Introduction The Rome Convention on the Law Applicable to Contractual Obligations, is a convention which was signed in Rome in June 1980 by European union countries with an intention of creating a harmonized if not a unified system of law within the union to avoid conflict of laws. The Rome Convention, which institutes homogeneous rules regarding the law pertinent to contractual obligations, is considered as an element of the “acquis communautaire” (Tridimas, 2004) Outline of the convention According to Article 1, of the Convention's, regulations are to be applied to all selection of law matters that involves contractual obligations. More so Article 10, states that once selected, the law selected will govern: The requirements of the Rome Convention overrule the conflict of laws requirements relating to contractual obligations personified in the preliminary part of the Civil Law. The Rome Convention offers a great deal more detailed ruling of the subject than that earlier offered by the Civil Law, therefore rendering it much easier to find the way in this intricate subject of law. The advantages of a nation embracing the Rome Convention includes, Whereas the liberty of parties to select a foreign law to preside over their contractual relationship is acknowledged also by the Civil Law, the Rome Convention set a more apparent borderline of this liberty through declaring that the selection of foreign law do not prejudice the use of the obligatory regulations of the law of the nation in which the contract is largely strongly connected. In addition, the Rome Convention codifies the standard which was formerly recognised under a nation’s law such as parties may choose the law appropriate not only to the entire contract but also as only a fraction of the said contract. (Tridimas, 2004) Nature of private international law, contract in Europe under the Rome convention The national rules of conflict of law in the European Union have been substituted by a Community standardized Law, the Rome Convention of 1980. First of all, it is worth commenting that the future directive of commerce do not control the actual system. Some authors believe that there is a disagreement between the “lex originis” presented by article 3 of the Common Position and article 5 of the Rome Convention that foresees the “lex protectionis” for consumer contracts. This view is wrong as the Common Position do not pertain PIL, as pointed out in article. 1.4. This means for example that a trader has to conform with the laws of the country where he/she has established his/her business regarding to its considerable obligations (article 3 of the Common Position), nevertheless when he/she is closing a consumer contract, the later is not considered of the future ruling and the appropriate law to the contract is selected in accordance to the requirements of the Rome Convention. (Tridimas, 2004) According to Collier (2001) the moment the contract considered is taken as an international contract, the Rome Convention offers the principle of the liberty of the parties to decide the applicable law though there may be no relationship with the contract through the reserve that it is a country law and not a soft-law such as the recent law merchant. (Collier, 2001) The EU involvement in creation of the Rome convention leads to several preliminary but fundamental questions. These questions include the aspects concerning the nature of international law in relation to the convention. Connecting to this question is whether the contract of law as stipulated in the Rome convention is indeed appreciating the international laws and also the internal laws in these countries in creating appropriate functioning of national market. Furthermore another question arises in regard to the different cultural aspects in terms of language, philosophy, culture which each country has and to effect it the Rome convention has in regard to the international law in Europe. It is important that we then address the issue of Nature of private international law, contract in Europe under the Rome convention. (Collier, 2001) The reason behind creation of a harmonized contract law under the Rome convention for the member states in the European Union is mainly connected to the aim of the union of integrating its market. The presence of different national contract laws regulations is seen in theory as a way of distorting competition and thus deterring businesses and also consumers for getting into European market. Thus these differences are taken as non tariff obstacles to trading in the European countries. The amount of legal dangers inherent in international business transactions is a lot given the economic player’s lack of information regarding other member countries laws, the dread of legal surprises that means that the concerned parties can not be able to advance contractual relationships confidently unless they invest in local legal service so as to content and also effect the application of contractual system that will involve incurring of extra and usual prohibitive expenses. (Collier, 2001) Thus the seen solution for such a case was to harmonize the substantive rules regarding contract law of all member states. The aim of the contract law was the assumption that by harmonizing the laws it will integrate the market and at the same time enhance the legal assurance, thus making it quite easy to perform and conclude contracts. To this end, one can then question the nature of private international law in the face of contract laws. It has been noted by different bodies that there exists some obstacles regarding the Rome convention on contract laws and the private international law. The obstacles arise indirectly or directly form different private international laws and the Rome convention which are exacerbated through the limits of the Rome convention approach in endeavouring for harmonization of the contract law within the member states. (Collier, 2001) Kaczorowska, (2003) states that a few obstacles can thus be pointed out and basic differences made between the contract law and the private international laws. The obstacle comes from some of the laws in the Rome convention being mandatory and thus being non mandatory rules. The mandatory laws create distinctive and acute obstacles for private international laws as they have to be in line with the mandatory laws of the convention. (Kaczorowska, 2003) Despite various directives which seek to ensure a lowest amount of the union protection on some particular sectors such as consumer protection, mandatory laws continue to differ among member countries as a result of application of lowest harmonization measures that permits member countries to impose their own stringent measures. This has implied that where mandatory laws are part of applicable law selected by the concerned parties of a contract, in many cases it is usually clear that at least of the party will not be familiar with the law which is applicable and therefore will not have a commercial framework to ensure the compliance with all the mandatory laws. In some other circumstances in particular the consumer contracts, laws of private international law imply that mandatory laws may be applied so that they aren’t derogated from laws irrespective of the law which is being applied regarding the contract law. (Kaczorowska, 2003) One other issue concerning private international law and the contract of law surrounds the uncertainty which is created by the deviation of rules concerning the fundamental questions of a contract. Such questions or issues include formation needs and the validity and also recognition of the documents from different national rules regarding the application and admissibility of standardized contract terms. The results is that business enterprises can not use standardized contracts and international business model which are designed to help in facilitating international trade and depend a lot on private international legal advice. Thus it confirms that the Rome convention though has tried to harmonize the different national rules to open up international trade, it however also creates a problem to private international laws. The important thing is thus to view if the contract law created by the Rome convention is helping to stimulate business and enhance economic integration or not. In order to answer this question one has to understand the effect of the contract law on private international laws. Kaczorowska, 2003) The Rome convention Article 1 Scope of the Convention 1. The set of laws of this convention will be applied to contractual obligations in any circumstances that involve a selection among the laws of dissimilar countries. 2. The set of laws shall not be applied to: (a)Questions which involves the legal capacity or status of natural persons, with no prejudice to Article 11 (b) Contractual obligations which are related to: · Succession and wills · Property rights cropping up out of a marital relationship, · Rights and responsibilities occurring out of a family relations, marriage, parentage or affinity, which includes maintenance responsibilities in relation to illegitimate children (Rome- convention. Org, 2007) (c) responsibilities arising out of bills of exchange, promissory notes and cheques and some other negotiable tools to the degree that the responsibilities under such negotiable tools arises from their negotiable nature; (d) Negotiated accords and also accords on the selection of court; (e) issues governed by corporate laws of companies and some other organizations corporate or not corporate like the creation, by registration, lawful capacity, internal association or closing up of companies and other organizations corporate or not corporate (f) The issue whether an agent is capable of binding a principal, or if an organ can bind an organization or company or a corporate or a non corporate body, to a third party; (g) The trusts constitution and the relations among trustees, settlers and beneficiaries (h) Confirmation and process, devoid of prejudicing to Article 14. 3. The set of laws of this Convention are not applicable to contracts of insurance that covers risks located in the areas of the member states of the European Economic Community. to determine if a risk is located in these areas the court will apply its inner law. 4. The previous paragraph do not relate to contracts of re-insurance. (Rome- convention. Org, 2007) Article 2 Use of law of non-contracting States Any law that is specified in this Convention will apply whether or not it is the law of a Contracting State. UNIFORM RULES Article 3 Freedom of choice 1. A contract will be governed through the law selected by the parties. The selection has to be expressed or established with logical certainty via the specified terms of the contract or the situations of the case. Through their selection the parties can choose the law relevant to the entire or a part of the entire contract. (Rome convention. Org, 2007) 2. The parties could at any given time concur to take the contract to a set of law apart from that which formerly governed the contract, whether because of a previous option in this Article or because of another provision of this very Convention. Any particular differences by the parties of the particular law which will apply undertaken after the closing of the contract will not prejudice its official legality under Article 9 or badly have an effect on the specified rights of third parties. (Rome convention. Org, 2007) 3. The truth that the parties have selected a foreign set of law, whether it is accompanied by the selection of a foreign law tribunal or not, will not, in the event where other aspects related to the circumstances at the occasion of selection are associated with only one country, prejudice the use of regulations of the law of that particular country that cannot be derogated from via the contract, hereby named “mandatory rules”. 4. The continuation and legality of the agreement of the parties as to the selection of the valid law will be determined according with the stipulations of Articles 8, 9 and 11. (Rome convention. Org, 2007) Article 4 (most controversial ) Applicable law in the absence of choice 1. To the degree that the law which is to be applied to the contract hasn’t been selected in agreement with Article 3, then the contract will be governed through the law of the country in which it is very closely related. Nonetheless, a severable portion of the contract that has a closer link with other country might by manner of exception be ruled by the law of that particular other country. (Rome- convention. Org, 2007) 2. Subject to the stipulations of paragraph 5 of this Article 4, it will be assumed that the contract is highly closely related with the state where the party that is to undertake the performance that is typical of the contract have, at the period of closing of the contract, his usual dwelling, or, for a corporate body or non corporate body, its main administration. nevertheless, in case the contract has been entered during the course of that party's business or profession, then that state will be the state in which the main location of business is located or, where in the conditions of the contract the presentation is to be implemented through a location of business apart from the main location of business, the state in which the other location of business is located. (Rome convention. Org, 2007) 3. Notwithstanding the stipulations of section 2 of this Article 4, to the point that the subject issue of the contract is a right in fixed property or the right to exploit fixed property it will be assumed that the contract is highly linked with the state in which fixed property is located. 4. A contract for transport of goods will not be subjected to the assumption in section 2. For such kind of a contract if the state where, at the moment the contract is closed, the transporter has his main location of business is also the state where the loading point or the point of discharge or the main location of business of the consignor is located, it will be assumed that the contract is closely linked with that state. When this section is applied to single voyage, charter parties and some other contracts the key function of which is transporting goods will be undertaken as contracts for transportation of goods. (Rome convention. Org, 2007) 5. Section 2 will not apply supposing the distinguishing performance can’t be known, and the assumptions in sections 2, 3 and 4 will be overlooked if it emerges from the position as an absolute that the contract is extra closely associated with another state Consumer contracts Article 5 pertains to supplying of goods contracts or services to a buyer for a non-business reason, or to make a contract for the providing credit for that particular object. even though Article 3 provides the parties an open selection of law, this selection cannot deny the buyer of any specific protections which are obtainable as stipulated by the mandatory regulation of the nation where he/she has his/her usual residence if the buyer was replying to an advertisement or a particular call and makes the contract in that nation, or if the other party or his/her agent did receive the buyer's order in that said state, or where the contract covers sale of products and the buyer travelled from his country to the other country and his orders were given, as long as the buyer’s journey was prearranged by the seller with the intention of inducing the buyer to buy. As for these reasons, Article 7 thus defines “mandatory rules” as rules which have to be applied not withstanding the law which is applicable. In deciding if a set of laws are mandatory in the “lex fori” (law with that the contract has got a close link), consideration will be placed on their nature and function and to the costs of their application or not being applied. Kaczorowska, 2003) Where the contract is quiet on the selection of law, the law of habitual residence will govern supposing it is gotten through the situations described above. However this Article doesn’t apply to: (a) A contract of transport (b) A contract for supplying services where such services are to be supplied to the buyer exclusively in a state different from that where he/she has his/her habitual residence. The Article, however, applies to a contract that, for an inclusive cost, grants for a mixture of travel and also accommodation (Kaczorowska, 2003) Contracts of employment Article 6, states that no selection of law choice enclosed in a contract of employment will rob the worker of any protection given to him/her by the mandatory laws that would be valid in the non-existence of that selection. Where there is no direct selection, an employment contract will be governed: Unless it emerges from the circumstance as entire that the employment contract is more closely linked with another nation, in such case the contract will be governed by the laws of that nation. (Kaczorowska, 2003) Material validity Article 8, of the convention outlines material validity of a given contract, or of any term in a contract, will be decided through the law that would oversee it. Under the Rome Convention when the contract or the term were legitimate (for example the presumed Applicable Law). However, since this would create an apparently unfair outcome, a party might depend upon the law of the location of usual residence to ascertain that he/she did not provide a free consent. (Kaczorowska, 2003) A Concept for Choice-of-law Rules on Consumer Contracts It has been noted that the location where services should be delivered or the location and structure of marketing activity in a business aren’t suitable as linking factors to establish the law which is applicable or even overrule a selection of law. Appropriate linking factors that can establish applicable law are location of business or where the parties reside. Basing on these linking factors a set of fundamental regulations for consumer contracts completed in a business can then be established: (Kaczorowska, 2003) In case the contract is for supplying of products to a delivery location which coincides with the residence of consumer, a strong link of that contract to the consumer’s residence exists. The supplier will know the country where delivery will have to occur, while the customer may not know the supplier’s location of business. The link that exists is big enough to put the applicable law in the state of the consumer's residence in case of lack of a choice of law. However, if a choice-of-law article is shown clearly, in that particular contract for supplying of goods favouring the law of the supplier's location of business it then should usually be valid and should not be overruled by compulsory rules or laws of the consumer's nation. This is because of various reasons: With current various ways of getting information the consumer has got a vast information reserve at hand. Getting information concerning competing suppliers is quite simple. For this case, the consumer is free to agree to a choice of law article on “a take-it-or-leave-it basis”. The customer can really leave a contract that do no not suit him and seek for some other suppliers in some other countries or in same country where he resides or seek for suppliers who can permit the law where the consumer resides to be applied. (Kaczorowska, 2003) For example in a case where business is being carried out online, then the contract of supply that is online, the link with the consumer’s residence country is weak, since there isn’t physical delivery to the location of the customer and the services which are provided at the fortuitous place are information resource. Thus, it is the location of supplier’s business that has largely substantial link to the contract and also the law of that particular country should be applied in the absence of a choice, provided the supplier has informed the consumer about that place. If he fails to do so, the burden of ascertaining a physical location from a network address can not be placed on the consumer, thus the law of his residence should be applied regardless of its weak relation. Yet again, where by the supplier has, through the considerable content of supplier’s marketing, made the impression that supplier subjected himself to consumer's residence law, then that law should be applied and the two parties should not be permitted to derogate from this because of a choice-of-law article. Formal validity Article 9 states that a contract done among parties in the same nation is officially legitimate if the contract satisfies the official requirements of the applicable law or slaw of the country where the contract is finished. A contract finished among people who are in dissimilar countries is officially legitimate when it satisfies the official needs of applicable law or law of one of these countries. Where a contract is closed via an agent, the nation in where the agent acts is the pertinent nation for the functions of the previous tests. However a contract involving immovable assets is always subjected to the mandatory provisions. Transfers of obligation Article 12 of the convention entails voluntary assignment. If the rights or obligations are transferable, the manner of the association among the assignee and the debtor that result from such transfer, the setting under where the task can be summoned against the debtor, any issue whether debtor's duties have been undertaken, are decided through the Applicable Law of the initial accord. The Applicable Law of the transfer will decide the joint duties of assignor and assignee as in opposition to the third party, i.e. “the debtor”. Article 13 of the convention involves subrogation so as whether a third party might implement an existing accountability owed to a “creditor” by a “debtor” is decided by reference to the law that governs the debtor's obligation to satisfy the creditor. (Hesselink, 2000) Article 4 is the most controversial aspect Another problem with the presupposition in Article 4(2) of the Rome convection is that it can be very synthetic and may not be in according to the parties’ practical expectations as to the law being applied (that is the ultimate goal to which the regulations of private international law endeavour). In fact, in accordance to the growth of international markets and cross-boundary services provision, the country where the supplier of goods or service supplier dwells may have extremely little relationship with the contract. In many cases the article 4 (2) will not agree with what the two parties sensibly expected. For instance, it could be more than a tax haven, or the dwelling of a mother company which will be indeed performing the contractual services via a locally based subsidiary. (Hesselink, 2000) System of law should govern in the absence of an express choice of law. Neither should this reform cause alarm in the wider business society, Lawful businesses who wants to do cross boundary business have a clear-cut choice which is explicitly to negotiate for a law of their choice to govern them (that will afterwards be agreed upon, subject to the consumer protection rules outlined below); or to make no express stipulation for a choice of law. Hesselink, (2000) makes it clear that if an undertaking fails to make any express choice, there is nothing inherently unfair in holding that undertaking to a system of law which would accord with both parties’ reasonable expectations. (Hesselink, 2000) This is an unfortunate outcome. furthermore, it simply plays into the trap of “cowboy” contractors, who normally are encouraged to put up businesses in jurisdictions that provide a lesser amount of redress for buyers of goods or services; because such a system of law will afterwards be applied as default by virtue of Article 4(2) supposition, devoid of the “cowboy” having to specifically specify for it (which might scare away the buyers). (Hesselink, 2000) Thus it follows that from the above, if by anything; the presupposition in Article 4(2) needs to be weakened, and not strengthened. Some other connecting aspects will generally be more possibly agreeable with the parties’ sensible expectations. The European Union so far has made a conclusion in a major conflict of law by signing the Rome convention which is to be applied to contractual obligations in the union countries. The current European countries has seen the emergence of a modern supranational entity; the European Union. Even though the EU at present has not achieved the rank of a “United States of Europe”, its federal system has a distinct similarity of that of US, which combines a measure of economic and also political unity with lawful diversity. (Hesselink, 2000) Given the amount of interaction among its members, the EU was destined to yield proposals in the conflict of laws in Europe. At present the European Union has completed two most important conflict of laws conventions: the Brussels Convention of 1968, on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, and (2) the Rome Convention of 1980, on the Law Applicable to Contractual Obligations. therefore, the European union whereas not codifying the whole field of conflicts law, have, through ways of international conventions, dealt with the three of the issues covered by the conflict of laws which are, judgments recognition, jurisdiction, and choice of law. (Hesselink, 2000) The Rome convention has 34 distinct articles which were drawn up to give different information on specific issues. For the purpose of this paper we shall review the first 10 as stated in the convention In Article 4 (1) the second sentence refers to “depecage” in certain circumstances. The proposal encapsulated here thus raises hard questions. Even though the courts are given an encouragement to exercise the discretion to disunite as slight as it is possible, there aren’t any guidelines given on how and also when the courts are to exercise this said discretion. This can therefore render the judicial procedure more complex. (Hesselink 2000) The Article deviates from the tradition of Member States generally by adopting of suppositions in sections (2) (3) and (4) via virtue by which the law is to be found. Yet, not any of these suppositions is definite. As, in accordance with Article 4 section 5 the suppositions are not to be regarded if it seems from the whole situations that the contract in question is very closely linked with a different country (one then resorts back to Article.4 (1) Section (2) spells out the “general” assumption for making the agreement local. The section falls into two elements. One element begins by giving a determination on the performance which is an attribute of the contract by; having made a decision that, the law regarding the usual residence of the party that is supposed to affect this particular performance is applied. “Characteristic performance” is therefore a supplementary linking factor, the determination is supposed to direct to the finding of the law that will govern. (Lando et al, 2000) Through including of this supplementary linking factor has been proven to be among one of the very contentious features of this Rome Convention. The convention gives no hints as to what should be undertaken as the typical performance. According to the Giuliano Lagarde report, it points out that it is generally the performance where by payment is considered due. However, it is not as simple as it might appear. (Hanotiau, 2007) Putting aside the complexity to apply the conception of agreements which don’t entail the payment of cash, there is, certainly an atmosphere of unreality concerning such an examination. Take, for instance, a loan contract. Can it in reality be said with all the self-confidence that the providing of the loan to a person and not the loan repayment constitutes the core of importance and the socio-economic meaning of the business deal? (Hanotiau, 2007) Even in a case where typical performance may be revealed, it isn’t the position of that particular performance that is supposed to supply the existing law. Rather, reference should be undertaken to the “personal law” of the typical performer. It is agreed that, it is not only improper in the perspective of business contracts, but fairly often hard to determine as well. Hanotiau (2007) observes that, unless an assumption is simple to be applied it won’t generate the sureness to determine the objective law to be applicable. Unluckily, the combination outcome of its two appendages is that the one in section 2 is a compound one, involving substantial definitional difficulties. For this very reason, quite often it will be considered to be not applicable by the courts which will arrive at a judgment after a careful deliberation of the evidence of each case according to Article.4 (5). There are “special” assumptions for specific contracts that are conductive to sureness or uniformity. In situations where the subject issue is a right in immovable or a right to employ immovable property, the law to be applied will be “lex situs”(Article.4 (3)). Where the case is of carriage of some goods, then the law to be applied will be considered to be that of the transporter’s location of business, this will be is either the location of loading, or the location of discharge, or the main location of business of the consignor (Article.4 (4)). The moment a contract considered as an international contract, the Rome Convention offers the standard of the liberty of the parties to decide the law which is applicable even in cases where there isn’t correlation with the contract as indicated by the detachment that it is a national law and not a soft law such as the recent law merchant. (Hanotiau,2007) In case of absence of a direct selection, article 3 of the Rome Convention directs the court to deem next step whether an unstated selection of law by the parties concerned could be ascertained. Accordingly it could be if for instance there weren’t direct selection in that particular contract, however a selection of law section in the common terms. Supposing there is no any selection, article 4.1 picks as the appropriate law “the law of the country with which the contract is most closely connected”. The closest correlation is assumed in support of the law of the state of where the party resides at the moment of the closing of the contract. The party that is to undertake the performance that is typical of the contract will have to state the applicable law. However, article. 4 part 5 states that this assumption is revocable if it emerges from the entire situation that the contract is very closely linked with another state. This could be the case for instance for swap transactions were it is hard to establish which bank undertakes the typical performance(Hanotiau,2007) Conclusion The Rome Convention on the Law Applicable to Contractual obligations is a convention which was signed in Rome by European union countries with an purpose of creating a harmonized if not a unified system of law within the union to avoid conflict of laws. No matter the final objective of the harmonization of European contract law might be; whether it can be perceived as a input to the formation of a European common code or just as ways of furthering their market integration and thus we are to be satisfied with a business/consumer apparatus, the formation of a harmonised system of common contract law could be a important advancement, in terms of work and also the level of contribution that will be requisite. The formation of a consistent set of doctrine is evidently the requirement for all additional progress and thus although the Rome convention remains with some limitations it is a good progress in right direction in solving the conflicts of law. However, Rome Convention is seen to have failed to pay enough attention to substantive guiding principle on considerations and also rational solutions. Doctrinal deliberations and “metaphysical subtleties” instead of the requirements of international business prevailed in the convention. Worried with conflicts system of belief and the ever obscure pursuit, for “decisional harmony”, the drafters of the Rome convention paid very little consideration to practicalities. As an end result, the Rome Convention does very little to advance the materialization of a much required European contracts law Reference: Briggs, F (2002): The Conflict of Laws, Clarendon Law Series, OUP Collier, J.G. (2001): Conflict of Laws Cambridge University Press, Cambridge , England Craig, de B. 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