The prospect of an EU Regulation on the law applicable to non-contractual obligations is moving closer, with agreement on a Council Common Position looking to be imminent as we went to press.

Known as Rome II, the proposed Regulation would for the first time harmonise European choice of law rules in areas such as negligence, intellectual property infringement, unfair competition, product liability and a host of others. Most controversially, given their implications for cross-border freedom of speech, rules for defamation and breach of privacy would have been included. However it now seems likely that, due to a failure of Member States to reach agreement, these areas will be excluded from the proposed Regulation altogether.

Rome II is of particular concern to online publishers and traders because of its tendency to adopt so-called country of destination rules, under which defendants could be liable under the laws of any country where damage or harm takes place. Country of destination rules bear particularly harshly on online operators because of the cross-border accessibility of their websites and the relative ease with which local courts can be persuaded that harm has been suffered in their country.

Online operators are also concerned that the regulation could prejudice the operation of the existing E-Commerce Directive. The E-Commerce Directive promotes, within Europe, a country of origin principle, i.e. favouring the laws of the Member State in which the supplier is based.

If the Council does adopt a Common Position the draft Regulation will go back before the European Parliament for a second reading. A parallel initiative for a Regulation on contractual obligations, to replace the 1980 Rome Convention, is also in progress.