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Contractual Obligations

Volume 450: debated on Tuesday 10 October 2006

To ask the Minister of State, Department for Constitutional Affairs whether the UK will opt out of implementing the European Commission’s final proposal for a regulation on the law applicable to contractual obligations. (92019)

The European Commission’s proposal for a regulation on the law applicable to contractual obligations (Rome I) was published in December 2005. Under Article 1 of the Protocol in the EC Treaty dealing with the position of the United Kingdom and Ireland in relation to Title IV measures (which covers Rome I), the UK had until 9 May 2006 formally to opt in to the negotiations on this proposal. In view of the UK's serious concerns about some aspects of this proposal the UK decided not to do so. This means that the UK will not automatically be bound by Rome I when it is finally adopted by the Council. Whether at some later stage, the UK will opt in to the adopted instrument (as it may do with the agreement of the European Commission) will depend upon the final text of the regulation. The UK is currently participating in the negotiations with a view to obtaining the best possible outcome for the UK.

To ask the Minister of State, Department for Constitutional Affairs what assessment she has made of the potential (a) financial and (b) economic impact on UK commercial businesses of the European Commission's final proposal for the implementation of a regulation on the law applicable to contractual obligations (Rome 1); and what steps the Government are taking in response to Rome 1. (92020)

Following the publication of the European Commission’s proposal for a regulation on the law applicable to contractual obligations (Rome I) in December 2005 the Government consulted UK stakeholders with a view to informing the Government’s decision as to whether to opt in to the proposed regulation. The responses received indicated that opting in to the proposed regulation on the basis of the proposed text could have significant adverse economic consequences for the UK and the EU. On this basis the Government decided not to opt into the Rome I regulation.

Whether, ultimately, the UK will decide to opt in to the adopted instrument (as it may do with the agreement of the European Commission) will depend upon the final text of the regulation. Although unable to vote, the UK is currently participating fully in the negotiation of the text with a view to obtaining the best possible outcome for the UK.

The Government are working closely with stakeholders regarding the financial and economic impact of the proposal and will continue to do so as the negotiations progress.