PRIVATE INTERNATIONAL LAW Conflict of Laws

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Private International Law Determines The competent court The applicable law in international relations between private parties

Sources of Private International Law 1. The contract between the parties (reference provision) 2. International treaties 3. Private International Law of different countries 4. Trade usages, Lex Mercatoria

Lex Mercatoria consists of common trade practices and norms of customary law among international trading partners. It dates back to the Renaissance. Its main principles are that a merchant must deal in good faith, contracts are binding and resorting to arbitration tribunals .

CHOICE OF FORUM

Forum is Municipal court Arbitration tribunal

Arbitration tribunal The parties can agree to have an Arbitration Institution solve their legal disputes Provides for a written Arbitration Agreement The institution sets the rules, conducts proceedings and manages the administrative aspects The arbitration award is binding New York Convention (1958) = The UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards

Private International Law §§ §§ CONVENTION CONTRACT Reference provision §§ Private International Law

The forum can be appointed by 1. Contract between the parties

Forum shopping Forum non conveniens = the claimant’s tendency to choose the forum he expects will offer best prospects for a successful lawsuit Forum non conveniens => a court may refuse to exercise its power to hear a case when doing so is either inconvenient or unfair

The forum can be appointed by 2. International Conventions: Brussels I Regulation Adopted by all of the EU member states but Denmark Successor of Brussels Convention, still applicable in Denmark Lugano Convention (1988) Applied by the other European countries => The signatory states have agreed to recognize and enforce each other's court rulings

=> The forum is 1. The court the parties have agreed on in writing or which otherwise can be derived from their practices or 2. The court 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.

The forum can be appointed by 3. National jurisdiction provisions

Tresbien SARL from France contracted to by goods from German Allesgut GmbH. The buyer received and paid for the delivery. However, the seller claims that the paymet was delayed and claims for compensation. The buyer disagrees. What to do?

CHOICE OF LAW

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Private International Law §§ §§ CONVENTION CONTRACT Reference provision §§ Private International Law

CONTRACTUAL CHOICE OF LAW Referece clause is always possible in business contracts Must be explicit or otherwise clear The applicable law must have a connection to the case

Regardless the reference provision Procedural law is the law of the forum (lex fori) In consumer trade, the minimum requirements of law of the consumer’s country In employment contracts, limitations to contractual freedom

A country may refuse to recognize foreign law being in conflict with its mandatory law Ordre Public = the public policy of a country, its mandatory law and basic legal principles

STATUTORY CHOICE OF LAW TRADE IN MOVABLES OTHER CONTRACTS The Hague International Sales Convention 1955 The United Nations Convention on Contracts for the International Sale of Goods CISG 1980 The Rome Convention on the law applicable to contractual obligations

If both parties come from CISG signatories HAGUE CONVENTION CISG ROME CONVENTION Applied If the case is brought before a court in: Belgium Denmark Finland France Italy Norway Switzerland Sweden Niger And the business locations of the parties are NOT in the CISG signatory states If both parties come from CISG signatories Or the Hague Convention, the Rome Convention or another international connection rule provides In other than contracts of trade in movables If the case is brought before a court in the EU

1. The Hague Convention According to 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

Not applied to strongly national issues such as 2. The Rome Convention Not applied to strongly national issues such as Legal competence Bills of exchange, cheques, promissory notes Family law Procedural law- arbitration agreements Law on foundations, associations, companies Procedural law

Excludes renvoi Honors "ordre public" => the choice of law provisions of the country specified by the Convention shall not be applied Honors "ordre public"

According to the Rome Convention, the applicable law is:

Determined by the choice of law clause in the contract General provisions: Determined by the choice of law clause in the contract The law of the country with which the contract has the most significant relationship => the country where the party, who is to effect the performance which is characteristic of the contract, has his habitual residence, unless it appears from the circumstances as a whole that the contract is more closely connected with another country

Trade of immovable property Specific provisions: Trade of immovable property => The law of the country where the immovable property is situated (Lex Rei Sitae) 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

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

3. The CISG

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 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 CISG governs Modified from: Richards, E. 1994. Law for global Business. Irwin, USA

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 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? CISG governs NO YES Does the ratifying country exclude the CISG coverage unless both countries have ratified? Did the parties opt-in to the CISG in a choice of law clause? Modified from: Richards, E. 1994. Law for global Business. Irwin, USA YES

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

The contracting parties are located in different signatory states or The CISG Is applied if The contracting parties are located in different signatory states or The applicable law is that of a country which is a signatory to the CISG => CISG will be applied as part of the country's private international law The parties have agreed to apply the CISG

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

CISG Can be excluded By a reference provision in the contract By a reservation of a signatory country

Parts of The CISG: 1. Sphere of application and general provisions 2. Formation of a contract 3. Sale of goods 4. Final provisions

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