UK: "Rome Revisited" - Further Thoughts on Choice of Law

Last Updated: 29 September 2010
Article by Elliot Woodruff and Carl Walker

F R Lurssen Werft GmbH & Co KG v. Warren E Halle [2010] EWCA Civ 587

The English Courts have recently considered the question of the applicable law and jurisdiction under a contract where no express choice of law and jurisdiction is stated. Of particular interest is the Court's analysis of the role of the Rome Convention in assessing the law by which a contract will be governed and the conclusion reached both at first instance and subsequently by the Court of Appeal that the provisions of related contracts may be taken into consideration when considering whether the parties have impliedly made a choice of law.


The Claimant was a German shipbuilding company and the Defendant was an American citizen. The parties entered into two separate Vessel Construction Contracts ("The VCC's") for the construction of motor yachts, both containing clauses providing that the governing law would be English law and that any disputes would be resolved under the rules of the London Maritime Arbitrators Association ("LMAA"). Around three years after execution of the VCC's, the parties entered into a Commission Agreement, which provided that if either of the vessels were purchased by a client introduced by the Claimant then the Claimant would be entitled to a commission of 5% of the sale price. Unlike the VCC's, the Commission Agreement was silent as to the applicable law and jurisdiction.

One of the yachts was sold to a buyer introduced by the Claimant and the parties entered into an agreement to terminate the VCC in respect of that vessel without any further liability on either party. The termination agreement was also stated to be subject to English law. The Defendants failed to pay the 5% commission that the Claimants claimed was due and commenced proceedings. The case came before the Commercial Court following an application by the Defendants challenging the jurisdiction of the English Court to hear the dispute. There were three main issues for consideration:

  1. Whether the Commission Agreement was governed by English law;
  2. Whether there was a serious issue to be tried; and
  3. Whether England was the forum conveniens

The Court had little difficulty in deciding that there was a serious issue to be tried and that England was clearly the most convenient jurisdiction for the determination of the dispute. More interesting was the Court's consideration of the governing law.

1.The Governing Law

In considering whether English law governs the Commission Agreement, the relevant statute is The Contracts (Applicable Law) Act 1990, which gave effect to the Rome Convention on the Law Applicable to Contractual Obligations ("the Rome Convention"). Article 3.1 of the Rome Convention provides as follows:

"A contract shall be governed by the law chosen by the parties. The choice must be expressed or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case. By their choice the parties can select the law applicable to the whole or a part only of the contract".

In the absence of a choice of law under Article 3, the law governing a contract is determined in accordance with Article 4 of the Rome Convention, which provides that the contract shall be governed by the law of the country with which it is most closely connected. On the facts of this case, it was accepted by the Claimants that, in the absence of a choice under Article 3, it would be difficult to argue that the Commission Agreement was most closely connected with England and Wales.

The question therefore was whether the Court was satisfied that the Claimant had much the better of the argument that the parties had demonstrated a choice of English law as the governing law of the contract with reasonable certainty.

The Judge concluded that a choice of English law had been clearly demonstrated. The parties had, by the VCC's, made a clear and express choice of English law and that choice was not simply an incident of the choice of arbitration to settle disputes. He considered that the VCC's were plainly closely related to the Commission Agreement, that they entirely governed the parties' prior commercial relationship and that their performance formed the factual background to the relationship created by the Commission Agreement.

Having reached this conclusion, the Judge went on to consider one further point which, in his view, reinforced the impression that there was a clear implicit choice of English law, namely that in the Termination Agreement the parties expressly chose English law as the governing law. This is an interesting comment, as it is well established that the consideration of subsequent conduct to construe an earlier transaction runs counter to principles of English law. However, the Judge took the view that it is legitimate to consider the terms of a later contract between the parties as part of "the circumstances of the case" for the purposes of Article 3.1 of the Rome Convention.

The Court of Appeal

The Defendant appealed on one particular issue, namely whether the Judge at first instance was correct in finding that the Claimants had much the better of the argument that the Commission Agreement was impliedly governed by English law. However, the Court of Appeal sided firmly with the Judge at first instance, with Aikens LJ going so far as to say, "I would therefore conclude that Lurssen Werft not only had much the better of the argument, but that the court is impelled to conclude that there has been a clear implied choice of English law for the Commission Contract".

2.Was England the Forum Conveniens?

The Judge at first instance first referred to what he described as the well established principles to be applied when considering issues of jurisdiction, namely:

  1. A Claimant must show that England is clearly the most suitable forum for the trial of the issues taking into account the convenience of the parties and the interests of justice;
  2. Where the only basis relied on by a Claimant to establish jurisdiction is that the claim is made in respect of a contract governed by English law, particular caution will be required and the burden on the Claimant of showing good reasons justifying service out of the jurisdiction is a particularly heavy one;
  3. Although different expressions have been used to characterise the nature of the jurisdiction, it is clearly recognised that it is an exceptional course to require a foreigner to litigate in the English court purely on the basis that English law is the governing law of the contract, although he noted that it may be a less exceptional course where there has been a choice of law under the Rome Convention;
  4. The fact that English law is the governing law may or may not be of importance, depending on the circumstances of the case and the relevant issues.

Having considered these principles, the Judge concluded that the English Court was very clearly the most convenient court for the determination of the issues arising under a contract clearly governed by English law. He considered that the factual issues in dispute, and thus the need to call upon witness evidence, were confined to one particular aspect of the case. The legal issues were also very likely to be determined in accordance with English law and it was likely that the dispute would involve the application of principles of English law which are not entirely straightforward.

Accordingly, the Judge held that it would plainly be sensible for this issue to be determined by a court which is experienced in dealing with such issues. Other factors that weighed in favour of the English Courts were that the parties had always communicated in English and so the need for translation would not be significant and that the parties had both been content for disputes under their other contracts to be determined by arbitration in London under the LMAA rules. It followed, in the Judge's view, that England was thus a place where they must be taken to have foreseen that disputes might be determined. The decision on this issue was not appealed.


Lurssen Werft v Halle demonstrates clearly that the courts may infer that the parties intended for their contract to be governed by the law of a certain country if that law governs a related contract in the course of commercial dealings between the parties.

It is also interesting that the Judge at first instance held that it is legitimate for the Court to look at the subsequent conduct of the parties when construing the contract under which the dispute arose. Whilst the Court of Appeal was able to find that there had been a clear implied choice of law without considering this question, if followed, this would represent something of a departure from the general position under English law that subsequent conduct cannot be taken into account when construing a contract.

It is also worth noting that the new EC Regulation 593/2008 (Rome I) is now in force and has been applicable to all contracts concluded after 17 December 2009 in all EC member States except Denmark. The new Convention amends the test for inferring the parties' intention as to choice of law so that the choice must now "be made expressly or clearly demonstrated by the terms of the contract or the circumstances of the case". It remains to be seen whether this change in wording will see a more stringent approach by the Courts in deciding whether a choice of law can be implied.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.