one for pre-dispute use and one for use post-dispute use). 82 See the Model Clauses no. (p. 857). Introduction. The area of law that regulates the choice of the governing law is called private international law (or conflict of laws). A valid alternative may be the recourse to the Unidroit Principles.32 They are available in all of the major international languages and provide a balanced set of rules covering virtually all of the most important topics of general contract law.33 To quote an eminent Swiss scholar, [t]he Principles represent a codification of high quality and homogeneity in contents, which in many respects even surpasses the quality of traditional national legal orders they represent a clear and stable codification created by an approved international organization.34 What still remains to be seen is whether, and, if so, to what extent under the relevant rules of private international law, parties or, in the absence of any choice of law by the parties, courts and arbitral tribunals are permitted to apply the Unidroit Principles as the rules of law governing the contract or applicable to the substance of the dispute in lieu of a particular domestic law. (pp. 1. 98 For an overview of eleven empirical studies of this kind conducted over the last 15 years or so, see S. Vogenauer, Regulatory Competition through Choice of Contract Law and Choice of Forum in Europe: Theory and Evidence, in European Review of Private Law 2013, p. 13 et seq. 61 UNILEX, http://www.unilex.info (accessed 31 December 2017). 49 According to a recent announcement by the Australian Parliament also Australia is planning to implement the Hague Principles: see Report of November 2016, published in http://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Treaties/ Choice of Courts Report_166/section?id=committees%2freportjnt%2f024013%2f24043 (accessed 31 December 2017). Oxford 2012. To begin with, domestic laws may not only vary considerably in content, but they are often ill-suited for the special needs of international trade. 67 So Article 7 of the CISG stating that [i]n the interpretation of this Convention regard is to be had to its international character and to the need to promote uniformity in its application (paragraph 1) and that [q]uestions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absense of such principles, in conformity with the law applicable by virtue of private international law (paragraph 2). Introduction Subject to any particular restrictions under applicable local law, the parties to a joint venture or shareholders' agreement are generally free to choose any governing law and jurisdiction clauses. Jurisdiction - What does jurisdiction mean? - Rocket Lawyer What does the governing law clause do? (R. Goode, Rule, Practice, and Pragmatism in Commercial Law, in International and Comparative Law Quarterly, vol. Canada: Governing Law And Choice Of Forum Clauses - Mondaq Gillette, M. Tarello, S.D. 50 Abstract and full text at http://www.unilex.info/case.cfm?id=1123 (accessed 31 December 2017). Hopt (eds. 96 Model Clauses no. What is a Governing Law Clause? E. Kramer, Nationale Privatrechtskodifikationen, internationale Privatrechts-vereinheitlichung und Privatrechtsvergleichung zu Beginn des neuen Jahrhunderts, in Zeitschrift fr Schweizerisches Recht 2005, I, p.421 et seq. 55 See recently, e.g., F. Bortolotti, The Unidroit Principles as a Basis for Alternative Choice-of-Law Clauses with Particular Reference to the ICC Model Contracts, in Uniform Law Review 2014, p. 542 et seq. For a complete list of domestic laws based on the Model Law, see http://www.uncitral.org/ uncitral/en/uncitral_texts/arbitration/1985Model_arbitration_status.html (accessed 31 December 2017). ), The Practice of Transnational Law, 2001, p. 91 et seq. Comment 3.6 ([R]ules of law that would satisfy this criterion may [be] non-binding instruments formulated by established international bodies. More important, the domestic laws governing the individual contracts in the cases in question are far from being only those of less developed countries or so-called emerging countries. Example 4: Adopting a child from another country. The contract, concluded in Denmark, was silent as to the applicable law. Indeed, in addition to the already highlighted role of the Principles as global background law,100 the Principles may also fulfil useful functions as lex contractus. 64 See the relevant decisions at http://www.unilex.info/dynasite.cfm?dssid=2377&dsmid=13621&x=1 (accessed 31 December 2017) (under issues nos. (p. 284): [The Unidroit Principles are] one of the most successful and ambitious recent soft law instruments. p. 297 et seq. In both cases, the Unidroit Principles may be used as a yardstick to ensure an interpretation and supplementation of the respective domestic law consistent with internationally accepted standards and/or the special needs of cross-border trade relationships. (2015), p. 50 et seq. Certainly not the argument that the Principles as a merely private codification lack the democratic legitimacy necessary to be a veritable binding or positive set of legal rules.93 Apart from the fact that the Unidroit Principles have not been prepared by individual companies or national trade associations but, rather, by independent experts from all over the world working under the supervision and with the final approval of an intergovernmental organization like Unidroit, domestic courts, when asked to apply a foreign State law, do not care at all about how that law has been produced in its country of origin but only make sure that its content does not violate the international ordre public of the forum, and there are no provisions in the Unidroit Principles that would not meet that test.94, Nor should it matter that the Principles cover only issues of general contract law but do not contain rules for specific contracts.95 Apart from the fact that such rules are normally agreed upon by the parties on a case-by-case basis or by a reference to their standard terms, nothing prevents parties, when choosing the Principles as the rules of law governing their contract, to indicate in addition a particular domestic law to which to resort to fill possible gaps in the Principles.96. Surviving provisions may be dealt with in various ways: by a general clause stating that all provisions which by their nature are intended to operate even after termination will remain in force; by listing the specific provisions intended to survive; or by stating in the provision concerned that it is to remain in force notwithstanding termination. 519 et seq. 41 For a convincing critique of these arguments, see e.g. Finally, the argument that the Unidroit Principles without a sufficiently developed case law concerning their application in practice do not provide the necessary certainty and predictability of solutions proves too much and too little at the same time. The NDA contained no governing law or jurisdiction clause because the parties could not agree on one, so expressly decided not to include one. 1.1 The purpose of Article 1 is to determine the scope of application of the Principles. 9 On the reasons why States may be reluctant to ratify uniform law conventions even where they have participated in their preparation see e.g. Laws/Rules that govern International Commercial Contracts United Nations Convention on Contracts for the International Sale of Goods (CISG) History Scope Analysis Limitation Convention Soft Law The International Institute for the Unification of Private Law (UNIDROIT) Principles National/Domestic Laws of the particular state/country A typical governing law clause will provide that: "This agreement shall be governed by and shall be construed in accordance with the law of [chosen law of the parties]". There are no UK statutory restrictions in this respect for joint ventures. International Instruments and Commentary, 2nd ed. For an overview of the most significant decisions falling in this category with a brief indication of the legal issues respectively addressed, see M.J. Bonell, An International Restatement, cit. (pp. in construction contracts the Employer s Representative and the Contractor s Representative, respectively), or establish special bodies composed of representatives of both parties or of independent experts (so-called contract management committees, auditing bodies or the like), with the task of monitoring both parties performance and possibly also of suggesting adjustments to the contract so as to bring it in line with developments. Governing law and jurisdiction or dispute clauses are two distinct things. In this respect, it is worth mentioning, first of all, that an increasing number of model contracts prepared, among others, by the ICC and the ITC. Common pitfalls to avoid in international contracts: governing law and Significantly enough, despite scholarly doubts and reservations as to the possibility of using the Unidroit Principles to interpret or supplement the CISG, both judges and arbitrators do not seem too troubled by theoretical justifications when resorting to the Unidroit Principles for this purpose. 1.2 and no. 10 This holds true also for successful instruments such as the 1980 United Nations Convention on Contracts for the International Sale of Goods (CISG), with respect to which it is estimated that e.g. ; F. Dasser, Internationale Schiedsgerichte und lex mercatoria, Zrich 1989, p. 77 et seq. No. R. Goode, International Restatements of Contract and English Contract Law, in Uniform Law Review 1997, p. 231 et seq. 24961. ; F. de Ly, International Business Law and Lex Mercatoria, North-Holland, 1992, p. 163 et seq. Indeed, not only in court proceedings but also in the case of arbitration absent any indication to the contrary by the parties, the arbitral tribunal is bound to apply the lawthat is, a particular domestic law determined by the conflict-of-laws rules that it considers applicable.6. (p. 194). 1 Since the Venezuelan exchange regulations only permitted the payment in US dollars after the goods had been delivered at the place of destination in Venezuela, the buyer anticipated the price to the seller through a US bank in order to make the sale possible and then paid a second time after the arrival of the goods. 42 Cf. In its decision, the Court noted that according to Article 9(2) of the current Brazilian private international law, the applicable law would be Danish law as the law of the place of the conclusion of the contract. When drafting INTERNATIONAL CONTRACTS the subject of GOVERNING LAW AND JURISDICTION is a complex one and legal advice should always be obtained. 7 Born, Drafting 137-46; John D. Head, Evolution of the Governing Law for Loan In so doing, the arbitral tribunals gave no reason whatsoever or relied either on paragraph 4 of the preamble or, more often, on the relevant statutory provisions or arbitration rules, according to whichto quote the language used in Article 21(2) of the 2017 ICC Rules of Arbitration[it] shall apply the rules of law which [it] determines to be appropriate, while, as already indicated above, the domestic courts applied the Unidroit Principles as an expression of general principles governing the law of international commerce or the new lex mercatoria.64 Moreover, in 11 international investment arbitration awardsnine rendered under the ICSID Arbitration Rules and two in an ad hoc arbitrationthe Unidroit Principles were referred to, together with other sources of law such as the domestic law of the hosting State, as an expression of international law.65 Finally, in four cases, the Unidroit Principles were applied by the arbitral tribunal in an arbitration ex aequo et bono.66, It is nowadays widely recognized that international uniform law instruments, even after their incorporation into national legal systems, remain an autonomous body of law that should be interpreted and supplemented according to autonomous and internationally uniform principles and rules and that recourse to domestic law should only be a last resort.67 As rightly observed,68 in this respect, there is a clear trend away from positive law (Depositivierung ) in the sense that the strict legal rules of domestic law are increasingly being supplanted by non-binding principles and rules of supranational origin.69 In the past, such autonomous principles and rules had to be found each time by the judges and arbitrators themselves. 37 Cf. First published in 1994 and now in their fourth edition adopted in 2016, they have been welcomed from their first appearance as a significant step towards the globalisation of legal thinking.24 In formally endorsing the Unidroit Principles in 2004, the United Nations Commission on International Trade Law (UNCITRAL) congratulated Unidroit on having made a further contribution to the facilitation of international trade by preparing general rules for international commercial contracts and unanimously commended the use of the Unidroit Principles, as appropriate, for their intended purposes.25. GOVERNING LAW AND JURISDICTION IN INTERNATIONAL CONTRACTS In a transaction with no foreign element involved it will not usually be necessary to specify the system of law which is to govern the transaction or the courts which are to have jurisdiction in the event of a dispute. 4 - Which state law governs an international contract? 22 [P]erhaps the most interesting development of the last quarter of the 20th century. 95 R. Michaels, in S.Vogenauer (ed), Commentary on the Unidroit Principles, cit., p. 55. Not in the first case because the determination of the applicable law would be left to the relevant conflict-of-laws rules with all of the inconveniences indicated above.
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