EU contract laws could burden UK firms

9 February 2007
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09 February 2007 | Antony Barton

UK firms selling goods and services across the EU might soon have to abide by the trade laws of all member states, under proposed new regulations.

The legislation, known as Rome I, means firms would need to navigate the legal regimes for up to 27 different countries.

John Cridland, deputy director-general of the Confederation of British Industry (CBI), has urged EU policy makers to reconsider the legislation. He said: "Businesses will have three choices: spend time and money getting to grips with the varied and conflicting legal regimes of each member state they trade with; chance their arm that their processes will meet the required standards; or, most worryingly, stop trading with some countries altogether."

The CBI said financial and legal services companies that draw up contracts in accordance with UK law on behalf of other firms could be particularly affected by lost business.

Paul Abbiati, a legal consultant for PMMS and member of an EU group which discusses contract law proposals, has been invited to speak at a conference in Rome next week to give a UK viewpoint on the proposed changes.

He explained what would happen if the proposed change comes in: "A UK firm that sells its products to a customer in Paris under English law would find itself liable under French law for any complaint. Any court case would be held in a French court, under French law with the proceedings in French. The same situation would apply to every EU member state the firm accepted an order from."

Rome I is at the early committee stage and, if successful, is expected to come into effect within the next couple of years.

SMfeb2007

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