University of Oslo Spring 2019 International Commercial Law
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1 University of Oslo Spring 2019 International Commercial Law Choice of governing law Giuditta Cordero-Moss, Ph.D., Dr.Juris Professor, Oslo University
2 Conflict of laws International transactions: Between parties having place of business in different states (CISG art. 1.1) Involving a conflict of laws (Rome I art. 1.1) When international trade interests are at stake (arbitration)(french CPC art 1504) More than one national law seem to be applicable
3 Mechanisms for cross-border contracts Conflict rules (PIL) determine the law of what country governs Conflict rules are part of each country s own law EU has harmonised conflict rules in many areas
4 Mechanisms for cross-border contracts, cont. Judge applies his own conflict rules First step: identify forum Then: apply conflict rule So: conflict rule determines what country s substantive law governs the contract
5 Choice of Forum Civil procedure of the judge International Instruments Bruxells regulation Lugano Convention Hague Convention (EIF 2015: EU, Mexico, Singapore)
6 Choice of forum II Defendant s forum Place of performance Exhorbitant fora Exclusive fora Forum chosen by the parties
7 Application of conflict rules FIRM OFFER FORCE MAJEURE Forum: Brussels I convention, art. 4 or 7.1 Governing Law: Italian subcontractor: Italian law English subcontractor: English law Forum: Brussels I, art. 4 or 7.1 Governing Law: Italian supplier: Italian law English supplier: English law
8 Party Autonomy The vast majority of PILs allow parties to choose the governing law
9 Party autonomy is a choice of law rule No «universal principle» Depends on applicable law Assumptions Internationality Modality of exercise Written form, tacit exercise Scope Other conflict rules
10 Effects of party autonomy Two possible effects: Incorporation of the chosen law in the contract Choice of governing law
11 Effects of Party Autonomy Domestic contracts: Incorporation (e.g. Art. 3 Rome I 593/2008) International contracts: Choice of law (e.g. Art. 1.1 Rome I) Limitations (e.g. Art. 9 Rome I)
12 Choice of non-national law Decision at law Choie of «law» Choice of «rules of law» Decision in equity Ex aequo et bono, Amiable compositeur
13 Choice of rules of law By the parties In court proceedings Rome I. No Hague Principles: Yes In arbitration proceedings Yes By the tribunal Model law English law Norwegian law No French law Swiss law Arbitration Rules Yes
14 Choice of non-national law Courts Rome Convention: Law Draft Rome I: Principles Gaps: autonomous interpretation, then governing law Outside of scope: governing law Conflict with mandatory rules? Rome I: Law
15 Rome I: Incorporation and prospects of choice of law Art. 3.1: A contract shall be governed by the law chosen by the parties. Recital 13: This Regulation does not preclude parties from incorporating by reference into their contract a non-state body of law or an international convention. Recital 14: Should the Community adopt, in an appropriate legal instrument, rules of substantive contract law, including standard terms and conditions, such instrument may provide that the parties may choose to apply those rules.
16 Exercise of Party Autonomy Expressed choice or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case Severability
17 Tacit choice of law Use of English contract models Actual choice, not hypothetical Certain Example: Lloyd s Marine Insurance Policy Example: Patchwork of documents expressed in English
18 Tacit partial choice of law Clauses that do not make sense under the governing law Waiver of jury trial Clauses that have different effects under the governing law Entire agreement Actual choice, certain
19 How to Choose Governing Law No need to choose a connected law Identify particularly favourable law (difficult): What protection/remedy is most likely to be needed What law provides that protection/remedy Is a literal interpretation of the contract expected? Is a contextual evaluation of the relationship expected? Avoid the other party s law (not always necessary) Choose a law particularly developed in the area Choose a stable law which is sufficiently known Choice of Lex Mercatoria is not equivalent to choice of law
20 Closest Connection Lacking parties choice Too vague
21 Closest Connection- Rome Convention Art. 4.2 Presumption: Habitual residence/place of business Characteristic performance Art. 4.5 Exception: Characteristic performance cannot be determined «It appears from the circumstances as a whole that the contract is more closely connected with another country»
22 Closest Connection II Rome I: Art. 4.1 (a)-(h): defined conflict rule for contract types Art. 4.2: Other contract types: residence of characteristic debtor (main place of business) Art. 4.3:»Where it is clear from all the circumstances of the case that the contract is manifestly more closely connected with a country other than that» Art. 4.4: if cannot be determined: closest connection
23 Applicable Law Certain Contracts Carriage of goods Consumer contracts Insurance contracts Employment contracts
24 Governing Law Scope of Application Interpretation of the contract Performance of the contract Consequences of non-performance Consequences of invalidity Termination NOT choice of law rules (renvoi)
25 Other conflict rules Procedural rules (arbitration clause) Legal capacity Company law Security Tort
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