Tagged: Article 14 Rome I Regulation

One rule to rule them all: the report on Rome I and voluntary assignment

As was pointed out in an earlier post, the Commission report under Article 27(2) Rome I Regulation (Regulation (EC) 593/2008 on the law applicable to contractual obligations) will be based on a recent study by the BIICL titled “Study on the question of effectiveness of an assignment or subrogation of a claim against third parties and the priority of the assigned or subrogated claim over a right of another person”. Although the title is a bit misleading (as the study itself indicates, the study deals not with the effectiveness but with the law applicable to the effectiveness of an assignment or subrogation of a claim against third parties and to priority issues), this is a thorough and excellent study. The report consists of a collection of statistical data, an EU-wide empirical analysis, national reports from twelve Member States and a comprehensive analysis of the question of whether it would be desirable to amend Art. 14 Rome I Regulation to include the third-party aspects of assignment.

The results of the questionnaire show that a vast majority of stakeholders who addressed this particular issue indicated that a uniform EU solution would be of positive impact to their business. Reduction of legal costs and due diligence, increased legal certainty and higher transaction volumes are regarded as positive effects of the introduction of a uniform rule on the property aspects of an assignment. In view of this, it seems highly unlikely that those who argue in favour of preserving the status quo (the description of which can be found in the earlier post) will win the day. The maxim ‘any rule is better than no rule at all’ wins at the expense of the principle ‘no rule better than a bad rule’. In other words,  legal certainty is a commodity to be valued in itself and there is a general need for a rule that covers all proprietary aspects of assignment. Which rule will it be?

Continue reading

Rome I and third-party aspects of voluntary assignment

Under Article 27(2) of the Rome I Regulation (Regulation (EC) 593/2008 on the law applicable to contractual obligations), the Commission is charged with the task to submit to the EP, the Council and the European Economic and Social Committee a report on the proprietary aspects of voluntary assignment. The Commission report under Article 27(2) Rome I will be based on a comprehensive study that has just been released titled “Study on the question of effectiveness of an assignment or subrogation of a claim against third parties and the priority of the assigned or subrogated claim over a right of another person”. This study shall serve as a potential future proposal to amend Art. 14 Rome I Regulation to provide for a new harmonized conflict of laws solution for the third-party aspects of assignment. Why was this necessary?

The rule in art. 14 Rome I Regulation is concerned with the law applicable to assignment of debt and subrogation. As far as the third-party aspects are concerned however, no uniform solution to a conflict–rule could be agreed upon in the drafting process of Rome I and, consequently, the Rome I Regulation (save a reference in recital 38) doesn’t regulate the proprietary aspects of assignment. As a result, Member States currently adopt different approaches. The current incomplete conflict of laws solution in Article 14 Rome I gives rise to various problems, as described in the study. To end this situation, the Commission has to deliver a report (which, incidentally, was due 17 June 2010) accompanied with, if appropriate, a proposal to amend the Rome I Regulation and an impact assessment.

When the Commission will deliver its report is unclear at this point but there is no doubt that it will rely heavily on this study. We will go into more detail in subsequent posts.