RULES THAT REGULATE AFFAIRS OF PRIVATE PERSONS INTERNATIONALLY

Moneymakers Ltd. from England contracted to by goods from a French company Tresbien SA. The buyer received the delivery and paid for it. However, now the seller claims that the paymet was delayed and claims for compensation. The buyer disagrees. Their first problem?

§§ §§ ? WHICH LAW TO APPLY > LAW? - WHERE TO LITIGATE > FORUM?

FORUM IS Municipal court Arbitration tribunal

SOURCES OF PRIVATE INTERNATIONAL LAW 1. Contract 2. International treaties 3. Private international law of the states concerned 4. Lex mercatoria

PROBLEMS ARISING Forum shopping Homeward trend = the claimant’s tendency to choose the forum he expects will offer best prospects for a successful lawsuit Homeward trend = court’s tendency to apply its own law (lex fori) Favouring the domestic party

REMEDIES TO THE PROBLEMS Recognition of foreign court rulings Forum non conveniens A court may refuse to exercise its power to hear a case if doing so is either inconvenient or unfair the case has no connection with the forum state Harmonization of laws Internationalization of judges and lawyers

NATIONAL JURISDICTION FORUM SELECTION NATIONAL JURISDICTION PROVISIONS INTERNATIONAL CONVENTIONS CONTRACTUAL CHOICE - OF - FORUM

CHOICE OF FORUM ? CONVENTION STATE A STATE B STATE C CONTRACT Forum Selection Clause STATE C

NATIONAL JURISDICTION CONVENTIONS Brussels I Regulation Adopted by all of the EU member states but Denmark Successor of Brussels Convention, still applicable in Denmark Lugano Convention Applied by the other European countries => The signatory states have agreed to recognize and enforce each other's court rulings NATIONAL JURISDICTION PROVISIONS INTERNATIONAL CONVENTIONS CONTRACTUAL CHOICE-OF-FORUM

=> By the Brussels – Lugano Conventions, the forum state is 1. The state the parties have agreed on by express or implied act 2. The state of the place of domicile of the defendant, unless 3. The defendant wishes to use his opportunity to bring the lawsuit to a different court.

CHOOSING THE GOVERNING LAW §§ §§ §§?

OPTIONS Law of the forum state Law applicable in the case > LEX FORI Law applicable in the case > LEX CAUSAE Qualification Point of reference

REJECTING FOREIGN LAW A court may reject foreign law being in conflict with the state’s Ordre Public = the public policy and the basic legal principles of the state E.g. Contracts regarded as illegal Acts violating human rights Social norms Provisions with public interest Territorial provisions

APPLICABLE LAW §§ §§ CONVENTION CONTRACT Forum Selection Clause Reference provision §§

”..applicable law is that of ”…the law of the seller’s RENVOI §§ BUYER’S state §§ SELLER’S state CONTRACT Reference provision: ”..law of the buyer’s state” BUYER SELLER LAW OF BUYER’S STATE: ”..applicable law is that of the seller’s state” LAW OF SELLER’S STATE: ”…law of the contract” §§ LAW OF BUYER’S STATE ”…the law of the seller’s state”…

CHOICE-OF-LAW RULES used by municipal courts to determine which state’s law they should apply in hearing a civil dispute GOVERNMENTAL INTEREST MOST SIGNIFICANT RELATIONSHIP STATUTORY CHOICE – OF LAW CONTRACTUAL CHOICE – OF - LAW

CONTRACTUAL CHOICE-OF-LAW Referece provision Possible in dispositive matters Must be explicit or otherwise clear The state whose legal system has been adopted must have a connection with the case GOVERNMENTAL INTEREST MOST SIGNIFICANT RELATIONSHIP STATUTORY CHOICE – OF LAW CONTRACTUAL CHOICE – OF - LAW

STATUTORY CHOICE-OF-LAW TRADE IN MOVABLES The Hague International Sales Convention, 1955 The United Nations Convention on Contracts for the International Sale of Goods CISG, 1980 CONTRACTS GENERALLY The Rome Convention on the law applicable to contractual obligations 1980 GOVERNMENTAL INTEREST MOST SIGNIFICANT RELATIONSHIP STATUTORY CHOICE – OF LAW CONTRACTUAL CHOICE – OF - LAW

If both parties come from the CISG countries HAGUE CONVENTION CISG ROME CONVENTION Applied in trade in movables If the forum state is: Belgium Denmark Finland France Italy Norway Switzerland Sweden Niger And the CISG is not applicable If both parties come from the CISG countries Or The applicable law is that of a state which has signed the CISG in contracts generally If no specific convention applies And If the forum is an EU member state

1. The law stipulated by the Choice of Law Clause in the contract 1. The Hague Convention The applicable law is: 1. The law stipulated by the Choice of Law Clause in the contract 2. The law of the country of the seller, unless the order was taken in the country of the buyer or in the country of business of the buyer GOVERNMENTAL INTEREST MOST SIGNIFICANT RELATIONSHIP STATUTORY CHOICE – OF LAW CONTRACTUAL CHOICE – OF - LAW

2. The CISG Consists of Choice-of-law provisions Material harmonization GOVERNMENTAL INTEREST MOST SIGNIFICANT RELATIONSHIP STATUTORY CHOICE – OF LAW CONTRACTUAL CHOICE – OF - LAW

The CISG consists of four parts: 1. Sphere of application and general provisions 2. Formation of a contract 3. Sale of goods 4. Final provisions GOVERNMENTAL INTEREST MOST SIGNIFICANT RELATIONSHIP STATUTORY CHOICE – OF LAW CONTRACTUAL CHOICE – OF - LAW

CISG CONTRACTING STATES (April 4, 2004) Argentina, Australia, Austria, Belarus, Belgium, Bosnia-Herzegovina, Bulgaria, Burundi, Canada, Chile, China(PRC), Columbia, Croatia, Cuba, Czech Rep, Denmark, Ecuador, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Guinea, Honduras, Hungary, Iceland, Iraq, Israel, Italy, Kyrgystan, Latvia, Lesotho, Lithuania, Luxembourg, Mauritania, Mexico, Moldova, Mongolia, Netherlands, New Zealand, Norway, Peru, Poland, Romania, Russian Federation, Saint Vincent & Grenadines, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Syria, Uganda, Ukraine, United States, Uruguay, Uzbekistan, Yugoslavia, Zambia THE CISG CAN BE EXCLUDED OR INCLUDED BY THE CONTRACTING PARTIES

The CISG does not apply to sales Of goods bought for personal, family or household use unless the seller neither knew nor ought to have known that the goods were bought for such use On execution or otherwise by authority of law Of stocks, shares, investment securities, negotiable instruments or money Of ships, vessels, hovercraft or aircraft Of electricity GOVERNMENTAL INTEREST MOST SIGNIFICANT RELATIONSHIP STATUTORY CHOICE – OF LAW CONTRACTUAL CHOICE – OF - LAW

transaction (each party’s SCOPE OF THE CISG Is it an International transaction (each party’s place of business is in a different country)? YES NO YES YES Have both countries ratified the CISG? Is the contract a sale of goods transaction? Is it a commercial (merchant- to-merchant) transaction? Did the parties opt-out of the CISG in a choice of law clause? NO YES NO Has the country with the closest connection to the contract ratified the CISG? NO NO CISG governs YES Domestic law governs NO NO YES Does the ratifying country exclude the CISG coverage unless both countries have ratified? NO YES Modified from: Richards, E. 1994. Law for global Business. Irwin, USA Did the parties opt-in to the CISG in a choice of law clause? YES

Superseded by specific conventions GOVERNMENTAL INTEREST 3. The Rome Convention Superseded by specific conventions Not applied to e.g. Status or legal capacity of natural persons Bills of exchange, cheques, promissory notes Family law Procedural law, arbitration agreements Law of companies, foundations, associations Authority of an agent or a representative MOST SIGNIFICANT RELATIONSHIP STATUTORY CHOICE – OF LAW CONTRACTUAL CHOICE – OF - LAW

Recognizes "ordre public" of the forum state The Rome Convention Excludes renvoi => the choice of law provisions of the country specified by the Convention shall not be applied Recognizes "ordre public" of the forum state GOVERNMENTAL INTEREST MOST SIGNIFICANT RELATIONSHIP STATUTORY CHOICE – OF LAW CONTRACTUAL CHOICE – OF - LAW

By the Rome Convention, the applicable law is: The law chosen by the parties The law of the country with which the contract is most closely connected => the country where the party, who is to effect the performance which is characteristic of the contract, has his habitual residence or central administration unless it appears from the circumstances as a whole that the contract is more closely connected with another country GOVERNMENTAL INTEREST MOST SIGNIFICANT RELATIONSHIP STATUTORY CHOICE – OF LAW CONTRACTUAL CHOICE – OF - LAW

Rome Convention, specific provisions: Trade of immovable property => The law of the country where the immovable property is situated Carrier => the law of the country where the carrier has his principal place of business, unless it appears from the circumstances as a whole that the contract is more closely connected with another country Consumer trade => the minimum protection of the mandatory rules of the consumer’s country’s law if the seller knew that the buyer is a consumer GOVERNMENTAL INTEREST MOST SIGNIFICANT RELATIONSHIP STATUTORY CHOICE – OF LAW CONTRACTUAL CHOICE – OF - LAW

Rome Convention: Employment contracts but 1. The law of the contract but the choice of law shall not have the result of depriving the employee of the protection afforded to him by the mandatory rules of the law which would be applicable in the absence of choice 2. If no choice of law was made, the law of the country where the employee habitually carries out his work in performance of the contract 3. If no such country can be appointed, the law of the country in which the place of business through which he was engaged is situated Unless it appears from the circumstances as a whole that the contract is more closely connected with another country GOVERNMENTAL INTEREST MOST SIGNIFICANT RELATIONSHIP STATUTORY CHOICE – OF LAW CONTRACTUAL CHOICE – OF - LAW

MOST SIGNIFICANT RELATIONSHIP The law of the state that has the most contacts with the parties and their transaction GOVERNMENTAL INTEREST MOST SIGNIFICANT RELATIONSHIP STATUTORY CHOICE – OF LAW CONTRACTUAL CHOICE – OF - LAW

Most significant relationship General factors: Which state’s law will Be furthered the most by applying it to the case Best promote the underlying policies of the legal subject-matter area involved Specific factors: Place of act or injury, nationality, domicile, residence, place of incorporation, where the relationship between the parties was centered, location of property etc. GOVERNMENTAL INTEREST MOST SIGNIFICANT RELATIONSHIP STATUTORY CHOICE – OF LAW CONTRACTUAL CHOICE – OF - LAW

GOVERNMENTAL INTEREST MOST SIGNIFICANT RELATIONSHIP The law of the forum state The law of the state that has the most interest in determining the outcome of the dispute STATUTORY CHOICE – OF LAW CONTRACTUAL CHOICE – OF - LAW