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Choice Of Law (Contract) Notes

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1) Rome I Regulation
- all contracts entered into from 17th December 2009 2) Rome Convention
- all contracts entered into after 1st April 1991
- implemented in UK by Contracts (Applicable Law) Act 1990 Giuliano-Lagarde Report 1980 on the Rome Convention aids with interpretation.

Rome I Regulation

1. Article 1(1): applies to contractual obligations in civil and commercial matters

2. Article 2: law specified by Regulation applies whether or not it is the law of a Member State

1. indeed Regulation applies even if both parties to contract are from nonMember States

3. "Contractual obligations": not defined in Regulation.

1. Giuliano-Lagarde Report 1980: autonomous approach must be taken

1. e.g. gifts and promises to give are involve contractual obligations

1. Articles 1(2) + 1(3): Regulation DOES NOT apply to: 1) revenues, customs or administrative matters 2) arbitration agreements or jurisdiction agreements
- thus law applying to agreement to arbitrate is matter for common law
- jurisdiction agreements are almost always governed by law governing underlying contract


i) ii) i) ii)


2. Regulation Article 3:

1. Choice must be made: Expressly Or clearly demonstrated by terms of contract or the circumstances of the case

1. Convention Article 3

1. Choice must be made: Expressly Or demonstrated with reasonable certainty by terms of contract or circumstances of case

1. Contrast: "clearly demonstrated" vs. "reasonable certainty"

1. Express Choice of Law

2. E.g. 'this contract shall be governed by English law'


1) Incorporation: Choice may be made via reference to one of parties' general terms and conditions

1. but only provided there is consensus that contract is concluded on those contractual terms

2. Iran Continental Shelf Oil Company [2002]
ii) Choice of law clause is not incorporated if one party deletes it before signing the contract and other party signs without noticing

1. Samcrete Egypt Engineers and Contractors [2001]
2) Express choice by reference to an external factor

1. e.g. governing law of 'country by which ship is flagged'

2. where it is obvious both parties assume this will lead to a particular choice of law, court will uphold it

1. even if due to unforeseen events, the external factor has led to a different choice of law

2. Companie Tunisienne de Navigation [1971]

Implied Choice Clearly Demonstrated

G-L Report 1980

1. Implied choice is not imputed

1. it must be a real choice of law, but simply not stated in the contract

1. Report gives 4 examples of where 'reasonable certainty' test (Convention) is satisfied: 1) standard form contracts 2) jurisdiction and arbitration clauses 3) courses of dealing 4) reference to a particular country's statutes

1. by analogy these would also satisfy the 'clearly demonstrated' test. i)

Standard Form Contracts

2. If contract is in a standard form known to be governed by particular system of law, is assumed that parties intended contract to be governed by that law.

3. E.g. use of phrases which only make sense in context of English insurance law indicates that contract intended to be governed by English law.

1. Grad Marine Energy [2010]

1. Form of slip used related to London insurance market.

ii) Jurisdiction and Arbitration Clauses

1. RIR Recital (12): if there is jurisdiction clause in favour of State A, is a factor to be taken into account when determining whether contract is governed by law of State A.

2. Is likely to be very influential factor.

1. Convention approach stated to be almost identical to common law in this respect

2. Egon Oldendorff v Liberia Corp [1996]

3. Compagnie Tunisienne de Navigation [1971]

3. GL Report: nevertheless this inference always subject to other terms of contract and circumstances of case

1. thus possible for forum of governing law to be different from forum chosen to hear disputes

2. i.e. choice of jurisdiction is not a choice of law.

3. Compagnie Tunisienne de Navigation [1971]

1. Inference will be stronger where: 1) England is chosen as neutral forum

1. compared to where one of parties is English 2) the more issues under contract that are put to arbitration

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