them.

However, other contributors expressed doubts as to the necessity of Rome II, arguing that, in practice, businesses do not face problems with diverging rules on conflict of laws in the member states. The proposed scope of Rome II was also criticised as too extensive. The less than universal welcome for the Commission proposal may ultimately be reflected in the negotiating process.

I emphasise that no change in substantive Irish law in the area of non-contractual obligations will be effected through this draft regulation. We should be clear that the proposed regulation deals only with the choice of applicable law where a dispute has arisen and there are different jurisdictions involved. In other words, if what we call a tort is caused by an action in Ireland, but the damage is sustained by somebody in France, the issue is whether the Irish law of negligence, if it was a negligence tort, or the French law applies. Members of the committee will appreciate that given the individual nature of potential disputes which might arise in this context, it is not possible to indicate at this point, the commencement of negotiations, what the exact nature and extent of the potential benefits for Irish consumers, business or private individuals might ultimately be. That would depend on future situations in which persons who feel they have an actionable complaint seek to vindicate their rights in a cross-Border situation. The proposed regulation, if eventually agreed by the Council, will be adopted by qualified majority voting. It is also subject to co-decision with the European Parliament.

It is important that Ireland should respond positively by exercising our right to opt-in to the negotiations from an early stage in order to be in a position to influence the eventual outcome. This will enable the State to play a full and constructive role in the negotiations in the relevant Council working group, which have just commenced under the Italian Presidency and will proceed under the Irish Presidency.

I hope the committee will support the proposal that Ireland exercises its opt-in to the discussions on this proposed regulation and I look forward to hearing the comments of members on that proposal. I need hardly add that any points raised by members of the committee on the current draft of the instrument will be taken into account by the Irish delegation in the negotiations.

I thank the Chairman for his co-operation in making time available, particularly given the short notice that circumstances dictated.

In opting-in to the negotiations, we do not prejudge in any way whether we will opt-in to the instrument. In effect, we are given an opportunity to have an input and our opt-out under the Amsterdam Treaty is not ultimately compromised, in that at a later stage we can say what has emerged from the negotiating process is not acceptable to us and we need not go ahead with it.

Interesting. On the opt-out of the instrument, could Ireland alone opt-out without other common law countries also opting out?

Both the UK and Ireland have an opt-out under this title. Either of us can independently exercise our opt-out. If the UK or Ireland goes in, it does not mean, necessarily, that the other goes in. There are clear indications that the United Kingdom is unhappy with some features of this proposal.

This particular proposal appears to come close to what the committee discussed previously in relation to JHA matters and the constitution of Europe, the difference between common law and "Seville". What is the Minister's take on all of that?

I do not want to exaggerate its importance in this respect. This is simply a proposal for a regulation that would determine what tort law of what member state is applicable to any particular wrong, in other words, if I am sued in Ireland for negligence in Spain, this regulation would state whether the Spanish or the Irish civil liability law applies to my actions in Spain. The regulation is not saying that the Spanish law and Irish law should in any sense be the same. It is purely saying that in a particular set of circumstances with a cross-border dimension, the applicable law is either Irish or Spanish. It is not saying that Spanish and Irish law should converge or that one should approximate to the other.

Take the example of unfair competition and a scenario whereby France Telecom decided to come to Ireland and says that Eircom benefits here from unfair competition, and Eircom goes to France and says that France Telecom has a monopoly there and that there is unfair competition for Eircom. Which would have the better chance of succeeding, the case in the French courts or in the Irish courts, all other things being equal?

Our unfair competition law is modelled on the European Union provisions about anti-competitive practices and abuse of dominant position. Some member states of the European Union have different concepts of what amounts to unfair competition, including notions of using misleading advertising, using forced sales, acts impeding competing supplies, enticing away a competitor's staff, acts that exploit a competitor's value, passing off and so on. Thus, the laws in relation to unfair competition are quite different across the European Union.

Apart from breach of contract, this jurisdiction does not recognise any right of action for unfairly enticing away one's competitor's staff. If somebody is free to go contractually within our system it is not unfair competition to hoover them up into one's company and turn them into one's employees. There would be some reservations in this area in deciding what the applicable law would be. If the effect of this particular regulation was to somehow provide that French law would apply to certain actions, even if tried in Irish courts, there could be some cross-infiltration of laws in those circumstances.

Likewise, in relation to violations of privacy, we do not have an identical law to many civil law states. The committee will know that at the moment there is quite a controversy about press councils and things like that, and many people are writing a lot of articles condemning my proposals in this area. This is interesting because I have no proposals in this area. However, that does not stop people from writing the articles anyway.

In some European states, if a prominent politician was having a private clandestine affair, it would violate a privacy law if a newspaper was to splash that all over its front page. In Ireland and the United Kingdom, no such law has yet been developed. That is another area with which the United Kingdom has significant problems because it raises various questions. Where did the violation of privacy take place - is it where the magazine is published? If an English magazine is published in Britain and sold in France in a way that violates French privacy law, which law is applicable? Where will the damage have been suffered by the politician in France whose privacy in France is violated by something perfectly lawful in London? There is a big question there and I do not purport to have an answer, in case anyone in the media intends to report what happened here today. I have no proposal at the moment on that subject.

We could start with the old saying that if you are not in you cannot win, so we should not tie our hands on this, and I am sure the Minister's extensive diplomatic and negotiating skills would be much appreciated in the Council working group on this.

First, I seek clarification that, under Article 3 of the protocol, what we are deciding here relates to tort matters across the board in relation to all Ministers. Are we talking about the entirety of matters that might be dealt with in the Council of Ministers no matter which Minister has responsibility for it, and not simply dealing with the Minister's brief in relation to justice?

Second, the premise that has been put here, that the draft regulation would provide that the law of the place where the direct damage occurred should be the law applicable, would seem to be more a bureaucratic than consumer oriented presentation. I can imagine a number of European states, including present members and accession states, in which the consumer might not be top of the list in priority terms in relation to, say, defective products, unfair competition, the violation of privacy or the environment. From the consumer or citizen's point of view, there would seem to be a benefit from forum shopping, whereby one would shop for the best forum and the best deal.

Our function is to represent the individual and collective citizenry of Europe and ensure they get the best deal if there is a tort or question of civil action in relation to damages inflicted upon an individual citizen. Are we starting with the draft regulations from the wrong premise? It might be more bureaucratically simple to say that the law of the place where the damage occurred is the law applicable, but it may not be the best law.

I do not know to what extent conflict would arise between the civil law successors of the Napoleonic code in Europe and our common law system. Has any serious survey been done on the individual countries? I presume we are now talking about 25 countries rather than 15 being involved in the Council of Ministers that will look into the matter. I presume there is no proposal for harmonisation as such. That is not part of the exercise and instead there will be a decision on agreed mutual recognition on the criteria to determine where an action should take place. Are there any statistics governing the extent of the problem that has arisen to date in legal terms, or is there is a perception that no action is being taken simply because it is too complicated to do so? Is there a problem of some substance that needs to be addressed?

I too would adopt the position that we are better off being in there talking about it and seeing what is going on. We can then decide whether to opt-in rather than sitting out now. I exhort the Minister to get involved in the discussions. Deputy Costello's last question is probably the most relevant one. Where is the need for this legislation and where does it arise? I am a little confused as to what exactly is covered in these transnational contracts. Suppose I decide to take a holiday in Spain, Greece or wherever——

To Australia.

I did not go to Australia. No, to the EU. Suppose I book a holiday through the Internet in Spain, Portugal, or Greece where the health and safety regulations may not be quite as stringent as here and if I fall on the stairs or the ski breaks under me, will those issues be covered here if I take a case against the operator in Spain, Portugal or Greece or take it here? If I book through an English company and wish to sue that company, should I sue the company in Dublin and, if so, must it turn up? Under which law can I take my case? Is it the Irish or British law or the country where it happened? How will all these issues be decided? Are those the issues that are covered?

The law of the place where the direct damage occurred.

May I begin with the last point? Is there a need for this legislation? One has to ask oneself whether much of the European Union legislation is driven by a need or by a theoretical perception that a problem exists and a desire to arrive at a solution. One of the judgments I have arrived at on a provisional basis is that there is a major tendency at EU level for people to generate problems on paper and to arrive at a paper solution. Then everyone has to get into practical mode to find out how this will work out in practice, whereas the great benefit of the common law, as I said on another occasion, is that it deals with cases as they arise. In our jurisdiction we tend not to work out a theory of the world but to work out a solution for the problem in front of us. The question is whether there is major evidence of forum shopping across Europe. There is none that I have seen on these issues. Are there major problems of this kind across Europe where people are coming in throngs to their politicians to solve this problem? My clinic is not full of these people. Deputy Costello probably spends his Saturday mornings sending off people in their throngs demanding a regulation.

A general rule is that the law applicable to a non-contractual obligation - booking holidays and so on is normally contractual - shall be the law of the country in which the damage arises or is likely to arise, irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event arise. One might ask what that means. The general rule is that the law of the country in which the damage occurs is to be the applicable law to a tort. If one buys a defective product and it explodes in one's house, the general rule is that the place where the damage occurred, one's kitchen in Ireland, is the country whose law will apply to whether one is to be compensated and, for what amount, and whether one is liable in those circumstances. It is not that easy. One is left with a situation where acts which are perfectly legal in country A can give rise to a claim in country B. The question then arises whether the person in country B can be sued for something which is legal at home. That is an issue which is not easily got around.

In relation to product liability, the proposed rules provide that the law applicable to a non-contractual obligation arising out of a damage, or risk of damage, caused by a defective product shall be that of the country in which the person sustaining the damage is habitually resident - in other words, where the consumer is habitually resident is the issue - unless the person who claimed to be liable, that is, the defendant, can show that the product was marketed in that country without its consent, in which case the applicable law shall be that of the country in which the defendant is habitually resident. In other words, if one produces a product and it is marketed in France and in Ireland; with one's consent Irish law applies, without one's consent French law would apply. Whether that is a great advance is for others to query.

In relation to unfair competition, it is proposed that the law applicable to a non-contractual obligation arising out of an act of unfair competition shall be the law of the country where competitive relations are the collective interests of consumers or are likely to be directly and substantially affected. That is easier said than done.

Does the committee support the motion?

One can see how helpful all this is.

Does the committee support the motion? In accordance with Standing——

The Minister will now engage with his colleagues on the Council of Ministers in Brussels. Is this the understanding?

Irish officials will now sit down and negotiate whether all this is right or wrong and if it should or should not be the law, and whether it is an advance on the situation which is unprovided for in law, which is a matter of private international law. At the end of that process Ireland, with all the other countries, will have had its tuppence worth on all these issues. We will then have to decide whether to opt-in or out of this legislation as a measure which will bind Ireland.

We shall keep the Minister updated on a regular basis. I hope he will have an input into this legislation.

I will do nothing else except worry about this legislation.

Is it a qualified majority vote?

Has it to be done before the accession countries join?

No, there is no timeframe.

Nothing will be done before——

It is unlikely that anything will be done this year.

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