1. FORUM AND LAW

2. 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?

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

4. ? §§ §§ 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

5. 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

6. AVOIDING 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

7. 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

8. § ? §§ §§ 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

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

10. 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.”

11. 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

12. ”..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”…

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. …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?

21. Tresbien v. Moneymakers, solution
Claimant: Tresbien (seller), defendant: Moneymakers (buyer)
Forum:
1. As contracted
If contract is silent
2. Brussels Convention: Defendant’s country
=> British court
Law:
1. As contracted
2. Statutory choice: Rome Convention
=> Law of the country with which the contract is most closely connected

22. Tresbien v. Moneymakers, solution (cont.)
The Rome Convention:
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
=> Seller’s performance is characteristic, buyer just pays
=> French law

23. YOUR CONCLUSION?

24. ALTERNATIVE MEANS OF DISPUTE RESOLUTION

25. ARBITRATION Arbitration agreement always in writing Award is binding
Agreement is voluntary
Solution in the form of a contract A M I C B L E N S
MINI-TRIAL
MEDIATION
NEGOTIATION

26. Negotiation The parties renegotiate to straighten up the situation
Provides for a sincere effort of the parties to arrive at a solution
Agreement is voluntary
The solution is in the form of a contract

27. Mediation
The parties appoint a neutral third party, a mediator to help them find a solution
Agreement is voluntary
The solution is in the form of a contract

28. Mini-trial
Lawyers from both sides present legal and factual arguments and try to solve the problem with the help of a neutral third party
Agreement is voluntary
The solution is in the form of a contract

29. PROS AND CONS ?

30. Arbitration

31. ARBITRATION
The parties agree in writing to subject their dispute to arbitration
Before or after the dispute has arisen
Options:
Ad Hoc arbitration
Institutional arbitration

32. Model Arbitration Clause or Separate Arbitration Agreement
 Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the UNCITRAL Arbitration Rules as present in force. Parties may wish to consider adding: (a) The appointing authority shall be __________ (name of institution or person); (b) The number of arbitrators shall be __________ (one or three); (c) The place of arbitration shall be __________ (town or country); (d) The language(s) to be used in the arbitral proceedings shall be __________.

33. ARBITRATION PROCEDURE (1)
Arbitration clause/agreement
The law applicable to the arbitration
The site of the arbitration
The procedural rules applicable to the arbitration
Determination of issues to be arbitrated
Drafting the demand for arbitration
Demand for arbitration, a reference to the contract in question
A reference to the arbitration clause/separate arbitration agreement between the parties
The general nature of the claim, amount of money involved
The relief or remedy sought
A proposal as to the number of arbitrators if not in the a. clause

34. ARBITRATION PROCEDURE (2)
Selecting the arbitrator
Alternative procedures
The arbitration clause/agreement may stipulate the procedure
The parties may agree on the sole arbitrator
The party seeking arbitration can be required to produce a list of e.g. 5 candidates, out of which the responding party chooses one
If an arbitration panel is required, the parties appoint their own arbitrators and they appoint the third, neutral panel member
Arbitrator
Must be impartial
Has generally more discretion than court judges

35. ARBITRATION PROCEDURE (3)
Hearing
Less formal and time consuming than in court litigation
Arbitrators generally may issue subpoenas for witnesses
Testimony is not under oath under most arbitration systems
Evidence must be relevant
Hearing takes place behind closed doors with the parties, their representatives and the arbitrator

36. ARBITRATION PROCEDURE (4)
Arbitral award
Arbitrator must decide the case on the basis of
The law chosen by the parties or determined by the conflict of laws rules
If the parties have expressly authorized the arbitrator to do so, he may apply concepts of fairness and equity
The terms of the contract, trade usage
The award consists of the decision of the arbitrator as of the winning party and of the remedy
The award is binding, a court can’t change it
The losing party has the right to challenge the award in court by refusing to abide by the decision
The prevailing party then must bring a court action either in the country of origin or some other country asking for recognition and confirmation of the award
The award remains confidential unless the parties agree to release it to the public

37. 1. AD HOC ARBITRATION
The parties furnish all of the administrative services needed
Agree on the procedural rules (e.g. UNCITRAL Arbitration Rules)
Formulate a mechanism for appointing the arbitrators > an odd number (1,3,5)
Proceedings are confidential
Not a commonly used procedure

38. UNCITRAL ARBITRATION RULES
(=United Nations Commission for International Trade and Law)
Originally intended for Ad Hoc arbitration
Abided by arbitration institutions if the parties call for the procedures in their agreement
No time limit for issuing a decision
The arbitrators must consider custom and trade usage
Considerable discretion to the arbitrators in determining the admissibility of evidence and witnesses
The losing party will bear all of the costs unless the arbitrator believes they should be shared

39. 2. INSTITUTIONAL ARBITRATION
The parties appoint the arbitration institution
The institution conducts the proceedings and manages the administrative aspects in accordance with its own sets of rules

40. American Arbitration Association AAA (NY)
Arbitrators make a decision within 30 days
Arbitrators may consider custom and trade usage in deciding the case
The parties may present evidence and call witnesses or
they may agree that the arbitrators’ decision will be based exclusevely on documentary evidence

41. International Chamber of Commerce ICC (Paris)
Proceedings in any of its locations around the world
Decision within 6 months, extension possible
Under whatever law the parties select
Custom and trade usage may be considered
The right to present evidence and call on witnesses is left to the arbitrators’ discretion
The parties may stipulate that decisions must be based on documents only

42. London Court of International Arbitration LCIA
No set time limit, ”as soon as practicable”
No provision on taking custom and trade usage into consideration
The parties may present evidence but the arbitrators can prevent the cross-examination of witnesses
The parties may stipulate that decisions must be based on documents only

43. ENFORCEMENT OF ARBITRATION AWARDS
Arbitration Award is binding
=> It can’t be appealed unless the procedure was conducted formally incorrectly
The award is confirmed by the court in the country where it is to be enforced

44. New York Convention, 1958 Applies to arbitral awards made in
= The UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards
Applies to arbitral awards made in
any country adopting the Convention
any non-signatory country when the arbitrating parties are from signatory countries
The holder of a valid, binding arbitral award
does not need to seek confirmation in the country where the award was given
may take the award to another signatory country where it will be confirmed and enforced

45. NEW YORK CONVENTION ENFORCEMENT
Country B
Court
recognizes
and confirms
Country A
Company
wins
award
Not necessary
Enforcement
Court confirms

46. PROS AND CONS ?

47. Pros and Cons of Arbitration
International enforcement of awards
Arbitrators are usually experts in the field
=> handling is professional
Litigation is faster than court trials
Procedure is confidential, not public
Institutional arbitration is easy to the disputing parties
Expensive
Ad hoc arbitration is often cheaper but can be difficult to conduct