Contractual proper law and Brexit: Back to the Rome Convention by default?

Posted on 27 Jul 2016 by Brick Court

Helen Davies QC

A previous blog post considered the possibility that when the UK leaves the EU, the jurisdictional rules contained in the Brussels Convention might take the place of the Recast Brussels Regulation (Regulation (EU) No 1215/2012) by default. This post considers the question of which rules might apply to determine the law applicable to contractual obligations post Brexit.

For those contracts entered into on or after 17 December 2009 falling within its scope, the rules the UK courts currently apply to determine the applicable law of the contract are those contained in the Rome I Regulation (Regulation (EC) No 593/2008). As this Regulation is directly applicable in the UK, its provisions have not been transposed into UK law. When the UK leaves the EU its provisions will therefore no longer apply in the UK.

Parliament could of course choose to enact new rules post-Brexit, but if it does not do so, it would appear that the position so far as all such contracts are concerned will be governed by the Contracts (Applicable Law) Act 1990. Section 2 of the 1990 Act provides that (subject to two exceptions) the Rome Convention (together with certain other Conventions  relating to the accession to that Convention of Greece, Spain and Portugal) and the Brussels Protocol on implementing the Convention have the force of law in the UK. The Rome Convention was ratified by the UK in January 1991. Pursuant to sections 4A and 4B of the 1990 Act, the provisions of this Act are currently disapplied in relation to issues relating to contractual obligations which fall to be determined under the Rome I Regulation. Once the UK leaves the EU, that disapplication will cease to be of any effect.

Section 3 of the 1990 Act provides that:

(1)  Any question as to the meaning or effect of any provision of the Conventions shall, if not referred to the European Court in accordance with the Brussels Protocol, be determined in accordance with the principles laid down by, and any relevant decision of, the European Court.

(2)  Judicial notice shall be taken of any decision of, or expression of opinion by, the European Court on any such question.

The Brussels Protocol further contains a power (but no obligation) on UK courts from which no further appeal is possible to make requests of the Court of Justice for a preliminary ruling on a question raised in a case pending before it and concerning interpretation of the provisions of the Rome Convention if that court considers that a decision on the question is necessary to enable it to give judgment.

It remains to be seen whether or not either section 3, or the incorporation of the Brussels Protocol via section 2, of the 1990 Act will be amended upon Brexit, even if Parliament decides that the relevant conflict rules that should be applied to contractual obligations are those contained in the Rome Convention.