1. The Law of Open Societies Private Ordering and Public Regulation of Cross-Border Relations Lectures, Lomonossov State University Moscow 11 – 15 May 2015 Jürgen Basedow, Hamburg Director, Max Planck Institute Associate Member, Institut de droit international

2. Basedow 2 / 96 Outline of the course (I) Introduction: PIL and social change; Purpose and methods of PIL; Recent trends in PIL; private and public actors; types of conflict Part I: From closed nation-states to the open society Philosophical foundations; globalization, its legal underpinnings and consequences for PIL Part II: Private ordering Private arrangements to cope with the international transaction dilemma: export trade and package travel as examples Choice of law: theoretical foundations Choice of law: new domains

3. Basedow 3 / 96 Outline of the course (II) Optional law in Europe: Europeanisation of private law; Societas europaea; unitary IP rights; CESL Deliberate connections (indirect choice of law): mobile connecting factors; the principle of recognition; evasion of law Part III: Public regulation Foreign policy measures and their effects in private law: (non- )recognition of foreign states; embargoes; blocking statutes Countervailing state measures for asymmetric private relations: consumer protection; employment relations Protection of foundational principles: imperative norms

4. Basedow 4 / 96 Introduction: PIL and social change The growing permeability of frontiers and the response of PIL: –from the regulation of the periphery of legal systems to the law of global home affairs –from the ex post search for the proper law towards ex ante regulation of the law applicable to the vast and growing number of international private relations Consequences for the course: –reflection on the “open society“ in a broader sense including economic and social aspects –an inquiry into the tendencies emerging from ex ante regulations, i.e. international conventions and the more and more numerous national PIL statutes

5. Basedow 5 / 96 Purpose and methods of PIL International transaction dilemma: quest for legal certainty in a multi-jurisdictional world 5 methods to attain that goal: –Localization of legal relations to find their “seat“ (proximity and choice of law) –Exclusive jurisdiction –Jurisdiction dependent on recognition, i.e. the prediction that the resulting judgement will be recognized by the law of the “seat“ –determination of the applicable law on the basis of certain values favouring either the validation (alternative connection) or the invalidation (cumulative connection) of a transaction –Recognition regardless of the law applied by the foreign court Here: Focus on choice of law

6. Basedow 6 / 96 Exclusive jurisdiction Exclusive jurisdiction in positive law: e.g. Art 24 EU Reg 1215/2012 –rights in rem in immovable property –constitution of legal persons –validity of entries in public registers –validity of IP rights –enforcement of judgements Static cases having an exclusive link with a single state Exclusive jurisdiction for dynamic cases ? The example of international divorce law in England: –LeMesurier v. LeMesurier, [1895] AC 517 (PC): exclusive jurisdiction of the courts at the spouses‘ common domicile –Consequence: potential denial of justice Concurrent jurisdiction cannot be excluded across the board, legal certainty must be attained by other means

7. Basedow 7 / 96 Uniformity of outcome Uniformity of outcome as an objective (Savigny) to be attained by the assignment of a legal relation to one and the same substantive law in different courts Criticism: futile and even harmful (US conflicts revolution, Hartley) –no complete harmony possible due to lex fori governing procedure –no sufficient consideration of governmental policies involved Objections: –Private law primarily serves the private interest in legal certainty –Private interests exist already at the time a transaction is made, not only later when litigation arises –Where governmental interests exist (welfare state) their intensity depends on proximity Consequence: bilateral conflict rules as basis; differentiation and flexibilisation; exceptional interest analysis

8. Basedow 8 / 96 The principle of recognition Recognition establishes harmony in cross-border private relations; a crystallization of the law in State A (e.g. a company, marriage, judgment etc.) may extend its effects to State B Enshrined in positive law in federal entities: –US: Full Faith and Credit Clause of the Constitution, Art. IV(1) –EU: Principle of mutual recognition, Art. 67(4) and 81(1) TFEU as a guiding principle, not directly applicable Suited for international private relations in general ? Recognition only addresses the reaction by second State B regardless of the content of, and the law applied for, the crystallization of law in first State A No answer to the choice-of-law question in State A. If lex fori, recognition provides a strong incentive for law shopping Easier in federal entities than in regular cross-border relations

9. Basedow 9 / 96 Recent trends in PIL Great increase of cross-border relations and of litigation with international dimension Codification: since 1978 (Austria) more than 40 national statutes on PIL have been enacted Differentiation and flexibilisation of the resulting conflict rules Materialisation of PIL: both in conflict rules (alternative and cumulative connections) and in substantive content (human rights, governmental policies) Liberalisation: growing recognition of party autonomy in all areas of the law Proceduralisation: jurisdiction, recognition of foreign judgements and various forms of cooperation receive growing attention

10. Basedow 10 / 96 Public and private actors The traditional view on PIL is that of a state actor, either a court or a legislature; it is mainly an ex post view directed at the implementation of regulatory policies or foreign policy But private law is above all a legal framework for private actors, allowing them to make their plans in a prospective and ex ante view PIL should therefore primarily focus on action taken by private actors with regard to their cross-border relations; this approach widens the range of possible private action beyond the choice of the applicable law Public measures adopted in pursuance of regulatory and foreign policy become an exceptional interference with private ordering, if viewed in this perspective

11. Basedow 11 / 96 Types of conflicts Levels of regulation –Regulation at the sub-national level in federal states –Regulation at the national level –Regulation at the supra-national level (EU) –World regulation Resulting types of conflicts –Vertical conflicts: a matter of constitutional law and – in Europe – of EU law –Horizontal conflicts: traditional matter of PIL –Diagonal conflicts: mix of PIL, constitutional law, EU law

12. Basedow 12 / 96 Part I: The open society - philosophical foundations (I) - Henri Bergson (1859 – 1941), The two sources of morality and religion (1932): biologist view of society as an organism, developing on a scale ranging from the closed society governed by instinct to the open society where intelligence prevails “The closed society is that whose members hold together, caring nothing for the rest of humanity, on the alert for attack or defence, bound, in fact, for a perpetual readiness for battle. Such is human society fresh from the hands of nature.“ “The open society is the society which is deemed in principle to embrace all humanity.... Between the nation, however big, and humanity, there lies the whole distance from the finite to the indefinite, from the closed to the open.“

13. Basedow 13 / 96 The open society - philosophical foundations (II) - Karl Raimund Popper (1902 – 1994), The open society and its enemies (1945), a critique of the assertion by Plato, Hegel and Marx of superior knowledge about the final goals of society Such claims are said to be elements of totalitarian programs and equivalents of magic and taboos governing primitive tribal societies (closed societies) which are juxtaposed to modern society steered by rational discourse and decision-making (open societies) Commerce as a threat to the closed society: “Perhaps the most powerful cause of the breakdown of the closed society was the development of sea-communications and commerce. Close contact with other tribes is liable to undermine the feeling of necessity with which tribal institutions are viewed.“

14. Basedow 14 / 96 Globalisation (I) Technical innovation as driving force First phase of globalisation (second half of 19 th century): steam engine, railroads, steel vessels, telegraph Second phase of globalisation (from 1970s onward): –Passenger transport: widebody aircraft reducing airfares and making air transport available for population at large –Carriage of goods: container revolution cutting costs as compared with traditional transport of general cargo; consequential extension of markets –Transport of data: internet, fibre optic cables, satelite communication allowing for the transport of large quantities of data to very distant destinations within seconds Impact on awareness of economic, social and political events and changes: “killing of distance“ and unboundedness of discourse

15. Basedow 15 / 96 Globalisation (II): Trade and investment Trade in goods: development of worldwide merchandize exports: 1948: 59 b $; 1983: 1,838 b $; 1993: 3,676 b $; 2008: 15,717 b $ Average growth rate of worldwide production 2000 – 2007: 3 % p.a., of global exports 2000 – 2007: 5.5% p.a. Consequence: growing significance of international trade in goods Trade in services: annual growth rate of trade in commercial services 2000 – 2007: 12% International division of labour and Foreign Direct Investment (FDI) Development of worldwide FDI inflows: 1982: 58 b $; 1990: 207 b $; 2007: 1,833 b $ Soaring growth rates and increase in mergers and acquisitions Drastic cuts in 2008 and 2009 due to world financial crisis, gradual recovery

16. Basedow 16 / 96 Globalisation (III): Migration Refugees and other migrants: national statistics using different criteria, but a minimum stay of 1 year is required Migration statistics include remigration, e.g. from central Asia to the Russian Federation or from Germany to Turkey; they do not necessarily indicate growing multiculturalism 2011: UN estimate 215 m migrants or 3.2% of world population. Low immigration shares in European countries (6.8% of population) as compared with Canada (21.3%), Australia (25.7%), Saudi Arabia (27.8%), Israel (40.4%), United Arab Emirates (70.0%) “South-south“ migration between developing countries stronger than “south-north“ migration towards higher-income OECD countries

17. Basedow 17 / 96 Globalisation (IV): Assessment John Baylis / Steve Smith (political scientists) define globalisation as “the process of increasing interconnectedness between societies such that events in one part of the world more and more have effect on people and societies far away. A globalised world is one in which political, economic, cultural and social events become more and more interconnected.... The world seems to be ‘shrinking‘, and people are increasingly aware of this. Sociological and economic descriptions Globalisation: inescapable course of history or based on political determination ?

18. Basedow 18 / 96 Legal Underpinnings of globalisation (I) Free trade in goods: 19 th century: bilateral treaties on commerce, friendship and navigation; post World War II: GATT as part of the Havana Charter, de facto application; institutionalisation in the WTO Treaty of 1994 Basic principles: Most Favoured Nation (MFN) Treatment; minimum liberalisation in accordance with schedules; prohibition of quantitative restrictions; national treatment for internal taxation; negotiations on tariff reductions Free trade in services: GATS as annex 1B of the WTO Treaty; MFN clause and transparency obligation are of little effect; liberalization is left to special commitments by states Free capital flows in general: OECD code of liberalization of capital movements of 1961

19. Basedow 19 / 96 Legal underpinnings of globalisation (II) FDI: since 1959 about 3000 bilateral investment treaties (BITs) regulating (1) the admission of foreign investors; (2) repatriation of profits; (3) fair and equitable treatment, in particular pre-conditions of lawful expropriation; (4) MFN clause; (5) Dispute settlement Migration: no comprehensive multilateral treaty except for refugees (1951, 1967); free movement in general is ensured in the EU Migrant workers: numerous bilateral recruitment agreements, concluded e.g. between Germany and Italy, Greece or Turkey in the 1960s Institutionalisation: foundation of numerous international law- making agencies International tribunals and dispute settlement bodies which grant standing to private persons

20. Basedow 20 / 96 Consequences for policy-making (I) Confrontation of values and habits of lifestyle PIL: loss of the State‘s knowledge about the present and future location of the centre of gravity of a legal relation (von Hayek); open frontiers render that knowledge haphazard This knowledge is a basis not only for court decisions where it can be procured ex post, but even more for legislation and regulation where it must be available ex ante Loss of State knowledge deprives conflict rules of their basis and shifts responsibility to private actors who are better placed to predict their future whereabouts The shift to private ordering unfolds regulatory competition and renders it legitimate

21. Basedow 21 / 96 Consequences for policy-making (II) Single states lose significance except for some areas where the extraterritorial application of national laws is possible, but a state-driven world order can subsist only by means of collaboration of states Institutionalisation of that collaboration Harmonization and unification of substantive laws Coordination of legal systems by uniform rules of private international law and of international civil procedure From coordination to cooperation of courts: Hague Conventions on children; international insolvency law Outlook: The enquiry aims, first, at forms of private ordering of international prive relations, then, second, at their public regulation

22. Basedow 22 / 96 Part II: Private ordering Private “anational“ arrangements The international transaction dilemma: rational behaviour in a multi-jurisdictional world leads to abstention from trading due to legal insecurity Public remedy: Unification of laws; difficult to achieve because of multi-tiered legislative process and political complications Private remedy 1: iteration and reputation-building: commercial agents; central counterparty in capital markets... Private remedy 2: procurement of “hostages“: securities such as first demand guarantees or export credit insurance Examples: Export trade and package tours

23. Basedow 23 / 96 The export trade (I) The separation of trade and transport and the emergence of new risks The export trade as web of multiple contractual relations: sellers and buyers; shippers and carriers; banks and their customers; insurers and policyholders The lex mercatoria as a collective designation of the various contract forms governing those contractual relations Lex mercatoria: a legal system of its own, independent from any other law ?

24. Basedow 24 / 96 The export trade (II): sellers & buyers State law on the sale of goods: pathological situations – breach of contract, warranties etc. Rules on ordinary issues – procurement of documents and certificates, insurance of the goods, sharing of costs etc. – are left to private arrangements Need for tailor-made solutions and standardization: FOB, CIF etc. Incoterms as definitions of several trade terms; periodic survey by ICC; current version of 2010 deals with 11 trade terms defining intermediate points as interfaces of either party‘s obligations Links between the Incoterms and state law

25. Basedow 25 / 96 The export trade (III): carriers Key function of the transport document for the sale of goods The significance of the carrier‘s liability for the traders‘ trust in the transport document Contractual exclusion of the carrier‘s liability as a threat to the export trade State intervention: Harter Act 1893 (USA); Hague Rules 1924; later amendments: Hague Visby Rules 1968 Dissolution of the law on carrier‘s liability from trade law by Hamburg Rules 1978 and Rotterdam Rules 2009

26. Basedow 26 / 96 The export trade (IV): payment Transfer of payment usually incumbent not on carrier, but on bank Documentary credit operation: contract between buyer and issuing bank for the benefit of the seller as beneficiary Issuing bank irrevocably promises to pay out price to seller upon presentation of certain documents as evidence of delivery in conformity with the contract: “clean“ transport document, insurance policy, certificates of origin, quality etc. Advising bank acting in the seller‘s country on behalf of issuing bank, usually not accepting its own liability Uniform Customs and Practice for Documentary Credit, UCP 600

27. Basedow 27 / 96 The export trade (V): insurers The buyer‘s irrevocable promise to pay (UCP) depends on his being certain of getting consideration, i.e. either the goods or compensation resulting from carrier‘s liability or insurance money In CIF contracts the seller must take out cargo insurance in line with Incoterms requirements and present a transferable cargo policy to the issuing bank under UCP 600 Note the interrelation between the insurance obligation, the sales contract and the letter of credit The cargo insurance contract, while strictly speaking subject to the governing state law, is usually regulated by private standard conditions exclusively (Institute Cargo Clauses etc.).

28. Basedow 28 / 96 Package tours Emergence of tourism in the 19th century From the intermediary promoting contracts between the tourist and the foreign service provider to the package tour operator promising the organization of a whole holiday trip consisting of several travel services (transport, hotel, excursions etc.) Increasing certainty through state regulation: the CCV 1970 and its loopholes European Directive on Package Travel (90/314/EEC): pre- arrangement of a combination of different travel services

29. Basedow 29 / 96 Domestication of international deals 4 common features of export trade and package tourism: -- recourse by the interested persons to the services of third parties -- reduction of complexity as between the interested persons -- relations between interested persons are domesticated -- shifting complexity to the third party dealing with it by iteration The overall effect of the recourse to third persons is a dissemination of the risk arising from international transactions among multiple participants in the sector (indirect insurance)

30. Basedow 30 / 96 Private arrangements and state law Export trade and package tourism are examples of private innovation paving the way out of the international transaction dilemma But state law is not redundant: regulation of carriers‘ liability and of package tour operators by international instruments and other state law, made the new arrangements viable Often the specific problems of international law are shifted into other areas of the law, e.g. from sales law into banking law Where national laws differ, choice-of-law remains on the agenda Arbitration is no escape device either: arbitrability, annulment etc.

31. Basedow 31 / 96 Theory of choice of law - introduction 1910: Joseph Beale‘s “fundamental objection“ to the parties‘ choice of the applicable law; it “involves permission to the parties to do a legislative act.“ 1929: Jean-Paul Niboyet‘s “first truth that the parties‘ intention is never superior and not even parallel to the law; it is always confined to the circle admitted by the competent legislature.“ After World War II Gerhard Kegel designated party autonomy as a “stopgap“ solution, a second-best accepted for practical convenience At present party autonomy is a bedrock principle of PIL, but the theoretical foundation is still elusive. How is its success possible ?

32. Basedow 32 / 96 Restrictions of party autonomy (I) Categorical Restrictions: Latin America and Middle East Brazil: exclusion by Art. 9 of the Introductory Act of the Civil Code of 1942; but choice of law permitted by Law 9307/1996 for arbitral proceedings Uruguay: Art. 2304 CC admits no contractual derogation from the rules of the code on the legislative and judicial competence Iran: Art. 968 CC (1935): “Obligations arising out of contracts are subject to the laws of the place where the contract was concluded, except where the contracting are foreign nationals and have expressly or impliedly subjected the contract to another law“.

33. Basedow 33 / 96 Restrictions of party autonomy (II) Less intrusive restrictions: widely spread No choice of non-state law (e.g. UNIDROIT Principles); only incorporation within the framework of the state law governing the contract (Rome I) No choice of a law lacking a substantial or reasonable relation with the transaction in question, § 1-105 UCC Restrictions for specific contracts, e.g. employment, consumer or insurance contracts, to be found in many countries

34. Basedow 34 / 96 Survey: theoretical objections Cecilia Fresnedo de Aguirre (1991): 8 rationales of proponents of party autonomy, both practical and theoretical, are subjected to criticism Here: focus on 4 of them which are of a more theoretical nature: (1) Impairment of sovereignty; (2) Incompatibility with ordre public; (3) Absence of binding agreements outside a given legal order; (4) protection of the weaker party

35. Basedow 35 / 96 Objections: impairment of sovereignty Uruguayan draftsman: “international competences... affect, in their legislative or judicial specification, the sovereignty of a country where a legal relation is localised, and... are therefore placed above the individual will.“ Objective, pre-individualistic, positivistic concept of law coined by Hegel and Kelsen; state as the only and ultimate source of law, not based on prior human action Contrary the subjective or contract-based theories of Locke and Rousseau; the state is the result of individual volition Only subjective concept can explain the emergence of new states and the recognition of human rights

36. Basedow 36 / 96 Other theoretical objections Incompatibility with ordre public: -- an exception to choice of law, not a general exclusion -- differentiation into various types of ordre public Binding effect of agreements only within a given legal order: -- corona of an agreement determined by a given positive law -- core of the agreement: pacta sunt servanda as general principle Protection of weaker party: -- would be an exception to freedom of contract in general -- solution must be more targeted, e.g. for specific types of contract

37. Basedow 37 / 96 Theoretical basis of party autonomy (I) Two strands: efficiency and natural freedom Efficiency: Given the scarcity of resources, an agreement on their use and allocation indicates the growing satisfaction of both parties which is defined as an increase of efficiency. This also applies to choice of law clauses. Doubts about efficiency as the sole justification -- whose benefits will be taken into account ? -- only short-term or also long-term perspective ? Problem of proof -- competing values

38. Basedow 38 / 96 Theoretical basis of party autonomy (II) Natural freedom; Locke, Rousseau, Kant John Locke: “We must consider what State all Men are naturally in, and that is, a State of perfect Freedom to order their Actions, and dispose of their Possessions,... within the bounds of the Law of Nature, without... depending upon the Will of any other men.“ Immanuel Kant: “There is only one innate right. Freedom (independence from being constrained by another‘s choice), insofar as it can coexist with the freedom of every other in accordance with a universal law, is the only original right belonging to every man by virtue of his humanity. – This principle... involves...: innate equality, that is, independence from being bound by others to more than one can in turn bind them.“

39. Basedow 39 / 96 Theoretical basis of party autonomy (III) Enlightenment philosophy presupposes the existence of a single legal framework, a “universal law“ (Kant); how can it operate in a world with numerous laws? Choice of law agreement is meant to select that single legal system, it is allocated before any positive law can unfold its effects Two types of contracts: contract-promise – dispositional contract Choice of law as a dispositional contract, unfolding its effects at the very moment of its conclusion

40. Basedow 40 / 96 Theoretical basis of party autonomy (IV) From enlightenment philosophy to the Universal Declaration of Human Rights Right of due process and right to legal certainty as human rights, Art. 28 Universal Declaration What is the meaning of this right to legal certainty in a multi- jurisdictional world ? It can only be implemented by permitting the individuals to choose the governing law. This amounts to a basic and pre-governmental recognition of that choice. Affirmation by the Institut de droit international

41. Basedow 41 / 96 Choice of law: new domains Contractual relations affecting third parties: agency – Hague Convention 1978, third party effects of assignment – Netherlands Tort and delict – Rome II Property in movables – Chinese Act 2010, in securities – Hague Convention 2006 and intellectual property – ALI Principles The law of persons: capacity; enduring powers to act for incapable persons – Hague Convention on the protection of adults Family law: -- marital property – Hague Convention 1978; EU draft regulation -- divorce – Rome III -- maintenance – Hague Protocol 2007 Succession – Hague Convention 1989, EU Reg 650/2012 Procedural agreements on foreign law

42. Basedow 42 / 96 New domains: assignment (I) Multiple relations: -- Creditor (C) – Debtor (D) -- C = Assignor – Assignee (A) -- A – D; -- further relations between C and its creditors (C – C C ); -- as well as A and its creditors (A – C A ) Economic functions: security (fiduciary) assignment; factoring; securitization Issues: Which requirements for a claim brought by A against D? Will D be discharged by payment to C? Or payment to A?

43. Basedow 43 / 96 New domains: assignment (II) The law governing the main claim (C – D relation) The law applicable to the assignment relation (C – A) The law governing the effect of the transfer of entitlement to the claim vis-à-vis third parties, in particular C C and C A Art. 14 Rome I only addresses C – A (para. 1) and the scope of the law governing the main claim (para. 2), but not explicitly third party effects Dutch solution: Art. 14(2) as a narrow exception to Art. 14(1) which also covers third party effects, allowing C and A to choose the law, HR 16 May 1997 NJ 1998 no. 585, now Art. 10:135 Dutch Cc 2011

44. Basedow 44 / 96 New domains: assignment (III) Other national solutions: the law governing the main claim (proposal UK government); but: intransparent for assignee The law of the debtor‘s residence (common law); impracticable in the case of bulk assignments the law of the assignor‘s residence (Belgium: Art. 87(3); Art. 30 UN Assignment of Receivables Convention 2001); intransparency in the case of multiple assignments of the same claim by subsequent creditors/assignees Proposal for a two tiered solution: Registration of assignments plus choice of law for third party effects; in the absence of registration the law of the assignor‘s residence should prevail

45. Basedow 45 / 96 New domains: intellectual property (I) Specificity of intellectual property History: mercantilistic background and the territoriality principle Framework in international law: Paris Convention of 1883 (industrial property) and Berne Convention of 1886 (copyright) with 2 principles -- Minimum standards for protection of IP rights -- National treatment of foreign originators Art. 5(2) Berne Conv.: “the extent of protection as well as the means of redress afforded to the author shall be governed exclusively by the laws of the country where protection is claimed.“ Choice-of-law rule? Or prohibition of discrimination?

46. Basedow 46 / 96 New domains: intellectual property (II) Most countries follow the lex loci protectionis rule, for both registered and non-registered ip rights For non-registered rights (copyright) Portugal (Art. 48) and Romania (Art. 2624(2) CC) apply the the law of the place of first publication or – failing that – the law of the author‘s domicile or nationality Security rights in IP: Recom. 248 of UNCITRAL Legislative Guide on Secured Transactions, Supp. on Security Rights in IP: law of the grantor‘s domicile, allowing consolidation of parallel IP under 1 law Is party autonomy possible in IP? If Art. 5(2) Berne Conv. is a mere prohibition of discrimination, it would not be affected by private choice of law; but where is party autonomy actually recognized ?

47. Basedow 47 / 96 New domains: intellectual property (III) Contracts for the sale and licensing of IP rights: general conflict rules on contracts, e.g. Rome I, apply, but only to obligatory, not to proprietary aspects IP arising from employment: Art. 60 EPA 1973: employee‘s habitual working place, no choice IP from employment: Switzerland Art. 122, Poland Art. 47: IP law ancillary to law governing the labour contract, but little choice Wider party autonomy for labour contracts and – indirectly – for law applicable to resulting IP in Taiwan, Art. 42 and Belgium, Art. 93

48. Basedow 48 / 96 New domains: intellectual property (IV) Rules on IP rights emerging from employment address the question of “initial ownership“: who is the first owner of a creation ? Under the lex loci protectionis that question would have to be answered by all laws of countries for which protection is claimed. If it is possible to reduce, either by objective connection or by the parties‘ choice, that large number of laws to a single law in the field of employment, why should that not also be permitted where an IP right arises from a cooperation agreement different from labour? In Belgium Art. 93 § 2 does not distinguish the forms of cooperation § 302 of the ALI Principles allows for a contractual designation of the law applicable to IP arising from pre-existing relationships

49. Basedow 49 / 96 New domains: capacity Logic: how can an incapable person choose the law granting him or her capacity? Is contracting out of incapacity possible? Consequence: capacity governed by the law of personal status, i.e. either by the national law or by the law of domicile; protection of the other party by the law of common residence (market) Common law jurisdictions: capacity governed by the law applicable to the contract, § 198 Rest.2nd, Art. 3539 La.Cc. Australian Law Refom Comm.: even if chosen by the parties Practical consideration: in the era of e-commerce, how can someone assess the capacity or the whereabouts of the other party ?

50. Basedow 50 / 96 New domains: concluding remarks Broad tendency granting greater weight to the parties‘ choice of law in many areas is undeniable Differences of the enabling provisions are noteworthy -- must the choice be explicit or can it be implied? -- are there formal requirements for the validity of the choice? -- is dépeçage permitted? -- when must the choice be made? -- can the choice later be amended? Efforts should be made to review the various provisions at a later stage aiming at greater consistency where appropriate

51. Basedow 51 / 96 Optional law in Europe Europeanisation of private law – Survey Fragmented legislative bases in the TFEU Types of legislation: decisions, directives, regulations “Binding“ and “optional“ regulations; the 29th or 2nd model Scope rules of optional instruments Choice of law and choice of optional instrument: double choice? Filling of gaps of the optional instrument

52. Basedow 52 / 96 Optional company law Survey: EEIG (e.g. arte), SE (e.g. Allianz, BASF), SCE The international dimension – condition of eligibility; practical implementation and difficulties arising for the SPE The residual national law and private ordering -- EEIG (Arts. 2,6 Reg. 2137/85): law at the central administration -- SE (Art. 9 Reg. 2157/2001): Statutes + law of registered office Transfer of registered office/central administration into other Member State is possible without a need of winding-up the company Consequence of relocation will be a change of the residual national law; hence an indirect choice of law is permitted

53. Basedow 53 / 96 Optional intellectual property law (I) Territoriality as an impediment to the Internal Market; it cannot entirely be overcome by harmonisation of national laws Unitary IP rights in the EU: -- Community trade mark, Reg 40/94, consolidated Reg 207/2009 -- Community plant variety right, Reg 2100/94 -- Community design, Reg 6/2002 -- European patent with unitary effects, Reg 1257 and 1260/2012 These rights are established in one go for the whole EU, in accordance with territoriality principle, administered by EU offices They are not accumulations of 28 national rights, but may even co-exist with them (Recital 6 of Reg. 207/2009 for the trade mark)

54. Basedow 54 / 96 Optional intellectual property law (II) Community trade mark acquired by registration in Alicante Owner may be any natural or legal person, both from inside the EU or from third countries (national treatment) Comprehensive coverage of almost all pertinent issues, few gaps Gaps in the administrative procedure: to be filled by “the principles of procedural law generally recognized in the Member States“, Art. 83 Reg 207/2009 Gaps in the legal regime of infringement proceedings: filled by -- lex fori in respect of procedure of Community trade mark courts -- PIL of the forum state, i.e. Art. 8(2) Rome II: lex loci actus

55. Basedow 55 / 96 Optional contract Law (I) Scholarly activities aiming at a European contract law since 1980 2001: first communication and public consultation by European Commission; Action Plan in 2003; Network on Common Principles of European Contract Law (CoPECL) 2005; Finalisation of the Draft Common Frame of Reference (DCFR) in 2008/2009; Appointment of Expert Group in 2010; Feasibility Study in 2011 Proposal for a Regulation on a Common European Sales Law (CESL) in October 2011, COM(2011) 635 final; withdrawl December 2014, announcement of new proposal 16 articles on scope (“chapeau rules“) + annex with 186 articles on sale of goods, supply of digital content and related services

56. Basedow 56 / 96 Optional contract law (II) Contrary to corporate and IP law, registration is insignificant for the determination of the law governing a contract; hence that law is intransparent for third parties and cannot bind them Rules on scope are the more important: choice of law v. incorporation 2 alternative conceptions: the 2 nd model, i.e. optional law as part of the (national) substantive law applicable in accordance with PIL, or the 28 th model, i.e. optional law as a special version of uniform law (e.g. CISG, Montreal Convention) with scope rules superseding PIL CESL proposed as 2 nd model of Member States‘ laws; consequently not available where the law of a non-EU state governs

57. Basedow 57 / 96 Optional contract law (III) CESL eligible only for cross-border transactions, Art. 4, and only for B2C transactions and for B2B transactions if a party is a SME CESL not available for two big traders and not for domestic contracts, unless Member State decides otherwise, Art. 13 What is a cross-border transaction? B2B and B2C contracts One of the parties must be established in the EU; hence CESL is available for transactions between EU party and third-state party, but not for two third-state parties No recourse to national law for interpretation or gap-filling permitted, Art. 7(2)

58. Basedow 58 / 96 Optional law in international treaties Uniform Law on International Sale of Goods (ULIS) of 1964 -- no prior application of PIL (=29 th model) -- reservation under Art. V: application only if chosen by the parties Franco-German optional matrimonial property regime, bilateral convention of 4 February 2010: assets acquired before and after marriage remain separate property; dissolution of marriage gives rise to a compensatory claim sounding in money Treaty provides for substantive law; regime is available irrespective of international dimension of marriage Available where the applicable law is either French or German (2 nd model); quid where a third state‘s law governs as spouses live there ?

59. Basedow 59 / 96 Concluding remarks on optional law Creation of optional law becomes popular in the EU because it is less intrusive on national law: next candidate after sales law will likely be insurance law Confinement of optional law to cross-border situations is widespread, but not imperative Optional law unfolds so-called vertical regulatory competition Relation between the opting-in agreement and private international law, in particular the parties‘ choice of law is still uncertain; the 2 nd model appears too complex and contradictory: why should we apply conflict rules in the absence of a conflict of laws?

60. Basedow 60 / 96 Indirect choice of law (Deliberate connections) Deliberate creation of a link with a jurisdiction as a means of (indirect) choice of law The smack of evasion (fraus legis) Background: assumption of quasi-natural and stable connection of persons, assets or legal relations with a specific jurisdiction Trend towards connecting factors referring to mobile instead of immutable facts Progressive adherence to the principle of recognition And what is left of fraus legis ?

61. Basedow 61 / 96 Indirect choice: lex loci celebrationis Form and substance: their changing weight in legal history Liberalization through the recognition of the local form of execution of a contract, the lex loci celebrationis Example 1: Avoiding notarial fees due under German company law by moving certain share deals to Switzerland Example 2: Marriage of European spouses in the ceremonial forms of African peoples under the Southern Cross Example 3: the “internet will“ established by a Dutch testator in Germany

62. Basedow 62 / 96 Indirect choice: habitual residence (I) Decline of nationality as a connecting factor for the law of personal status, family law and the law of succession -- the nationality/domicile conflict: no uniformity of outcome -- Europe: from emigration to immigration; nationality principle compelling more frequent application of foreign law -- increase of double citizenship depriving nationality of its indicative value for PIL -- law of citizenship became object of national policy-making driven by other considerations than cultural affiliation -- EU: prohibition of discrimination on grounds of nationality Strong inclination of many countries in the Western Hemisphere to domicile and habitual residence

63. Basedow 63 / 96 Indirect choice: habitual residence (II) Old and new Hague Conventions on the same subjects – from nationality to habitual residence -- Guardianship 1902 – Protection of infants 1961/children 1996 -- Marriage 1902 – Marriage 1978 -- Effects of marriage 1905 – Matrimonial property 1978 -- Effects of marriage 1905 – Maintenance 1973/Protocol 2007 From domicile to habitual residence -- domicile as a legal concept with divergent definitions -- habitual residence as a factual concept Private International Law of the EU: remainders of the nationality principle (Brussels IIbis, Rome III), but general trend towards habitual residence

64. Basedow 64 / 96 Principle of recognition (I) Liberalization of recognition in State A of (foreign) crystallizations of law occurred in State B indirectly grants private actors a choice between A and B The concept of recognition of foreign crystallizations of the law -- recognition of judgments = importation of res judicata effect -- recognition of authentic instruments and settlements ? -- recognition of administrative acts Recognition of legal situations -- Recognition of a marriage celebrated abroad -- Recognition of foreign companies -- Recognition of foreign trusts

65. Basedow 65 / 96 Principle of recognition (II): judgments Liberalization by abandoning the review of the foreign court‘s choice of law -- Foreign divorce decrees: from Hague Marriage Convention 1902 to the Hague Foreign Divorce Convention 1970 and Brussels IIbis -- Recognition of money judgments depending on incidental question of personal status: from Art. 27 no. 4 Brussels Conv. 1968 to Art. 34 Brussels I and Art. 24 Maintenance Reg. 4/2009 Liberalization by loosening the review of jurisdiction -- recognition of foreign jurisdiction under the “mirror theory“ in Latin America and de facto also in the EU and US -- no review within US and prospectively in the EU -- divorce decrees: Hague 1902, Hague 1970 and Brussels IIbis growing recognition of jurisdiction of petitioner‘s court

66. Basedow 66 / 96 Principle of recognition (III): companies “Incorporation theory“ and “real seat theory“ Attempts at international unification: Bilateral US treaties on friendship, commerce and navigation; Inter-American Conventions of 1979 and 1984 based on “incorporation theory“ European developments: The French Cour de cassation applied the European Convention on Human Rights in order to permit an Anstalt established in Liechtenstein to have its day in court ECJ 5 Nov 2002, case C-208/00 (Überseering BV): non-recognition of Dutch BV with place of business in Germany by German “real seat theory“ violated freedom of establishment, Art. 54 TFEU

67. Basedow 67 / 96 Principle of recognition (IV): companies Consequences of ECJ decisions in EU Member States: Belgium and Poland (legislation); Germany (Bundesgerichtshof) International company law and regulatory competition: the teachings of CENTROS (ECJ 9 March 1999, case C-212/97); Danish couple, with the aim of avoiding the minimum capital required by Danish law, had established a private limited company in UK and applied for the registration of a subsidiary in Denmark; business activities were intended only in Denmark AG La Pergola: “... in the absence of harmonisation competition among rules must be allowed free play in corporate matters.“ ECJ: non-registration in Denmark violated Art. 54 TFEU

68. Basedow 68 / 96 Indirect choice and fraus legis Deliberate choice of connection as an evasion of the law? Evasion as a matter of construction of the evaded law, no special prohibition being necessary (Oliver Wendell Holmes) Special statutory rules on evasion of law in national PIL (e.g. Spain, Taiwan, Tunisia) and Inter-American Convention 1979 Evasion is irrelevant where party autonomy is permitted Legal provisions favouring mobility (e.g. habitual residence as a connecting factor, rights of free movements) restrict the possible application of fraus legis

69. Basedow 69 / 96 Part III: Public regulation Measures of foreign policy (I) Forms and addressees of a state‘s action within its jurisdiction and vis-à-vis other states in the international community Objectives of state rules on choice of law: -- default situations where no private ordering occurred -- situations where third parties are affected -- protection of the state‘s self-interest vis-à-vis third states -- compensation of market imperfections -- protection of the internal public good Foreign policy measures and their private law effects: private actors as tools or hostages of foreign policy considerations

70. Basedow 70 / 96 Measures of foreign policy (II) The decline of reciprocity requirements in international private law conventions: -- older and new Hague Conventions; compare e.g. Protection of infants 1961 and Protection of children 1996 -- maritime law conventions; compare e.g. Limitation of liability of shipowners 1924 and Limitation of liability maritime claims 1976 Conclusion: depolitisation of convention-based private law Limitation of state action through public international law, in particular by the rules on jurisdiction Prescriptive, adjudicatory and enforcement jurisdiction; for PIL matters primarily prescriptive jurisdiction

71. Basedow 71 / 96 Non-recognition of foreign states (I) Can norms emanating from an entity that is not recognized as a state by the forum state‘s government be considered as “law“ ? Examples: Palestine; Northern Cyprus; Kosovo, Taiwan... Elements of statehood: territory, population, effective government; ascertainment depends on subjective views, i.e. on recognition containing element of volition and being primarily a matter for governments Is an assessment (recognition or non-recognition) made by the government binding on the courts of the country? Normative approach: AG Neumünster 16 Dec. 1986, IPRspr. 1986 no. 108, in French: Rev.crit.dr.int.pr. 77(1986) 675; UK certificates

72. Basedow 72 / 96 Non-recognition of foreign states (II) Factual approach: what matters is that the law adopted by a foreign entity within its territory is effective Texas v White, 74 U.S.700 at 732-733 (1868): non-recognition of rebel government in sister state, but reverence for its law ICJ, Advisory opinion on Namibia, I.C.J.Rep. 1971, 16 at para. 125: illegality of government does not affect internal order National case law on PIL from Switzerland, France, Germany, UK A differentiated solution: effectivity of law matters, but non- recognised foreign state has no standing in court

73. Basedow 73 / 96 Trade embargoes (I) Types of trade restrictions: -- exclusion of certain goods, e.g. narcotic drugs, from international trade in general; motivation in national or universal policy -- exclusion of certain goods from trade with a specific country, e.g. Iran or North Korea; motivation in foreign policy 3 kinds of legal issues: -- Scope of application (substantive, personal, geographical) of the embargo: national law of the state imposing the embargo -- Compatibility with public international law -- Ascertainment of the impact on transactions an applicable embargo may have: a matter of private international law and contract law, usually litigated outside the embargo state

74. Basedow 74 / 96 Trade embargoes (II) The US pipeline embargo of 1982 -- background and development -- the scope rules: extension to foreign affiliates acting abroad -- Pres. Rechtbank The Hague 17 Sep 1982, English translation in Int.Leg.Mat. 22 (1983) 66, disregarding the US embargo because of lack of jurisdictional basis under public int‘l law EU embargo against Iran (Reg. 961/2010): -- the scope rules -- legal persons as addressees defined through “control“ by natural persons “resident in“ Iran or Iranian state bodies – what about control by Iranian citizens resident abroad? Joint ventures? -- Supply of goods from non-EU states into Iran covered?

75. Basedow 75 / 96 Trade embargoes (III) Public enforcement and private law effects Contract terms assigning the risk of an embargo; e.g. Incoterm 2010 FOB A2: “Where applicable, the seller must obtain, at his own risk and expense, any export licence...“ Was the US pipeline embargo “applicable“ or was the seller excused? Proceedings may be pending in the courts of different countries: -- in the embargo state, which will enforce the embargo -- in the country whose law governs the contract -- in a third state Will the courts outside the embargo state give effect to the embargo?

76. Basedow 76 / 96 Trade embargoes (IV) Are trade prohibitions within the scope of the law governing the contract? (lex causae approach) -- but can the parties be expected to choose a law invalidating their transaction? -- how can third-state embargoes be given effect? Deliberate breach has been considered as immoral, BGH 21 Dec 1960, BGHZ 34, 169 at 176; supervenient embargo as excuse, Regazzoni v Sethia (1958) AC 301 (HL) Proximity between contract and embargo state is always relevant, special connection approach is more consistent, giving effect to the embargo as an “overriding mandatory provision“ Art. 9 Rome I and Art. 7 Rome Conv. compared

77. Basedow 77 / 96 Countervailing state measures for asymmetric private relations The weaker party in traditional civil law – individual assessment: minors; threat, mistake and fraud; protection of the weak – and of other parties‘ trust in PIL The modern trend: “categorical weakness“ and asymmetric information and motivation; protection by targeted mandatory legislation Protection of the weaker party also in PIL? The example of standard choice of forum clauses in consumer contracts, allowed by Carnival Cruise Lines v Shute, 499 U.S. 585 (1991), invalidated by ECJ 27 June 2000, joined cases C-240/98 to 244/98 (Océano Grupo Editorial v Rocio Murciano Quintero) Efficiency – to be assessed by the courts or by legislators ?

78. Basedow 78 / 96 Countervailing state measures: consumer contracts (I) 50 years of consumer policy and law -- US President Kennedy‘s consumer message 1962 -- Art. 169 TFEU: consumer protection as an objective of the EU -- mandatory private law -- national divergences; unification is not realistic, not even in EU -- need for conflict rules; challenge to party autonomy Personal scope of conflict rules -- consumer: only natural persons; private purpose of contract – purpose need not be consumption; antonym is the professional -- small legal entities -- dual purpose: ECJ 20 Jan 2005, case C-464/01 (Gruber v BayWa): strict construction of Art. 15 Brussels I

79. Basedow 79 / 96 Countervailing state measures: consumer contracts (II) Situative scope of conflict rules: “active“ and “passive“ consumers Defining the passive consumer: detailed conditions, Art. 5(2) Rome Conv. or broad description, Art. 6(1)(a) Rome I: “pursuance of commercial or professional activities in the country of the consumer‘s habitual residence“ Electronic commerce: worldwide activities of the professional? -- Art. 6(1)(b) Rome I: consumer is protected by his law, where the professional “directs such activities to that country...“; similar to Art. 15(1)(c) Brussels I -- ECJ 7 Dec 2010, joined cases C-585/08 and C-144/09 (Pammer and Hotel Alpenhof): jurisdiction of courts in consumer‘s country?

80. Basedow 80 / 96 Countervailing state measures: consumer contracts (III) Three types of bilateral conflict rules Complete suppression of party autonomy, e.g. in Switzerland, Louisiana, Oregon, China Party autonomy subject to mandatory provisions of the law of the consumer‘s habitual residence, Art. 5 Rome Conv., Art. 6 Rome I, Russia, Quebec, Korea, Turkey; “law-mix“ and safeguard of substantive minimum standard Application of the law most favourable to the consumer (out of a range of laws related to the contract, proposal CIDIP VII Critical assessment

81. Basedow 81 / 96 Countervailing state measures: consumer contracts (IV) Unilateral approach -- practice in countries with bilateral conflict rules is unilateral -- countries lacking specific conflict rules may enforce their own standards as public policy: Tunisia, Brazil Public policy enforcement in favour of “active“ consumers? The Brazilian Panasonic case, Superior Tribunal de Justiça 11 April 2000, Rev.Jur.Sup.Trib.Justiça 137 (2001) 387 Unilateral enforcement on top of a specific conflict rule (Art. 6 and 9 Rome I)? Contra: BGH 19 March 1997, IPRax 1998, 285, French translation in Rev.crit.dr.int.pr. 87(1998) 610; pro: Cass.fr. 23 May 2006, Rev.crit.dr.int.priv. 96 (2007) 85

82. Basedow 82 / 96 Countervailing state measures: employment contracts (I) Complex regulation in response to market imperfections: public law regulation, collective agreements, mandatory and dispositive contract law Resulting difficulties of characterization; example: is the prohibition to dismiss a member of a works council an issue of co- determination governed by the law of the site of the establishment or does it relate to the individual employment contract governed by Art. 8 Rome I? Implicitly in the latter sense ECJ 15 March 2011, case C- 29/10 (Koelzsch) Manifestations of cross-border employment: seafarers, air-borne personnel, multiple workplaces, posting, outsourcing

83. Basedow 83 / 96 Countervailing state measures: employment contracts (II) Conflicts approach has traditionally been unilateral, e.g. Art. 11(2) of the Labour Code of the Russian Federation of 2001: “this Code, the laws and other normative legal acts containing the labour law norms shall be mandatory for application in the whole Russian Federation territory for all employers...“ – Is the location of the court seized in Russia sufficient? Appropriate solution where all elements of the case are foreign? No need for the application of foreign labour law? Steps towards bilaterlism in the USA: § 196 Rest. 2 nd, Conflict of Laws (1971); few cases decided on that basis; instead application of labour law is considered a matter of statutory construction

84. Basedow 84 / 96 Countervailing state measures: employment contracts (III) The European model of a bilateral conflict rule: Art 6 Rome Conv., now Art 8 Rome I, with 5 basic elements Follow-ups outside the EU: Korea, Japan, Turkey, and Switzerland Exclusion of party autonomy in Tunisia, China, Ukraine, limited effect in the EU, as mandatory provisions of the deselected law always establish minimum protection for employee Hierarchy of objective connections: (1) habitual working place and, failing that, (2) the employer‘s hiring branch; according to ECJ in Koelzsch a “broad interpretation“ by means of an “overall assessment“ must be given to the habitual working place; is there any room left for the employer‘s hiring branch?

85. Basedow 85 / 96 Countervailing state measures: employment contracts (IV) The escape clause, Art. 8(4) Rome I, especially in maritime labour, BAG 24 Aug 1989, IPRspr. 1989 no. 72: British cashier working under English collective agreement on pay on a ferry flying the German flag on voyages between Dutch and British ports; application of German law against unfair dismissal declined; German law of the flag state was avoided by escape clause Enforcement of national labour law rules as overriding mandatory provisions? Definition by Art. 9(1) Rome I: the difficult delineation between public interest and protection of the weaker party; mandatory contract law may be covered in some cases, ECJ 23 Nov 1999, joined cases C-369/96 and C-376/96 (Arblade) Borderline to be drawn under the principle of proportionality by ECJ

86. Basedow 86 / 96 Countervailing state measures: employment contracts (V) Posting of workers: the dilemma between social protection and economic efficiency Illustration by ECJ 18 Dec 2007, case C-341/05 (Laval un partneri): under Art. 8 Rome I, Latvian law would likely have governed, subject to overriding mandatory provisions or public policy EU Dir. 96/71 on the posting of workers as an overriding mandatory provision, but putting only the host Member State under an obligation, not the country of origin; here (in Latvia), the Swedish high-standard labour law provisions are overriding mandatory provisions of a third state, which may, but need not be given effect

87. Basedow 87 / 96 Protection of foundational principles: Imperative norms Foundational principles -- collective goods, e.g. currency, cultural heritage, competition; public production and protection against private challenge -- essentials of the social model: mix of protection of the weaker and of public values; ECJ 9 Nov 2000, case C-381/98 (Ingmar) -- ethical foundations, in particular in family matters and as a weapon against medical and scientific progress: the example of surrogate motherhood: Cass. 6 April 2011, Gaz.Pal. 2011, 1181, but see ECHR 26 June 2014 (Mennesson v France, no. 65192/11) Legal tools: imperative norms -- public policy, positive and negative -- lois de police and overriding mandatory provisions -- a dubious distinction: which criteria?

88. Basedow 88 / 96 Identification of imperative norms (I) Explicit scope rules: Art. 3(1) French Cc: territorial application; GWB § 130(2): effects doctrine; definitions of US Fair Labour Standards Act; are scope rules contained in substantive law conflict rules, or are they subject to choice of law? Scope in the absence of explicit scope rules – relevant questions: -- what is the purpose of the foreign law and of corresponding domestic law? -- how essential is the purpose of the domestic law? -- how is the trend of legal development in a comparative view? Is the foreign or the domestic law following this trend? -- how close is the link between the facts of the pending case and the forum state? -- Which are the practical effects?

89. Basedow 89 / 96 Identification of imperative norms (II) The political character of the task Judicial review in federal entities -- US: abstention of the Supreme Court: Allstate Insurance v Hague, 449 U.S. 302 (1981) -- EU: legal review exercised by ECJ under basic freedoms, Union citizenship: ECJ 14 Oct 2008, case C-353/06 (Grunkin & Paul) Outside federal entities: a need for judicial self-containment in light of a trend emerging from comparative law and of the consequences the enforcement of imperative norms may have on the parties of the pending case

90. Basedow 90 / 96 International standards as imperative norms International standards: fundamental rights and human rights Checking the compatibility of choice-of-law rules with human rights; Germ. Const. Ct., BVerfG 22 Feb 1983, IPRspr. 1983 no. 56 Checking the compatibility of foreign law with human rights as specifications of domestic public policy/ordre public Enforcement of human rights irrespective of a proximity relation of the case with the forum state? The example of the islamic talaq (repudiation) Conclusion: no unqualified rejection of foreign legal institutions on the account of human rights, but a search for fine-tuned solutions

91. Basedow 91 / 96 Respecting foreign imperative norms: foreign currency law (I) Imperative norms of the forum state and concurrent jurisdiction: troublemakers in private international relations Efforts at containment and the respect for foreign imperative norms: currency, cultural property, competition law as examples Basics on international currency law: lex causae and lex loci executionis serving private interests, lex monetae inspired by the public interest Art. VIII(2)(b) IMF Agreement 1945: “Exchange contracts which involve the currency of any member and which are contrary to the exchange control regulations of any member maintained or imposed consistently with this agreement shall be unenforceable in the territories of any member.“

92. Basedow 92 / 96 Foreign currency law (II) Basic messages -- no rejection of foreign currency law as foreign public law or as contrary to the forum state‘s public policy -- duty to respect foreign currency law -- no proximity relation with state of currency required Impact beyond the scope of IMF Agreement Is Art. VIII(2)(b) a bilateral conflict rule? Currency laws of the lex fori and of other member states are not entirely equal; the provision is rather one of double unilateralism

93. Basedow 93 / 96 Protection of foreign cultural objects (I) What are “cultural“ objects? Definitions in social science, by the UNESCO Convention 1970, the Institut de droit international, the UNIDROIT Convention 1995 Cultural objects and other assets: valuation by a group beyond the material or utility value Prevailing political objective: removal from cross-border trade and immobilization of cultural objects, Arts. XX GATT and 36 TFEU; numerous national restrictions Consequence: for many cultural objects trade becomes illicit and is pushed into a – well-organized – international black market

94. Basedow 94 / 96 Protection of foreign cultural objects (II) Illicit export of cultural objects and the post-exportation lex situs on bona fide acquisition: assistance to the laundering of stolen art Are the export restricions respected as foreign overriding mandatory provisions, Art 9(3) Rome I, in the courts of the importing state? Little evidence The solution lies in substantive law: UNESCO 1970 requiring export certificates; UNIDROIT 1995: restitution of illegally exported cultural objects, but no conflict rule; similarly in the EU Dir. 93/7; only at the request of the state of origin, not in private litigation From lex situs to lex originis? Institut de droit international 1991, Art. 90 Belgium

95. Basedow 95 / 96 General conclusion Private international law and social change – from closed to open societies A change of perspective – from public to private ordering Multifarious forms and expansion of private arrangements into new areas of the law Public regulation: different forms, addressees and purposes Paradigm Europe: from the law governing external private relations to the private law of global home affairs

96. Good bye Au revoir Auf Wiedersehen