For most online activity the new draft will defer to the European Commission's e-commerce directive, which is in the process of being adopted as national law by the member states.
That directive states clearly that the laws of the country in which a product or service originated - the country of the supplier - should apply to all online activity except e-mail.
The original draft of Rome II had said that the laws of the country where the consumer is based should apply in a cross-border dispute, rather than the laws of the country where the supplier is based.
This raised deep concern in the Internet, marketing and publishing industries.
The online industry argued that it would make cross-border business too risky, and would fragment the European Union's internal market in communications.
It would have meant that Web sites had to abide by the toughest national advertising laws and that online news providers would have had to take into account the defamation laws of each EU member country.
The Commission will announce a consultation process expected to last six months before it formally adopts the proposal in November.
The Commission has changed its mind about how to launch the new law several times. A year ago a Commission official said further consultation on Rome II would be "a waste of taxpayers' money". In June 2001 the Commission changed its position, saying that there would be a consultation after all.