References will be permitted from 1st March when a new contracts law comes into force in the UK, the Department for Constitutional Affairs announced.
The change in procedure relates to the Rome Convention of 1980, which deals with disputes over international contracts. The UK and all the other member states of the EU (except those 10 countries which acceded last year) are parties to the Convention.
The Convention only came into force in 1991. It allows the parties to a contract to choose the law applicable to their contract, and to select the court that will hear disputes arising from that contract.
If the parties have not stated their choice of law, the Convention says that the contract will be governed by the law of the country with which it is most closely connected – usually the habitual residence of the party performing the contract, or the place of central administration for businesses.
However, the Convention makes no provision for a judicial body to hear disputes involving its interpretation, leaving these issues to be decided by individual national courts. This, according to the European Commission, inhibits the co-operation and uniformity of decision between Member States' courts.
This changed with the signing of a Brussels Protocol in 1988, paving the way for national courts to refer cases to the European Court of Justice – albeit the Protocol's ratification process took until May 2004. The UK's new regulation brings this Protocol into force across the country with effect from 1st March 2005 by unlocking a key provision in a contracts Act of 1990.