§ 7.38 p.m.
§ The Lord Chancellor rose to move, That the draft order laid before the House on 24th May be approved [21st Report from the Joint Committee].
§ The noble and learned Lord said: The purpose of this order is to make some minor modifications to the Contracts (Applicable Law) Act 1990 in order to reflect 104 the accession of Spain and Portugal to the 1980 Rome Convention on the law applicable to contractual obligations.
§ It may be helpful at the outset to say a few words by way of background about the 1980 Rome Convention. This is a convention made between member states of the European Community, the purpose of which is to harmonise their private international law rules on contract. It lays down rules to determine which law is to apply to a contract that has connections with more than one country. It does not affect the substantive law of contract, but merely enables courts to decide which country's law governs a contract. This harmonisation is designed to make it easier for people to do business in the Community, since the rules on applicable law will no longer vary according to which member state's courts hear litigation in the field of contract law.
§ The two basic principles of the convention accord with previous United Kingdom law, and its implementation has therefore led to few changes in our law. First, the parties to a contract may choose which country's law is to apply to it; we regarded this enshrining of freedom of choice as central to the convention. Secondly, in the absence of such a choice the contract is to be governed by the law of the country with which it is most closely connected; the convention lays down various rebuttable presumptions for determining this connection.
§ Certain matters are excluded from the scope of the convention, including contracts more closely related to family law, trusts, wills and succession, certain insurance contracts and questions governed by company law. There are special provisions on employment contracts and consumer contracts which are intended to benefit the weaker party. Although the convention is made between EC member states, it will apply to all contracts with a foreign element, whether with an EC state or not, which come before the courts of an EC state.
§ The convention was opened for signature in 1980. This country signed it in 1981 and ratified it in January 1991, having given effect to it in United Kingdom law by the Contracts (Applicable Law) Act 1990. The reason for the delay was the time taken to negotiate two protocols to the convention which provide for the European Court of Justice to have jurisdiction in certain cases under the convention and which were signed in 1988. This country's ratification was the last needed to bring the convention into force on 1st April 1991. All nine member states at the date of the opening for signature of the convention have now ratified it.
§ Although the Rome Convention is not strictly a piece of Community legislation, it is related to Article 220 of the Treaty of Rome, the treaty which established the European Economic Community. The purpose of this article is to ensure that member states enter into negotiations to secure the simplification and facilitation of recognition and enforcement of judgments in the Community, and new member states undertake to accede to the conventions made thereunder, in particular the 1968 Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters. The Rome Convention concerns a related area 105 of private international law and Greece therefore acceded to it by the Luxembourg Convention of 1984. The United Kingdom ratified this latter convention and it too is now in force.
§ The convention on the accession of Spain and Portugal was signed in Funchal on 18th May 1992. It followed that for Greece very closely and is largely of a formal nature. It is to be found in the schedule to the draft order, Article 9 of which will insert it as a new schedule into the Contracts (Applicable Law) Act 1990. By Article 1, Spain and Portugal accede to the Rome Convention. Articles 3 to 7 deal with texts, copies, ratifications and entry into force. Article 5 provides for its entry into force as between those states which have ratified it three months after ratification by Spain or Portugal and by one other contracting state; thereafter it will come into force for other states on the first day of the third month after they ratify. It came into force on 1st March 1994 in relation to Spain, the Netherlands and Italy.
§ Article 2 deletes Article 27 of the Rome Convention and makes consequential changes elsewhere. Article 27 enables this country, by means of a declaration, to extend the scope of the Rome Convention to Gibraltar. Its deletion follows a similar change made in the San Sebastian Convention whereby Spain and Portugal acceded to the 1968 Brussels Convention, and is also consistent with the 1988 Lugano Convention on jurisdiction and judgments made between member states of the EC and those of EFTA.
The object of Article 2 is to remove from the face of the convention the reference to,
any European territory situated outside the United Kingdom for the international relations of which the United Kingdom is responsible".
§ As well as covering the Channel Islands and the Isle of Man, this is also an oblique reference to Gibraltar, which is, of course, an issue of long-standing sensitivity in Spain. The practical effect of the deletion of Article 27 will be minimal. Contracting states will remain free to rely on accepted principles of public international law, as expressed in Article 29 of the Vienna Convention on the law of treaties, that a party is entitled to apply a treaty to all its territories.
§ Although the right to extend this convention to Gibraltar after the commencement of this order would thus be unaffected, the Government have in fact decided to make such an extension shortly. We see no reason to delay it until after the coming into force of this order. No legislation is needed in this country because Gibraltar has already enacted the necessary legislation in its own legislature.
§ In conclusion, the changes to the 1990 Act contained in this draft order are minor and uncontroversial and are necessary in order for this country to be able to ratify the convention whereby Spain and Portugal have acceded to the 1980 Rome Convention. As such this order facilitates a useful development in an important area of private international law and I commend it to the House. I beg to move106
§ Moved, That the draft order laid before the House on 24th May be approved [21st Report from the Joint Committee].—(The Lord Chancellor.)
§ Lord Mishcon
My Lords, if I may quote from the last words of the noble and learned Lord, this order is indeed happily uncontroversial. From these Benches I have nothing to add to what the noble and learned Lord has so clearly said about it.
§ On Question, Motion agreed to.