The UK is one of the major centers for the international and domestic trade and commerce both for the European market and global market. The British law, judicial system (courts) and other legal services have played a vital role the development of this sector of commerce which has always been hindered by the reliability, certainty and just application of the British law on contract (Minford, Nowell & Mahambare 2005, p.37). Since 1991 the British contract law has been based on the Rome Convection. However the European commission sought to change to the prevailing law in contracts with an aim of a more efficient regulation in the contract law that would see to it that businesses and consumers needs are met. Therefore after consultations the commission came up with new regulations that were known as Rome 1. The Rome 1 allowed parties to a contract choose the country on which they shall base their contract following the laws and provisions of that country; this was referred to as the “Choice of law” (Peele 2004, p. 18).
“Choice of law” entails the process by which parties in a contract agree on the law that they will apply nationwide to their contracts and file their agreement with a contract based term. This is of great significant for business contract between two or more nations. Moreover, when getting into an insurance contract in the occurrence of a disagreement, the law can have a considerable basis on its productivity because the States concerned embrace different legal necessities (Greene & Elffers 2000, p. 61). The British government productively argued beside the introduction of restrictions which would have restrained insurers’ aptitude in agreeing on contractual choices of law between the parties involved. Thus, go-ahead of a free choice on “mass risk” contracts has remained intact as it was introduced by new European regulation, with retention of free choice of law in insurance contract (Baimbridge, Burkitt & Whyman 2006, p. 41).
Despite the fact that both the 1991 Rome convention and Rome 1 are similar to a large extent, the application of Rome 1 in courts is very different from the 1991 law on contracts. Stone (2006, p. 183) notes that “ Both are built upon the same principles: a choice of applicable law for the parties in most circumstances, clear rules that apply in the absence of choice, a degree of flexibility for the courts, and appropriate protection for weaker parties such as consumers.” The UK has on numerous occasions opted to opt out of the Rome 1 which it felt that it did not address their commerce interests. Due to the flexibility of the law the UK courts have been forced to address transnational disputes using contract laws of foreign countries whereby they did not have jurisdiction initially. Therefore if a party in UK choose to use Spain’s law on contract, the UK courts will have to use Spain’s’ contract law in the interpretation of the contract. As a result the analysis used by courts in determining commercial cases has significantly changed in the UK courts (Craig & Burca 2008, p. 63).
As a result of Rome 1 employment, uniformity of the choice of law rules as well as practical applicability has been enhanced (Seatzu 2003, p. 45). This has and continues to improve the ability of parties in their determination of the law that will apply to their contract, through employment of a choice of law clause as a “long-standing commercial practice.” In addition, the widespread application of similar rules promise to impact significantly on benefits of international contracting, in case of issues on conflict of law. As a result this will enhance the realization of Rome 1’s goal as the predictability of the outcome of transnational commercial disputes will be attained through application of similar “Choice of law” in English courts, enhanced by the uniformity in contractual choice of law. Since the laws to be chosen are already known, prediction of outcome in relation to them is easier unlike in cases of Rome convention (Keenan 2007, p. 102).
Reference list
Baimbridge, M. Burkitt, B & Whyman, P 2006, implication of the euro: a critical perspective from the left, Taylor & Francis, Macomb.
Craig, P. & Burca, G 2008, EU law: text, cases, and materials, Oxford University Press, London.
Greene, R. & Elffers, J 2000, The 48 laws of power, Penguin Books, London.
Keenan D 2007, Smith & Keenan’s English law: text and cases, Longman, New York.
Minford, P Nowell, E & Mahambare, V. 2005, Should Britain leave the EU: an economic analysis of a troubled relationship, Edward Elgar Publishing, Northampton.
Peele, G 2004, Governing the UK: British politics in 21st century, Wiley-Blackwell, Malden.
Seatzu, F 2003, Insurance in private international law: a European perspective, Hart Publishing, Glidden.
Stone, P 2006, EU private international law: harmonization of laws, Edward Elgar Publishing, London.