A proposed European Union cross-border trade law that would change which nation's laws are used to resolve disputes would force companies to navigate regulations.
The legislation, known as Rome 1, would force companies to resolve contract disputes under the law of the country where the complaint arose, the Confederation of British Industry said in an e-mailed statement today. Since 1980 European companies have been allowed to choose which EU legal system they want to abide by for contract disputes. The law will make businesses think twice before selling outside of their home market, according to the CBI, which represents UK employers. Currently, many companies choose English law, it said. EU regulators responded that the measure will simplify business. If the law is adopted businesses would have three choices, CBI Deputy Director General John Cridland said. They can „spend time and money getting to grips with the conflicting legal regimes of each member state they trade with, chance their arm that the processes will reach the required standards, or most worryingly, stop trading with some countries altogether,” he said in the statement.
Chris Warren-Smith, a lawyer at London-based Barlow Lyde & Gilbert, agrees with the CBI's assessment. „The old laws are perfectly good, so if they ain't broke don't fix them,” he said in a telephone interview. „This probably hasn't been properly thought through and is an attempt at harmonization that won't help to create a single market,” he said.” The legislation clarifies rather than changes existing rules that haven't hurt British exporters, especially in electronic commerce, said a spokesman for the European Commission. The EU agency drew up the measure to codify an existing international agreement. The UK retains an „opt out” from the legislation in any case, the spokesman said. „The proposed rule will enhance consumers' trust in cross-border e-commerce without introducing additional burdens for professionals,” said the spokesman, Friso Roscam Abbing, in an e-mailed statement. The proposal „offers a new, simple and foreseeable conflict rule instead of the rather complicated system involving the simultaneous application of two different laws to a given contract.” (Bloomberg)