1. International Business Law Sciences Po Paris Spring 2017
Limitations to the applicability of the chosen law
Giuditta Cordero-Moss, Ph.D., Dr.Juris
Professor, Oslo University

2. Party Autonomy and Overriding Interests
Party Autonomy enhances predictability
Party Autonomy assumes that conflicting laws are equivalent to each other
Party Autonomy is restricted when other policies override predictability and equivalence is not true

3. Examples of overriding interests-I
Protection of the weaker contractual party
Commercial Agency
Maritime Law
Unfair Terms of Contracts
Labour Law
Competition Rules
Insurance

4. Examples of overriding interests-II
Protection of Third Parties
Company Law
Encumbrances
Immovable property
Intellectual Property
Insolvency
Product liability
Legal capacity

5. Examples of overriding interests-III
Regulation of National Economy
Securities exchange
Foreign Exchange
Taxes and charges
Import-export

6. Examples of overriding interests-IV
Protection of Community’s Interests
Expropriation
Embargo
Money Laundering
Terrorism
Freedom of speech

7. Choice of Law - Restrictions
Party autonomy is not applicable in certain areas:
Immovable Property
Encumbrances
Company Law
Tort
Insolvency
Intellectual Property
Product Liability
Legal Capacity

8. Governing Law – Limitations I
Rules of the Lex Causae assuming that the factual consequences of the foreign rule are taken into consideration
Rules of the Lex Causae sanctioning the violation of foreign rules in certain areas
Comity of Nations
Good faith

9. Governing Law – Limitations II
Overriding mandatory rules (e.g. Art.7 Rome Convention/art. 9 Rome I)
Not all mandatory rules are overriding
Balancing of interests – predictability vs overriding interests

10. Overriding Mandatory Rules
Of the lex fori: Art. 7.2 Rome Convention/Art. 9.1 Rome I
Of a third country: Art. 7.1Rome Convention
Close connection
Regard to the rules’ nature and purpose
Regard to the consequences of application
Of a third country: Art. 9.3 Rome I
Place of performance
In case of unlawfulness

11. Governing Law – Limitations III
Ordre Public
Application of a foreign rule is
Manifestly
Incompatible with public policy of the forum

12. Ordre Public Truly international public policy Public policy
(negative/international)
Overriding mandatory rules
(positive/domestic public policy)
Mandatory rules
Non mandatory rules

13. Disregard of mandatory rules on agency
Applicable rule: compensation equal to one year of provisions, calculated on the average of the last 5 years of exercise
C-381/98 (Ingmar)
Alt 1.: compensation equal to six months of provisions – probably not against OP
Alt 2.: compensation equal to one day of provision – probably against OP

14. Typical examples where ordre public clause is applicable
Bribery
Drugs Traffic
Discrimination
Confiscation without Indemnity

15. Typical examples where ordre public clause is applicable - I
Measures essential to the accomplishment of the tasks entrusted to the European Community:
Competition law (Eco Swiss, C-126/97)
Protection of the agent (Ingmar, C-381/98 (?))
Consumer protection (Claro, C-168/05)

16. Typical examples where ordre public clause is applicable - II
Company Law
OAO Telecominvest, Sonera Holding B.V., Telia International AB, Avenue Ltd, Santel Ltd, Janao Properties Ltd, and IPOC International Growth Fund Ltd, Federal Commercial Court of West Siberia, 31 December 2006

17. Typical examples where ordre public clause is applicable - III
Insolvency (French Supreme Court, , Salen Dry Cargo AB v. Victrix Streamship Co, C.A., 2nd Circ., August 5, 1987)

18. Disregard of OMR Not enforceable OMR Enforceable ** Legal capacity
Agency *
Competition
Company
Insolvency
Security Exch
Foreign Exch
Import-export
Embargo

19. International Contracts and National Law
It is not in the power of the parties to exclude applicability of national overriding mandatory rules or of ordre public
In some cases: the parties can allocate the risk (e.g.: INCOTERMS, Force Majeure clause)
Choice of arbitration to solve disputes: does it really permit to disregard national rules?