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6 Choice of Law

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Published on October 31, 2007

Author: Edolf

Source: authorstream.com

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International Commercial Law Choice of Governing Law :  International Commercial Law Choice of Governing Law University of Oslo Giuditta Cordero Moss, Ph.D., Dr.Juris Professor, Oslo University Conflict of laws:  Conflict of laws International transactions: Between parties having place of business in different states (CISG art. 1.1) Involving a choice between the law of different countries (Rome Convention art. 1.1) Transaction has a foreign element (French CPC art 1492) More than one national law seem to be applicable Mechanisms for cross-border contracts :  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 Norway has own conflict rules Mechanisms for cross-border contracts, cont.:  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 Choice of Forum:  Choice of Forum Civil procedure of the judge International Instruments Bruxells regulation Lugano Convention Hague Convention? Choice of forum II:  Choice of forum II Defendant’s forum Place of performance … Exhorbitant fora Exclusive fora Forum chosen by the parties Application of conflict rules:  Application of conflict rules FIRM OFFER Forum: Lugano convention, art. 2 or 5.1 Governing Law: Italian subcontractor: Italian law English subcontractor: English law FORCE MAJEURE Forum: Lugano convention, art. 2 or 5.1 Governing Law: Italian supplier: Italian law English supplier: English law Party Autonomy:  Party Autonomy The vast majority of PILs allow parties to choose the governing law Two possible effects: Incorporation of the chosen law in the contract Choice of governing law Effects of Party Autonomy:  Effects of Party Autonomy Domestic contracts: Incorporation (e.g. Art. 3 Rome Convention) International contracts: Choice of law (e.g. Art. 1.1 Rome Convention) Limitations (e.g. Art. 7 Rome Convention) Exercise of Party Autonomy :  Exercise of Party Autonomy Expressed choice or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case Severability Tacit choice of law:  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 Tacit partial choice of law:  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 How to Choose Governing Law :  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 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 Choice of non-national law:  Choice of non-national law Is Lex Mercatoria the same as a choice of law? “Rome Convention: “Law” Draft Rome I: Principles Gaps: autonomous interpretation, then governing law Outside of scope: governing law Conflict with mandatory rules? Choice of non-national law II:  Choice of non-national law II Arbitration Rules of law” v. “Law” Is Lex Mercatoria Rule of Law or ex bono et aequo? Closest Connection:  Closest Connection Lacking parties’ choice Too vague Closest Connection- Rome Convention:  Closest Connection- Rome Convention Art. 4.2 Presumption: Habitual residence/place of business Characteristic performance Art. 4.5 Exception: Characteristic performance cannot be determined Circumstances as a whole show closer connection Closest Connection II:  Closest Connection II Draft Rome I: Art. 1 (a)-(h): defined conflict rule for contract types Art. 2: Other contract types: residence of characteristic debtor (main place of business) Art. 3: if no characteristic performance: closest connection Applicable Law – Certain Contracts:  Applicable Law – Certain Contracts Immovable property Carriage of goods Consumer contracts Employment contracts Governing Law – Scope of Application:  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 Other conflict rules:  Other conflict rules Procedural rules (arbitration clause) Legal capacity Company law Security …

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