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ECJ confirms temporal application of Rome II

30 January 2012

Homawoo v GMF Assurances SA [2011] EUECJ C-412/10, 6 September 2011

In Homawoo v GMF Assurances SA [2011] EUECJ C-412/10, 6 September 2011 the ECJ has confirmed that Rome II, the EU Regulation on the law applicable to non-contractual obligations, will apply to determine the governing law of non-contractual obligations only where the events giving rise to damage occurred after 11 January 2009.

Previous decisions of the English courts had indicated that Rome II would apply to events giving rise to damage which occurred after 20 August 2007 (where the governing law of the non-contractual obligation in question was determined by a court on or after 11 January 2009). This English authority, and English academic commentary to the same effect, has now effectively been overruled. The ECJ’s decision is relevant to parties litigating about non-contractual obligations where the events in question took place after 20 August 2007 but before 11 January 2009 because Member State courts will now have to apply their national law pre-dating Rome II, rather than Rome II, to determine which law will govern those obligations. This could lead to a different law being identified as the governing law of the obligations in question and, potentially, a different outcome to any claim.

On 29 August 2007, Mr Homawoo was injured in a road accident while on holiday in France. He brought proceedings in England against the insurer of the car which hit him for personal injury and indirect damage. Central to the issues in the proceedings was the temporal application of Regulation (EC) 864/2007 of the European Parliament and of the Council of 11 July 2007 on the Law Applicable to Non-contractual Obligations (Rome II or the Regulation). If Rome II applied to the case, the assessment of damages would be governed by French law (because Rome II provides that the law governing the non-contractual obligation itself will also govern the assessment of damage, and the parties had agreed that French law governed the obligation). If Rome II did not apply, the assessment of damages would be a matter of English law, because under the English conflict of laws rules on the governing law of non-contractual obligations which pre-dated Rome II, the assessment of damages was seen to be governed by the law of the court hearing the dispute (ie in this case, English law). It being generally accepted that English law provides for more generous damages for personal injury claims than French law, there was an issue between the parties as to whether Rome II applied.

The source of the parties’ disagreement lay in the following provisions:

  • Article 31 of the Regulation, which provides that the Regulation “shall apply to events giving rise to damage which occur after its entry into force”;
  • Article 32 of the Regulation, which provided that the Regulation “shall apply from 11 January 2009…”; and
  • Article 297 of the Treaty of the Functioning of the European Union (TFEU), which provides for legislative acts to enter into force on the date specified in them, or in the absence thereof, on the twentieth day following their publication in the Official Journal of the European Union.

Relying on Article 32, the insurer argued that Rome II could only be applied to events giving rise to damage occurring after 11 January 2009. Relying on Article 31 and Article 297 of TFEU, Mr Homawoo argued that Rome II could be applied to events giving rise to damage occurring after 20 August 2007, the twentieth day following the date of the Regulation’s publication in the Official Journal.

The decision

The European Court of Justice (ECJ) agreed with the insurer. The ECJ accepted that a distinction could be drawn between the entry into force of a regulation and its application. This was explicable on the basis that certain preparatory obligations were sometimes imposed upon Member States and the European Commission immediately upon the entry into force of a regulation. It also found that Article 31 of Rome II and Article 297 of TFEU set the date of the Regulation’s entry into force (20 August 2007). Article 32 set the date of the Regulation’s general application (11 January 2009). However, the ECJ concluded that Article 31 could not be interpreted without taking into account the date of application supplied by Article 32 and “It must therefore be held that, under Article 31, the Regulation applies to events giving rise to damage occurring after [11 January 2009].” The ECJ took the view that this interpretation was the only one which ensured the full attainment of Rome II’s objectives, namely the predictability of the outcome of litigation, legal certainty as to the law applicable and the uniform applicability of Rome II in all EU member states.

Comment: The ECJ’s conclusion on this point was contrary to the conclusion reached previously by the English courts. In the first instance decision in Homawoo, Slade J provisionally suggested that the clear language of Article 31 precluded the application of the Regulation only to events giving rise to damage which occur on or after 11 January 2009 (see Homawoo v GMF Assurance SA [2010] EWHC 1941). In Bacon v Nacional Suiza Cia Seguros y Reseguros SA [2010] EWHC 2017, Tomlinson J, albeit obiter, remarked that it was “simply not possible” to contend that the intention of the legislature was to nominate the date of application in Article 32 as being the date of entry into force for Article 31. At the time of the ECJ’s judgment, the editors of Dicey, Morris and Collins on the Conflict of Laws were also suggesting that “Articles 31 and 32 should be construed, on their present wording, as meaning that events giving rise to damage after 20 August 2007, are subject to the Regulation”.

Perhaps the explanation behind the ECJ’s brief judgment lies in judicial pragmatism. The ECJ was plainly concerned with the complexity that would arise if a court was obliged to apply the Regulation to events giving rise to damage which occurred after 20 August 2007 despite having to wait until 11 January 2009 to apply the Regulation. In such circumstances, the same non-contractual claim could be subjected to different laws solely on the basis of the speed with which the claim was brought before a court. Such a result would, in the ECJ’s view, run contrary to the full attainment of the Regulation’s objectives, described above.

Although this result was perhaps not predictable from an English law point of view, the decision of the ECJ draws a clear and simple line in the sand in determining the applicability of Rome II:

  • Rome II will apply where the events giving rise to damage occurred after 11 January 2009; and
  • Rome II will not apply where the events giving rise to damage occurred on or before 11 January 2009.

As time passes, the practical significance of the almost 18 month difference between the position adopted by the ECJ and that provisionally advanced by the English courts will disappear. In the meantime, it is certainly helpful to have some clarity on this point, which has troubled the courts and academic writers since the final text of Rome II was published. Perhaps the more interesting legacy of the ECJ’s judgment, however, lies in the ease with which it appears to have interpreted the wording of a regulation, on the basis of a brief policy analysis, in order to reach a result in accordance with the interests of legal certainty.

Further information

This case summary is part of the Allen & Overy Litigation Review, a monthly update on interesting new cases and legislation in commercial dispute resolution.  For more information please contact Sarah Garvey sarah.garvey@allenovery.com, or tel +44 (0)20 3088 3710.