In this paper, we analyze the impact of the Rome II Regulation regarding the law applicable to non-contractual obligations on cases of cross border liability regarding banking and financial services. In view of the current state of harmonization of substantive law in the European Union, which obeys to the home country rule, the conflict rules as contained in the Rome II Regulation may potentially undergo some interference from sectoral harmonization directives.

We illustrate this with regard to liability issues arising of the MiFID conduct of business rules and the European Prospectus Directive. We conclude that the substantive harmonization of conduct of business rules and prospectus requirements do not formulate a conflict rule regarding liability issues. The home country principle does at most involve the law of the home country in setting the standard of care or the information duty with a view to determining possible liability. The provisions regarding damages and causation will, in conflict of law terms, continue to be determined by the Rome II Regulation.

A detailed analysis of the conflict of law regime regarding prospectus liability, analyzed in part 2 of this paper, illustrates the quite complex interrelationship between substantive law harmonization and conflicts of laws in a intra EU context.