Private International Law Sciences Po Paris Spring 2017 Harmonisation of contract law Giuditta Cordero-Moss, Ph.D., Dr.Juris Professor, Oslo University

Is there a need for choice of law? Self-sufficient, autonomous contracts Lightly unconsciously inspired by common law Use common law possibility to write exclusive regulation Boilerplate-clauses Regulate contract construction and operation Seldom negotiated Not adapted to governing law

”Interpretation” 1.2.2 References in the singular shall include references in the plural and vice versa, and the words denoting natural persons shall include partnerships, firms, companies, corporations, joint ventures, trusts, associations, organisations or other entities (whether or not having a separate legal personality); 1.2.9 refrences to ”construction” and ”construct” include, unless the context otherwise requires, design, procurement, delivery, installation, testing, completion, commisioning, remedying of defects and other activities incidental to the process of construction; 1.2.11 any references to ”parties” shall mean the Seller and the Purchaser and a ”party” shall mean either of them;

”Representations and warranties” Each Party represents and warrants to and for the benefit of the other Party as follows: 11.1 It is a company duly incorporated and validly existing under the laws of ...(in respect of the Seller) and of... (in respect of the Buyer), is a separate legal entity capable of suing and being sued and has the power and authority to own its assets and conduct the business which it conducts and/or proposes to conduct; 11.2 Each Party has the power to enter into and exercise its rights and perform and comply with its obligations under this Agreement; 11.3 All actions, conditions and things required by the laws of ...to be taken, fulfilled and done in order to enable it lawfully to enter into, exercise its rights under and perform and comply with its obligations under this Agreement, to ensure that those obligations are valid, legally binding and enforceable and to make this Agreement admissible in evidence in the courts of... or before an arbitral tribunal, have been taken, fulfilled and done. 11.4 Its entry into, exercise of its rights under and/or performance of, or compliance with, its obligations under this Agreement do not and will not violate or exceed any power granted or restriction imposed by any law or regulation to which it is subject or any document defining its constitution and do not and will not violate any agreement to which it is a party or which is binding on it or its assets 11.5 Its obligations under this Agreement are valid, binding and enforceable;

“International law” for international contracts? New Lex mercatoria Trade usages Generally acknowledged principles Restatements of principles UPICC PECL DCFR CESL Standard contracts by branch organisations Publications by organisations

Party autonomy Roma I art 3: “Law” Roma I recital 13: This Regulation does not preclude parties from incorporating by reference into their contract a non-State body of law or an international convention.

Roma I recital14 Should the Community adopt, in an appropriate legal instrument, rules of substantive contract law, including standard terms and conditions, such instrument may provide that the parties may choose to apply those rules.

European instruments DCFR 11.10.2011: COM(2011) 635 final on a Common European sales law (CESL) Approved by European Parliament 26 February 2014 Not approved by Council 9.12.2015: COM (2015) 635 final – Proposal for a directive on certain aspects conserning digital sales

CESL: Optional instrument, second regime Assumes active choice by the parties Creates “within each member State’s national law a second contract law regime … identical throughout the Union and existing alongside the pre-existing ! rules of national contract law” (recital 9) Should “not amount to, and not be confused with, a choice of the applicable law within the meaning of the conflict-of-law rules and should be without prejudice to them (recital10)

Proposal of directive on digital sales Full harmonisation of: conformity criteria, hierarchy of the remedies, periods for the reversal of burden of proof, legal guarantees Termination or price reduction if the seller does not repair or replace the goods within a reasonable time Right to terminate in case of minor defects No duty to notify a defect of the goods to the seller within a certain period of time from its discovery Period for the shift of the burden of proof is extended to two years No rules on right to receive compensation for the losses caused by lack of conformity

UNCITRAL Model Law on International Commercial Arbitration Art. 28: The arbitral tribunal shall decide the dispute in accordance with such rules of law as are chosen by the parties […] Failing any designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers applicable.

Can “rules of law” govern a contract to the exclusion of any national law?

Irrevocable offer ”This offer is binding on the Offeror and cannot be revoked before 30 days have elapsed from the date hereof” May the offer be revoked within the 30 days term?

Firm Offer and National Law Romanistic systems of law - Art. 1329 Italian Civil Code: Firm offer is binding. Revocation is ineffective Germanic systems of law - § 145 German BGB: Firm offer is binding. Revocation is ineffective Common Law systems USA: Promissory estoppel (irrevocable to the extent it has induced offeree’s action) England: Revocable if there is no consideration

Rules of law • Art. 2.4 Unidroit: Offer is not binding until accepted, but cannot be revoked if it indicates that it is irrevocable (by fixing a time for acceptance or otherwise). Art. 1.4: Principles cannot derogate from overriding mandatory rules of the governing law. • Art. 2:202, 1:103 PECL: Idem

Partial Impediment ”Non performance by a party of its obligations hereunder is excused if such party was prevented from fulfilling its obligations by an event beyond that party’s control, that was not foreseen at the date hereof and that could not be reasonably avoided or overcome.” Impediment reduces the debtor’s capacity by 50% If plurality of creditors, how is the reduction allocated?

Partial Impediment and National Law Norwegian law: Full delivery to the first creditor in time (Rt 1970 s. 1059) German law: Delivery to all creditors reduced pro rata (§ 275(1) BGB) Common Law: Full delivery to all creditors (J. Lauritzen A.S. v. Wijsmuller B.V. (The Super Servant Two) [1990] 1 Lloyd’s Rep. 1 )

Rules of law • Unidroit: Not regulated (art.1.6: gap filling by autonomous interpretation, 1.8 usages between the parties, generally acknowledged usages) • PECL: Not regulated (art.1:106(2): gapfilling by autonomous interpretation, otherwise governing law)

Can “rules of law” ensure uniform regime?

Uniform application of “good faith”? Loan agreement “Art. 13, Covenants”: submit audited financial statements within 3 days from audit “Upon any breach by the Borrower of any of the obligations listed in article 13, the Bank shall be entitled to terminate this contract with immediate effect.”

Good faith Unidroit: Good faith is general principle (1.7). To be understood as good faith in international trade PECL: General duty to act in good faith (1:201). Autonomous interpretation

CESL 1. Each party has a duty to act in accordance with good faith and fair dealing. 2. Breach of this duty may preclude the party in breach from exercising or relying on a right, remedy of defence which the party would otherwise have .... 3. The parties may not exclude the application of this Article or derogate from or vary its effects. (Art. 2) In transaction between traders, good commercial practice in the specific situation concerned should be a relevant factor in this context.” (Recital 31)

Good faith in international trade • General principle? • Generally acknowledged trade usage? • Contract practice: No good faith • www.trans-lex.org: – Good faith is general principle • Awards (no specific standard) • CISG (no good faith as duty between parties) •... • UNIDROIT Principles and PECL