The Choice-of-Law Rules of the European Community Regulation on the Law Applicable to Non-Contractual Obligations: Simple and Predictable, Consequences-Based, or Neither?*

By Weintraub, Russell J. | Texas International Law Journal, Summer 2008 | Go to article overview

The Choice-of-Law Rules of the European Community Regulation on the Law Applicable to Non-Contractual Obligations: Simple and Predictable, Consequences-Based, or Neither?*


Weintraub, Russell J., Texas International Law Journal


I. DRAFTING CHOICE-OF-LAW RULES

The European Community Regulation on the Law Applicable to Non-Contractual Obligations ("Rome II") will take effect on January 11, 2009.1 This regulation is part of a widespread effort to draft new choice-of-law rules. For example, in 2007 a new conflict-of-laws code took effect in Japan.2 China is drafting a comprehensive civil code, which includes choice-of-law rules.3 What should be the objectives of these drafting projects? Should the new rules, as law-and-economics scholars urge, be simple and afford clearly predictable results? Or should choice-of-law rules endeavor to select the jurisdiction that experiences the consequences when the chosen law is applied? A third possibility is to draft rules that provide substantial predictability and are likely to be consistent with a consequences-based approach. Rome II falls into this third category: reasonably predictable results that are likely to give effect to the policies of the jurisdiction that will experience the consequences when the chosen law is applied.

There is now an extensive law-and-economics literature devoted to choice of law. Sections II and III summarize this economics approach to drafting conflicts rules and evaluate Rome II under this perspective. Sections IV and V outline a consequences-based approach to choice-of-law and appraise the extent to which Rome II is consistent with this methodology. The Appendix contains the complete text of the Regulation.

II. LAW-AND-ECONOMICS SCHOLARSHIP ON CHOICE OF LAW

In the third edition of his classic work, Economic Analysis of Law,4 Judge-formerly Professor-Richard A. Posner, inserted a one-page section on "Choice of Law."5 He poses a case in which "a resident of State A, while driving in State B, injures a resident of B who sues."6 He states that the law of B should apply because that state has "a comparative regulatory advantage in regard to accidents which occur in B."7 It is likely that by "comparative regulatory advantage" he is referring only to rules of the road, such as speed limits: "Presumably B's Rules are tailored to driving conditions-the state of the roads, weather, etc.-in B."8

Judge Posner goes on to decry the fact that the place of tort rule "has given way in most states to a more complex analysis of the respective 'interests' of the states affected by the suit."9 He then states, "The issue ought not to be interests; it ought to be which state's law makes the best 'fit' with the circumstances of the dispute."10 When explaining what he means by "fit," however, he engages in the very interest analysis that he purports to disapprove, including an inquiry into the purposes of the rule in question.11 He concludes by changing the hypothetical with which he began to "a case where two residents of state A are involved in a collision in state B."12 Judge Posner then departs from the place-of-tort rule in a manner that devotees of interest analysis would applaud: "The tort rules of B will be better adapted to location-specific factors such as the state of the roads and climate conditions, but the tort rules of A will be better adapted to person-specific factors such as ability to take care."13

This short and somewhat self-contradictory statement prompted many law-andeconomics scholars to apply their analyses to choice of law. The key difference between "traditional" and law-and-economics conflicts scholarship is the importance given to choice-of-law rules that produce easily predictable results. In Reich v. Purcell, Chief Justice Traynor of the Supreme Court of California, a devotee of interest analysis, states, "ease of determining applicable law and uniformity of rules of decision, however, must be subordinated to the objective of proper choice of law in conflict cases, i.e., to determine the law that most appropriately applies to the issue involved."14 Most law-and-economics scholars would disagree. They prefer clear choice-of-law rules, such as the place of injury for torts and the situs of land for issues concerning real estate. …

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