Commercial Expectations and the Rome Convention

Extract

Which law governs a contract where none has been chosen by the parties? The solution lies in Articles 3 and 4 of the 1980 Rome Convention on the Law Applicable to Contractual Obligations. Article 3 allows a court to infer the parties’ intentions from the circumstances. But such intentions must be “real”, not presumed, and in the absence of genuine consent, Article 4 provides that the applicable law is that most closely connected with the contract. Under Article 4(2) this is (in effect) the law in force where the supplier of goods or services is located, or (if relevant) has a branch—for the supplier’s performance is invariably “characteristic” of a contract, in the sense intended by the Convention. But any clarity thereby won is immediately lost because the presumption is rebuttable under Article 4(5) whenever a contract is better connected with another law, exposing Article 4(2) to the risk of constant challenge. The presumption is especially vulnerable because it will so seldom be appropriate to apply the supplier’s law, the law of the place of performance frequently having a stronger claim to govern. Perplexingly, it is a presumption more apt to be rebutted than applied.