Advanced Commercial Litigation – Conflict of Laws 1 (Contract) - £10.49   Add to cart

Lecture notes

Advanced Commercial Litigation – Conflict of Laws 1 (Contract)

Advanced Commercial Litigation – Conflict of Laws 1 (Contract) Learning Objectives – Understand: 1. The circumstances in which choice of law is an issue; 2. The extent to which the parties can choose the governing law of an international commercial contract; and 3. The effect of no choice of law being made by the parties in respect of the whole or part of an international commercial contract. International Contract - Two questions: o In which jurisdiction might proceedings connected with the contract be brought? (jurisdiction) o Which law will govern the contract? (applicable law / conflict of laws) Governing Law - English courts will apply English laws to then decide which law is the most appropriate amongst: o Common law (non-examinable) o Rome Convention (non-examinable) o Rome I Regulation – EXAMINED Rome I - Applies across all EU member states except Denmark - Articles: main elements of the regulation - Recitals: give more information about how each article operates in practice Does Rome I Apply? (Material + Temporal Scope) - Material Scope (Article 1) – substantive contracts in which: o Is the court faced with a conflict of laws; and o Does it relate to a contractual obligation; and o Is it a civil and commercial matter NOT excluded under Article 1?  CJEU will determine this as a matter of substance and not form (Lechouritou v Germany) and court will look beyond statements of case and consider the very substance of the dispute  EXCLUDED: Article 1(2)  Revenue matters;  Customs matters;  Administrative matters;  Questions involving the status or legal capacity of natural persons;  Obligations arising out of family relationships, including maintenance obligations, and matrimonial property regimes;  Wills and succession; 1  Bills of exchange, cheques, promissory notes and other negotiable instruments;  Arbitration agreements and agreements on the choice of court;  The law of companies / corporate or unincorporated bodies relating to the creation, registration, legal capacity, internal organisation or winding-up of such bodies, the personal liability of their officers and members for the obligations of the body;  The question whether an agent is able to bind a principal in relation to a third party;  The constitution of trusts and the relationship between settlors, trustees and beneficiaries;  Obligations arising out of dealings prior to the conclusion of a contract (such obligations fall within the Rome II Regulation; see Recital 10 to Rome I); and  Certain insurance contracts.  NB: exclusions are to be interpreted strictly and in line with their objective and not more broadly (Graphics Graphische Maschinen GmbH v Van Der Schee)  Multiple claims: court decides whether principal subject-matter of the claim falls within one of the exceptions (Peretz Winkler and Arzal Finance Corp v Angela Shamoon and Others) o If outside Material Scope you fall back onto Rome Convention, and then fall back onto Common Law - Temporal Scope 17 December 2009 o Article 28 This Regulation shall apply to contracts concluded after 17 December 2009  Corrigendum: This regulation shall apply to contracts concluded AS FROM 17 December 2009 o Contracts concluded on or after 17 December 2009 Rome I: Application of Laws Outside the EU - Article 2 + Recital 13 o Article 2: Any law specified by this Regulation shall be applied whether or not it is the law of a Member State  Any country’s laws may be applied, but will be applied by the court in the Member State o Recital 13: This Regulation does not preclude parties from incorporating by reference into their contracts a non-State body of law or an international convention  Thus Rome I extends to all contract cases meeting material and temporal scopes which involve choice between laws of different jurisdictions 2 Applicable Law & Freedom of Choice Choice of Law Made – Article 3 NB: always preferable to have an express governing law clause in a contract when drafting/reviewing - Where parties can and have decided applicable law - Article 3 o Article 3(1): “A contract shall be governed by the law chosen by the parties. The choice shall be made expressly or clearly demonstrated by the terms of the contract or the circumstances of the case. By their choice the parties can select the law applicable to the whole or to part only of the contract.”  Courts will look to intention  May be express or implied choice – however, Recital 16 states the conflict of law should be highly foreseeable and not for the court to seek some hypothetical will, thus unlikely to imply choice of law unless intention of parties can be shown with certainty e.g.  Standard form contract known to be governed by particular system of law, even if no express statement to this effect; or  Previous course of dealing between parties under contracts containing express choice of law clause, and clause omitted in circumstance which do not indicate deliberate change of policy by the parties o Marubeni Hong Kong and South China Ltd v Ministry of Finance of Mongolia: choice of jurisdiction clause also amounts to implied choice of law, unless compelling indications to the contrary o Now enshrined in Recital 12 as one factor to be considered  Recital 11: parties’ freedom to choose applicable law should be one of the cornerstones of the system of conflict of law rules in matters of contractual obligation (starting point) o Article 3(3) – anti-avoidance clause: all other elements relevant to the situation at time of choice are located I a country toerht ahn country whose law was chosen, choice of parties shall not prejudice application of provisions of that other country’s law which cannot be derogatedfrom by agreement  Therefore if all elements of a transaction are connected to one country, and the law of another country is chosen, then that chosen law will be subject to mandatory provisions of that first country where all elements of a the situation are present o Supplemented by Recital 15: rule applies whether or not choice of law accompanied by chocie of court or tribunal.  “Where a choice of law is made and all other elements relevant to the situation are located in a country other than the country whose law has been chosen, the choice of law should not prejudice the application of provisions of law of that country which cannot be derogated from by agreement.”

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