Conflict Of Laws – Contract Notes

Conflict of Laws – Contract

Introduction

• Conflict between two different law systems which could apply to a dispute

• Courts will decide as a preliminary issue either by request or of own motion

• Rules governing how to decide:

  • Common law rules

    • Previous system – case law

    • Now, only regulates CoL where Convention or Rome I does not apply

    • Parties can expressly/impliedly choose provided that :

      • Made in good faith

      • Legal

      • Not against public policy

    • When implying

      • Look at all circs to find true intention

  • Rome Convention

    • Superseded by Rome I

  • Regulation No 593/2008 (Rome I)

    • December 2009

Rome I

• Material Scope

  • Article 1:

    • Applies where:

      • Conflict of laws

        • Must be a choice between 1 or more country’s law

      • Contractual obligations

        • Excludes:

          • Revenue and customs

          • Administrative

          • Legal capacity of natural persons

          • Family relationships, inc. matrimonial property

          • Wills and succession

          • Bills of Exchange

          • Arbitration agreements

          • Companies

          • Constitution of trusts

          • Dealings prior to the conclusion of contract

          • Insurance contracts

      • In civil and commercial matters

        • Same meaning as in Brussels Recast

• Temporal Scope

  • Not applicable to contracts concluded before 17^th December 2009

• Applicable Law

  • Any law applicable under Rome I will apply to a dispute even if not a law of a MS

  • Does not depend on some connection to the EU

  • Key is that the courts deciding are MS courts

Which law to apply?

• Freedom of choice - Art 3

  • Contract governed by the law chosen by the parties

  • Envisaged that most parties will decide in contract

  • Expressly, clearly demonstrated by contract or circumstances of the case

  • Can incorporate international laws or convention

• Implied choice

  • Choice of law will not be lightly inferred – must be highly foreseeable

  • Intentions must be demonstrated with certainty

  • Implied can be inferred where:

    • Standard form contract governed by particular system of law

    • Previous course of dealings under the contract contained an express choice and circumstances do not demonstrate deliberate change in policy

    • Inferred jurisdiction clause MAY provide implied choice of law

      • Look to circumstances or contract

      • Marubeni Hong Kong and South China Ltd v Ministry of Finance of Mongolia [2002]

      • Exclusive jurisdiction is now a factor in deciding which choice of law (recital 12)

• Whole or part of contract

  • Can include a course expressly providing that a certain clause is to be governed by the law of another country

  • Where separable parts, choice of law clause must be clear

  • Care must be taken when choosing more than one law because of differences in laws

  • Choice may be subject to overriding principles

• Limitations on freedom of choice - Articles 5-8

  • Contracts of carriage – Article 5

  • Consumer contracts – Article 6

    • Protects ‘weaker party’

      • Protects natural person for purpose regarded as outside trade/profession where other is in trade/profession

    • Excludes:

      • Contract for supply of services exclusively in country other than one in which consumer has HR

      • Contracts of carriage

      • Contracts relating to rights in rem

      • Financial instruments

    • Rule:

      • Governing law is country where consumer has HR IF:

        • Business pursues commercial activities in that country; OR

        • Directs activities to that country

    • Contracts over internet

      • If website sells goods accessible in another MS, does not automatically trigger consumer protection. Professional must take extra steps and conclude contract directing services to that country

      • Do not take into account language or currency of website/prices

    • Choice of law will be binding

      • Will not deprive consumer of protection of the other overriding rules

  • Insurance contracts – Article 7

  • Individual employment contracts – Article 8

    • Designed to protect employees

    • If not chosen, law of country from which employee habitually carries out his or her work

      • Will not change if temporarily employed in another country

    • Where law cannot be determined by where employee works, will be governed by law of country where...

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