RATIONALE AND APPLICATION OF ARTICLE 4(1)(h) OF ROME I REGULATION Caroline Kleine Oslo, 4 May 2018
2 (Rome I) Article 4 (1) (h) Applicable law in the absence of choice 1.Totheextentthatthelawapplicabletothecontracthasnotbeen chosen in accordance with Article 3 and without prejudice to Articles 5 to 8, the law governing the contract shall be determined as follows: (h) a contract concluded within a multilateral system which brings together or facilitates the bringing together of multiple third party buying and selling interests in financial instruments, as defined by Article 4(1), point (17) of Directive 2004/39/EC, in accordance with non discretionary rules and governed by a single law, shall be governed by that law.
What is a multilateral system? II. Les clauses monétaires MiFID II, art. 4 1 (19): multilateral system means any system or facility in which multiple third party buying and selling trading interests in financial instruments are able to interact in the system Multilateral systems are MTFs (Multitrade Facilites) or OTFs or (Organised Trade Facilities) regulated markets. 3 operated and/or managed by: an investment firm or a market operator
What are financial instruments? II. Les clauses monétaires No definition in Rome I Regulation But a list section C of MiFID II) 4
The Context Travaux préparatoires 2005: No mention at all in the initial proposition of the Commission 2006 : reference is made to contracts within financial markets 2007: technical word multilateral systems is preferred Other international instruments: The 2006 Hague Convention on Certain Rights in Respect of Securities held with an Intermediary Unidroit Convention on Substantive Rules For Intermediated Securities (The Geneva Convention adopted in 2009)
The Rationale One market one law Same law applicable to all participants, to all transactions, irrespective of habitual residence of the parties Coincides with law applied by the national financial authorities regulating the markets locally) ( organizational law as opposed to transactional law )
Application How does the conflict of law rule operate? Connecting factor: contract concluded within. governed by the law that governs that market Determined by another instrument Which contracts? All types of contracts, except for contracts for the provision of services between a financial intermediary and a client.
Is Art. 4(1)(h) really necessary? Contracts concluded within multilateral systems governed by: Operator s Rules (e.g. Euronext s Rule Book : 1.7. GOVERNING LAW 1701 All provisions in this Rule Book in respect of orders and/or Transactions executed, deemed to be executed or entered into on the respective Euronext Market and all matters related thereto and, subject to Rule 1702, all other provisions of the Rule Book shall be governed by and construed: (i) in respect of Euronext Amsterdam, in accordance with the laws of the Netherlands and, without prejudice to any agreement to go to arbitration, shall be subject to the exclusive jurisdiction of the Dutch courts; (ii) in respect of Euronext Brussels, in accordance with the laws of Belgium and, without prejudice to any agreement to go to arbitration, shall be subject to the exclusive jurisdiction of the Belgian courts; ( ) National Financial Authority Regulation (e.g. Règlement general de l Autorité des marches financiers National Legislation (e.g. Code monétaire et financier)
The missing rule... in Rome II A conflict of law rule relating to financial tort Given the uncertainty of the localization of the event giving rise to the damage for the application of art. 7(2) Brussels I Recast Regulation (art. 5(3) Brussels I Regulation) and the Lugano Convention (ECJ Case law: Marinari/ Kronhofer/ Kolassa/Universal Music) A specific conflict of law rule for financial tort should be envisaged
Takk! ckleiner@unistra.fr