Main questions of ’international private law’ Questions 1. Which court has jurisdiction (in disputes of private law) ? (see Topic 12) 2. Which law is applicable (in private law relations) (topic of this chapter) 3. Value of foreign judgments and other documents (see topic 12 ff. - international procedure and arbitration) Sources IPL rules stem from national law or from international law Primarily national, but to some degree unified or governed by treaties. What is the applicable private law ? Application of private law in transnational relationships is determined by rules of « IPL ». Basically 2 types of rules of IPL: - conflict rules (national or uniform); - substantive rules of IPL (mostly uniform rules) (often applied only after the conflict rule) Structure of conflict rules Starting point: a state will apply the law applicable by virtue of the conflict rule even if foreign law Unity or diversity of conflict rules ? Often harmonised (Hague Conference, EU), but also often diverse > jurisdiction is important in case different conflict rules lead to a different result. Structure of the conflict rule: - conflict category > connecting factor - Classify the issue in a category (such as property, contract, tort, …) - Concretisation of the connecting factor refers to the applicable law (e.g. law chosen by the parties, law of nationality, law of residence or seat, location of a thing, place of damage, …) Exceptions to conflict rules - Exceptions to the determination of the applicable law by conflict rules: exception of international public order (art. 21 Rome-I-R) treatment of « overriding mandatory » law (loi d’application immédiate, Eingriffsnormen) (analogous to public law): application of domestic overriding rules (always) (art. 9 (II)) application of foreign overriding rules (rare), see art. 9 (III) Rome-I- R.: “Effect may be given to the overriding mandatory provisions of the law of the country where the obligations arising out of the contract have to be or have been performed, in so far as those overriding mandatory provisions render the performance of the contract unlawful” (comp. Art. 16 Hague - Convention on Agency) definition & criteria of overriding in Art. 9 I (autonomous EU-concept; interpreted in C-184/12 Unamar) Comp. § 187(2) US restatement 2nd of Conflict of Laws: “fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue” (comparative impairment doctrine) conflict rules: company law Category « company law » (and other legal persons) Issues within this category are mainly: - requirements for incorporation (eg capital requirements) - functioning of the company - dissolution and liquidation of the company. - Connection factor: either principal seat or incorporation theory Conflict rule sometimes in some of its effects set aside by EU law (free movement) conflict rules: procedure Category « procedural law » Issues within this category: - procedure s.s. - evidence ? (in part procedural, in part substantive law) Connection factor: lex fori (Forum = court itself) conflict rules: property law - Category « property law » Issues within this category: types of property rights, includes proprietary security rights; mode of acquisition and loss of property, rights included in ownership or other property rights Connection factor: lex rei sitae (location) immovables: immovable movables things: possible conflit mobile. E.g. reservation of title in international sale receivables: place of debtor or of creditor or lex causae ? documentary intangibles: lex cartae sitae dematerialised or intermediated securities conflict rules: contract Worldwide: only Hague « principles » on choice of law in business contracts (approved 19 March 2015) In the EU: Rome Treaty of 1980 replaced since 17 Dec. 2009 by Reg. 593/2008 (« Rome-I ») (except for Denmark & overseas) unless specific Treaties concluded before 17 June 2008 and incl. non-member states (art. 24 ff)* or specific EU rules (art. 27) Category « contractual obligations » in civil & commercial matters (incl. Individual labour contracts) (excl. arbitration agreements, trusts, company law, family relations, etc.) Issues within this category: art. 10 - 12 (incl. formation, validity, form, interpretation, performance, extinction, prescription, effects of nullity) Overriding mandatory provisions: see supra. * Eg 1955 Hague Convention Sales, still in force in 7 countries (F, It, 4 Scandinavian countries and Switz) conflict rules: contract Rome-I Reg. - - - Reg. 593/2008 Connection factor: Primary factor: choice of law (art. 3 freedom of choice) in relationship with an international element (otherwise, mandatory rules remain applicable) In consumer contracts as defined by art. 6, and individual employment contracts (art. 8), choice only relates to non-mandatory law Limited choice in insurance contracts (other than large risks) art. 7 conflict rules: contract – choice of law in Rome-I Reg. Reg. 593/2008 Choice of law Law applicable to the choice agreement: in principle the chosen law Law of a country or also « rules of law » ? (cfr. debate on lex mercatoria) (see Recital 13 & 14) Express / implied choice Partial choice Problem: no solution for battle of forms with conflicting choice of law clauses … (see Art. 6 of the Draft Hague principles on choice of law) Change of choice (yes, but not to detriment of third parties) Choice a posteriori (but cannot create a formal invalidity a posteriori by choosing a « lex invaliditatis ») (art. 3 II) conflict rules: contract – choice of law Choice of law Why do parties choose a certain law ? Mainly familiarity (incl. language). Empirical data: Some attraction of English, Swiss and to some extent French law. Battle for the choice of law common law >< « continental law ». Moreover, ‘boilerplate clauses’ are often copied from other jurisdictions without taking into account the chosen (or otherwise applicable) law (result is an ‘alien contract’) conflict rules: contract Rome-I Reg. Reg. 593/2008 Subsidiary connection factor if no choice of law: sales in art. 4 (a) (residence seller) services in art. 4 (b) (residence service provider) immovable property or tenancy in art. 4 (c/d) , franchising and distribution in art. 4 (e/f) (residence franchisee, distributor) other contracts: residence of party obliged to characteristic performance (art. 4 II). more subsidiary factor: « closest connection » (art. 4 IV) contracts for carriage in art. 5 « Residence » defined in art. 19 Rome-I. conflict rules: contract Rome-I Reg. - - Reg. 593/2008 Some more specific categories Assignability (& pledgeability) and relation with assigned debtor (art. 14 II): lex causae. There may be overriding mandatory limits (eg Belgian Act of July 12, 2015 against vulture funds) Legal subrogation (art. 15) Recourse between debtors (art. 16) Set-off (art. 17): law of the claim against which the right to set-off is asserted (« passive claim ») conflict rules: contract other instruments Matters regulated by other IPL instruments: Representation (Agency): Hague Convention 1978 - Ch. II: agency contract: choice, subsid. establishment agent - Ch. III: external relationship: establishment agent Trusts: Hague Convention on Trusts Arbitration agreements: New York Convention 1957 (s. further) Jurisdiction Agreements: Brussels-I Regulation / 2005 Hague Convention on Choice of Court Agreements Bills of exchange: uniform laws Precontractual liability: Rome-II-R conflict rules: non-contractual In the EU: Regulation 864/2007 on the law applicable to noncontractual obligations, on acts since Jan 11, 2009 (as clarified in C412/10, Homawoo). Scope of category « torts »; see art. 15 - disputed: actio pauliana (damages is certainly within 864/2007; effect on the attacked legal act is rather under Rome-I) Excluded from scope: privacy and personality rights (no agreement; thus jurisdiction becomes very important) Priority (lex specialis …) to: - existing conventions including non-member states (e.g. traffic accidents, …), - EU leges speciales on conflicts (e.g. e-commerce, combating counterfeiting & piracy) conflict rules: non-contractual - - EU Regulation 864/2007 - Connection factor: - art. 4 I : where the damage occurs (neither the causing event, nor the indirect consequences) (but rules of safety and conduct: place of the event, art. 17) (NB for certain acts, locating them is increasingly difficult, esp. in cyberspace) - both residing in the same country: 4 II - manifestly closer connection: 4 III Specific rules for product liability, unfair competition, environmental damages, infringing intellectual property, industrial action Alternative conflict rule for « direct actions » against insurers: possible if either applicable tort law or applicable insurance contract law allows it (art. 18) conflict rules: non-contractual Regulation 864/2007 on the law applicable to non-contractual obligations: Category unjust enrichment: art. 10 Negotiorum gestio: art. 11 Culpa in contrahendo: art. 12 Common rule: freedom of choice (art. 14) substantive rules of IPL - « Substantive rules of IPL»: separate rules for transnational contractual or other relationships (comp. also substantive law for transnational procedures). Such rules may be purely national or of international origin Mostly of international origin (treaties); different methods: model law, treaty including rules, etc. Main examples: International sales of goods International transport (eg Maritime transport: Hague rules relating to bills of lading 1924 > Hamburg rules 1978/1992 (not very succesful) > Rotterdam rules 2009 (not yet in force) Exceptionally, treaties have unified or harmonised also the law for domestic relationships (e.g. bills of exchange; EU Directives) substantive rules of IPL Mode of application - attention (for illustrations, see international sales): In principle first apply the conflict rule (with exceptions) non-uniform law has subsidiary application (lacunae) Sometimes choice between national and international « model » (incl. a so-called optional instrument – see draft common EU sales law (CESL) published Oct 11, 2011) Reverse example: chosen law has rules that do not apply if the law applies only on the basis of choice without a further ‘sufficient connection’. Eg S. 12 of the UK Late Payment of Commercial Debts Act 1998 IPL - lex mercatoria Rules of non-national origin, not part of international public law , which would be applicable to international relationships of private law As a « material » source: many such rules play a role because they are « received » within domestic law for international relationships (as substantive rules of IPL); They are then applied on the basis of freedom of contract (if not contradicting mandatory law), custom or usage (for gap filling), as a source for the content of contractual relationships, etc..... IPL - lex mercatoria Formal source ? Maybe as customary law Also as an autonomous system of law ? (a possible choice of law and not merely integration of a rule in a contract) ? Defended by i.a. Cl. Schmitthoff and more radically B. Goldman. - But 2 questions: « political » question (acceptance by states) « practical » question (certainty of contract) Accepted in the practice of international commercial arbitration - IPL - lex mercatoria • Sources : trade customs, standard terms (e.g. UCP), nonimplemented uniform law (?*), general principles and concepts as received in transnational case law (esp. arbitral decisions) Eg choice by parties of a convention which is as such not applicable (HR 26 May 1989 on CMR) Attempts at codification: Unidroit PICC 1994/2004/2010. Its «format »: a restatement of the law.