FORUM AND LAW Satu Pitkänen 2015

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 payment was belated and demands for compensation. The buyer disagrees. Problem?

§? ? 1. CHOICE OF FORUM 2. CHOICE OF LAW §§ §§ BUSINESS AGREEMENT Tresbien Money- Makers 1. CHOICE OF FORUM 2. CHOICE OF LAW

? §§ §§ 1. CHOICE OF FORUM Sources (determinants): 1. Contract CONVENTION §§ §§ BUSINESS AGREEMENT Forum selection clause Tresbien Money- Makers 1. CHOICE OF FORUM Sources (determinants): 1. Contract 2. International conventions 3. National laws

PROBLEMS ARISING Choice of forum 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

SOLUTIONS TO THE PROBLEMS Choice of forum Harmonization of laws Internationalization of judges and lawyers Recognition of foreign court rulings Forum non conveniens A court may refuse to exercise its power to hear a case if hearing the case is either inconvenient or unfair, the case has no connection with the forum state AND there is an alternative court

STATUTORY CHOICE OF FORUM All EU member states but Denmark Lugano Convention European countries Brussels Convention EU member states Brussels I Regulation All EU member states but Denmark 1. Recognition and enforcement of foreign court rulings 2. Forum is Stipulated by the contract Defendant’s domicile Appointed by the defendant

§ ? §§ §§ 2. CHOOSING THE APPLICABLE LAW 1. Contract CONVENTION §§ §§ BUSINESS AGREEMENT Reference Provision Tresbien Money- Makers 2. CHOOSING THE APPLICABLE LAW 1. Contract 2. International conventions 3. National laws 4. Common trade practices

1. CONTRACTUAL CHOICE-OF-LAW Referece provision Possible in dispositive matters Must be explicit or otherwise clear Most profitable option!

Choice of law Reference provisions, examples: ” This contract shall be governed by and construed in accordance with the laws of France.” “Governing law: This contract shall be governed in all respects by the laws of Germany.” “This contract shall be subject to and shall be construed and enforced pursuant to the laws of Japan, which is the location of the headquarters of the seller (or buyer).” “This agreement shall be governed by and construed in accordance with the laws of the State of Delaware, United States of America without regard to conflicts of laws principles.”

REJECTING FOREIGN LAW Choice of law Ordre Public 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 Choice of law

”..applicable law is that of ”…the law of the seller’s RENVOI Choice of law §§ 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”…

2. STATUTORY CHOICE-OF-LAW HAGUE CONVENTION 1955 Appoints the applicable law ROME CONVENTION 1980 Applied in trade in movables If the forum state is: Belgium Denmark Finland France Italy Norway Switzerland Sweden Niger in contracts generally If the forum state is an EU member state And If there is no more specific convention applicable

1. The law stipulated by the Choice of Law Clause in the contract 1) Hague Convention The Hague International Sales Convention, 1955 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 buyer’s country Choice of law

Applied in lack of more specific conventions Not applied to Choice of law 2) Rome Convention The European Communities Convention on the law applicable to contractual obligations, 1980 Applied in lack of more 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

Choice of law By the Rome Convention, the applicable law is: The law of the contract 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

Rome Convention, specific provisions: Trade of immovable property => The law of the country where the immovable property is situated 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 Choice of law

Choice of law Rome Convention, specific provisions (cont.): Employment contracts 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 Choice of law

3. PRINCIPLES OF NATIONAL LAWS AND COMMON TRADE PRACTICE Choice of law Applicable law is that of the state with Most significant relationship with the case E.g. 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 The law of the forum state The law of the state that has the most interest in determining the outcome of the dispute

…SO, 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 payment was delayed and demands for compensation. The buyer disagrees. Your instructions?

YOUR CONCLUSION?