International Commercial Law Choice of Governing Law University of Oslo Giuditta Cordero Moss, Ph.D., Dr.Juris Prof.ass., International Commercial Law, Oslo University

Conflict of laws International transactions: –Between parties having place of business in different states (CISG art. 1.1) –Involving a choice between the law of different countries (Rome Convention art. 1.1) –Transaction has a foreign element (French CPC art 1492) More than one national law seem to be applicable

Mechanisms for cross-border contracts Conflict rules (PIL) determine the law of what country governs Conflict rules are part of each country’s own law EU has harmonised conflict rules Norway has own conflict rules

Mechanisms for cross-border contracts, cont. Judge applies his own conflict rules First step: identify forum Then: apply conflict rule So: conflict rule determines what country’s substantive law governs the contract

Choice of Forum Civil procedure of the judge International Instruments –Bruxells regulation –Lugano Convention –Hague Convention?

Choice of forum II Defendant’s forum Place of performance … Exhorbitant fora Exclusive fora Forum chosen by the parties

Application of conflict rules FIRM OFFER Forum: Lugano convention, art. 2 or 5.1 Governing Law: –Italian subcontractor: Italian law –English subcontractor: English law FORCE MAJEURE Forum: Lugano convention, art. 2 or 5.1 Governing Law: –Italian supplier: Italian law –English supplier: English law

Party Autonomy The vast majority of PILs allow parties to choose the governing law Two possible effects: –Incorporation of the chosen law in the contract –Choice of governing law

Effects of Party Autonomy Domestic contracts: –Incorporation (e.g. Art. 3 Rome Convention) International contracts: –Choice of law (e.g. Art. 1.1 Rome Convention) –Limitations (e.g. Art. 7 Rome Convention)

Exercise of Party Autonomy Expressed choice or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case Severability

How to Choose Governing Law No need to choose a connected law Identify particularly favourable law (difficult): –What protection/remedy is most likely to be needed –What law provides that protection/remedy Avoid the other party’s law (not always necessary) Choose a law particularly developed in the area Choose a stable law which is sufficiently known Choice of Lex Mercatoria is not equivalent to choice of law

Closest Connection Lacking parties’ choice Too vague

Closest Connection- Rome Convention Art. 4.2 Presumption: –Habitual residence/place of business –Characteristic performance Art. 4.5 Exception: –Characteristic performance cannot be determined –Circumstances as a whole show closer connection

Applicable Law – Certain Contracts Immovable property Carriage of goods Consumer contracts Employment contracts

Governing Law – Scope of Application Interpretation of the contract Performance of the contract Consequences of non-performance Consequences of invalidity Termination NOT choice of law rules