EU ministers have voted to establish common rules deciding which country's courts should hear cases involving more than one member state.
The Rome II regulation generally encourages parties to hear cases in the country where an incident took place, but makes allowances for them to make alternative arrangements in certain circumstances, such as in advance of a transaction.
The EU Council of Ministers' 'common position' vote authorised the law in principle and largely supported the text approved by the European Commission, which drafted the regulation.
In voting through the latest regulations, ministers scrapped amendments passed by the European Parliament, insisting that disputes involving product liability, damage to the environment and anticompetitive practices must be heard in the country where the damage took place.
European Parliament members will now have a second reading of the legislation, where they could change the law again. If they oppose the council and the Commission, a special conciliation committee could be formed to strike a deal over final terms.