As a result, companies and financial institutions that conduct cross-border transactions in which an EU jurisdiction can exercise jurisdiction should become familiar with the new rules and, when entering into new contracts, negotiate a legal choice clause with respect to non-contractual and contractual obligations. If the event suffered by the damage has already occurred, the new rules allow the parties to choose the law applicable to the dispute after the fact, provided they can agree. Since the new regulation provides that the applicable law also regulates factors such as the burden of proof and the nature and extent of compensation for losses incurred (a significant departure from the previous position), the contracting parties should carefully consider this choice of clauses. When an agreement is reached by commercial parties, “contractual” obligations are generally defined in a written agreement. However, the parties may also have obligations under common law that are not included in the terms of the contract. These “extra-contractual” obligations may arise with respect to both, but the advantage of such a universal application is that non-EU parties have the option of choosing an applicable right by which they know some of their non-contractual obligations. This should enhance the legal security of the contracting parties and ensure the consistency of the laws to which they are subject. In beximco Pharmaceuticals Ltd -v- Shamil Bank of Bahrain EC,5 the provisions of the current law provide that “subject to the principles of glorious Sharia A, this agreement is submitted and interpreted in accordance with the laws of England.” The Court of Appeal held that the only relevant right was England`s law. Rome II is a regulation which defines the regime that governs the law applicable to non-contractual civil and commercial obligations.
The regulation came into force on 11 January 2009 and is enforced by the courts of all Member States except Denmark. The problems encountered in this regard are highlighted by Mr. Justice Mann`s comments in the case of Apple Corps Ltd -v- Apple Computer Inc.2.