EU Choice of Law Rules: Which Status Before National Courts?

In this post, Marylou Françoise presents her doctoral work on the role of courts in choice of law from an EU law perspective (‘L’office du juge en conflit de lois : Étude en droit de l’Union européenne’). This is a important issue for all EU PIL experts and obviously a recurring topic in France (see here, here, here and here).

Introduction

This work raises a topical issue at the crossroad of private international law, EU law, and civil procedure. It aims at rethinking the national procedural system of EU Member States to accommodate more efficiently European choice-of-law rules. The status of EU choice-of-law rules before national courts can legitimately be questioned in the light of the objectives pursued by these rules.

The Functional Nature of the EU Choice of Law Rules

EU choice-of-law rules are part of a specific policy of the European Union based on Article 81 of the Treaty on the Functioning of the European Union. According to this provision, the EU has the competence to develop judicial cooperation in civil matters having cross-border implications. The main goals are to encourage accessibility to justice for European citizens, to offer a predictable justice based on clear articulation of national provisions and to achieve international harmony of solutions. In this context, the European regulations applicable to conflict-of-laws are adopted to ensure that the same national law is designated irrespective of the national court hearing the case. Thus, EU choice-of-law rules have a functional nature. To achieve their goal, they need to be applied uniformly. Yet, there is no common procedural framework along with the European regulations in conflict-of-laws matter. Their uniform application depends on various national procedural provisions of the Member States.

The National Heterogeneity of Procedural Rules in Conflict-of-laws

According to the Latin maxim forum regit processum, the procedural status of choice-of-law rules depends on the national law of the court hearing the case. Several studies, including the study conducting by the Swiss institute of comparative law, have shown the diversity of national procedural provisions. The French system is particularly complex because it requires that courts distinguish between rights according to their availability (i.e. whether the parties may dispose of their rights). On 26 may 2021, the French supreme court for private and criminal matters added a new criterion that requires to apply ex officio EU choice-of-law rules when they are mandatory. For the first time (to the best of our knowledge), a national court made a distinction between conflict-of-law rules according to their European origin. If this ruling has to be welcomed according the EU principles of primacy and effectiveness to which the French court referred, the regime of the conflict-of-laws rules becomes more complex : only the choice-of -law rules which do not allow a derogation shall be applied ex officio. Yet, the vast majority of EU choice-of-law rules may be derogated from.

The French system reflects the complexity to define the procedural status of the European conflict-of-laws. More broadly, according to the national court hearing the case, the application of EU choice-of-law rules become unpredictable. The ex officio implementation of EU law directly depends on the competent court. This seems to be in complete contradiction with the purpose of EU choice-of-law rules. The unpredictable nature of the choice-of-law rule is strengthened by the lack of a European corrective mechanism.

The Lack of European Procedural Rules in Conflict-of-laws

The principle of procedural autonomy of EU Member States allows them to adopt procedural provisions to implement EU law. However, this principle is bounded by two conditions : equivalence and effectiveness ( see the Comet and SpA San Giorgio cases). These requirements are generally used by the European Court of justice to limit the autonomy of Member States. Regarding the ex officio application of EU provisions, the Court provides for a flexible approach. In its Van Schijndel case, the Court of justice held

Community law does not require national courts to raise of their own motion an issue concerning the breach of provisions of Community law where examination of that issue would oblige them to abandon the passive role assigned to them by going beyond the ambit of the dispute defined by the parties themselves and relying on facts and circumstances other than those on which the party with an interest in application of those provisions bases his claim.

In other words, national courts shall apply ex officio the European provision only if the parties ask for it. An exception is made for certain provisions in consumer law (see the Pannon case). The Court justifies this specific position by the public interest attached to European consumer provisions.

Against this background, the control of the procedural autonomy of the Members States led by the ECJ is not sufficient to establish an efficient system of conflict-of-laws. The intervention of the EU is clearly incomplete to pursue the goal of a European civil justice area. Therefore, how can EU choice-of-law rules achieve international harmony of solutions if there is no common provisions to support their application ? In this context, a new framework should be drawn up to ensure a uniform application of EU choice-of-law rules.

A Critical Thinking on a European Procedural Status of Choice of Law Rules

Firstly, it is necessary to analyse the EU acquis regarding the application of choice-of-law rules, in particular the overriding mandatory provisions, in cross-border situations and the parties’ freedom to choose the applicable law. The application of national mandatory rules is generally strictly controlled by the European Court of justice (see the Nikiforidis case). At the same time, the identification of EU mandatory provisions is confusing (see the Unamar and Da silva cases). Then, the possibility for the parties to choose the applicable law is widely accepted by European conflict of laws rules (in contractual and non-contractual matters) – except for articles 6-4 and 8 of the Rome II Regulation. EU choice-of-law rules become optional for both the parties and courts. Indeed, if the European provisions allow a derogation, they are not compulsory for the judge according to national procedural systems. These two examples illustrate that EU law is already influencing the national application of EU choice-of-law rules. However, this influence is incomplete and flawed. The procedural status of the European rule depends on the interpretation by national courts of the mandatory nature of a law or of the existence of a choice of law agreement by the parties.

EU choice-of-law rules must be applied consistently. They should have a uniform procedural status. The latter can depend neither on the substantive nature of the respective rights, nor on the national interpretation of the mandatory nature of the rule. EU choice-of-law rule must be mandatory for national courts. This solution may be seen as radical in particular since the freedom of the parties is a key component of civil procedure. It could also generate an increase of procedural costs because of the recurrent application of foreign laws. That is why this obligation to apply the choice of law rule ex officio should be limited. Party autonomy wit respect to the applicable law should be maintained but it should be exercised after the ex officio application of the choice of law rule by the court. This private choice must also be strictly framed by the choice-of-law rules themselves. The material scope of the procedural choice should comply with the individual choice allowed by the EU regulations and the procedural choice should be express. In other words, the EU choice-of-law rules should be applied automatically by the Court and parties should be informed of the potential application of foreign law.

This proposition can be loudly criticised according to the civilian procedural system. National courts cannot be a substitute for negligent litigants and several questions arise. How much litigation will cost ? How long it will last ? Are national courts well trained in European private international law ? Can they have an easy access to foreign law ?

At the same time, these arguments seem outdated. EU law is now part of national law in the Member State. The rise of international disputes requires full awareness of EU provisions and a close collaboration between EU judicial systems.

The uniform application of EU choice-of-law rules is the only way to achieve the objective of a European civil justice area. In this context, the PhD dissertation concludes by providing a proposal for a European regulation on a common procedural frame in choice of law. This proposal – based on Article 81-1 and Article 81-2 c), e) and f) of the Treaty on the functioning of the European Union – could be included into the existing regulations on choice of law. It could also appear in a future European code of private international law or in a regulation on procedural aspects of choice of law rules.

This proposal finally requires an inevitable adaptation in practice. Judicial practitioners, such as judges and lawyers, must be trained in European private international law. The ex officio application of EU conflict-of-law rule would be a revolution for many national procedural systems. But it seems to be a necessary evolution for the European judicial system.