Choice of Law (Contract)
R is advising that there are two frameworks to find applicable law of the contract, which using
Rome Convention (RC) if the contract made after 1st April 1991 and Rome I Regulation if the
contract made after 17th December 2009. Where neither framework applies, then English
common law shall govern. Convention and Rome I applies to contractual obligations arising in civil
and commercial matters.
Intro
C would be suing D for his royalty payment. There are two main issue raise in the
question in regard to choice of law for contract between C and D. First whether is there
any express choice of law by parties or can the court implied choice of law. Secondly
whether there is any limiting effect that can displace such choice of law. Alternative if
there was no choice of law, contract will be governed by the law applicable in the
absence of such choice.
Since the fact is silent as to when contract created, both framework of Rome Convention
and Rome I would be discussed.
Rome Convention
The fact mentioned that contract between them entered into in 2001, therefore relevant
framework would be Rome Convention. Convention incorporated to UK via Contract
Applicable Law Act 1990 (CALA) and it’s applied to contractual obligation (Art.1(1))
regardless it is a contracting state law (Art.29).
A3(1) Express
There is no express choice of law between parties on the fact, Art.3(1) is not applicable.
Rome I & RC = The express choice of law between parties on the fact, that governing
law for DVD manufacturer’s right to be English law and for singer to be Spanish law. The
cornerstone of Rome I is the principle of party autonomy (recitals 11 Rome I),
nevertheless it appears to have no substantial changes, at least as far as party autonomy
is concerned. In Art.3(1) of both frameworks, contract will be governed by law chosen by
parties (Compagnie v Cle Tunisienne) ** and allowed parties to depecage (pick and
choose) different law to govern different part of contract, as they did so, provided choices
are logically consistent (Giuliano Lagarde Report 1985). In any event, if court deems
the choice are incompatible/illogical/inconsistent/conflict-each-other, court may drop
express choice and proceed to implied choice of law.
Floating col - But the fact to choose the law upon dispute, create greater uncertainty.
Lord Megaw in Armar Shipping v Caissey said floating choice is unacceptable since
governing law cannot be decide retrospectively and contract cannot be treated as being
anarchic, thus governing law must be seen from the outset. However, today Armar must
be read in line with Art.3(2) of both frameworks, where parties allowed to change their
choice of law upon breach of contract and also in circumstance where parties have not
made any choice of law, they were allowed for delayed choice of law. Thus, until partial
decide the law, Art.4(1) govern the matter.
**In Compagnie v Cle Tunisienne, clause 13 law was interpreted by Lord Diplock as
an express choice of law (French law) even though the Compagnie only had 5 vessels
(used the French flag) and the remainder 7 vessels used other flags. The decision by
Lord Diplock was based on the reason that the parties has contemplated that
performance of contract would require vessels being chartered from other vessels and
due to this anticipation, clause 13 was not treated as meaningless. However, on the fact,
it is unclear whether parties had similar vision. Therefore, it could be argued that there is
no express choice of law.
There is an express choice of English law between parties which suggest for breach of
contract, however French law excused from such performance. These fact mirror
Compagnie v Cle Tunisienne. In Compagnie, claimant sue defendant for non-
, performance due to war broke out in middle east based on English law which suggests
non-performance is a breach of contract, meanwhile defendant argue French law which
suggest frustration. HOL decide clause 13 was express choice and French is governing
law, thus frustration has taken place and defendant is not liable. Thus, applying express
choice of English law under Art.3(1), D would be liable.
A3(1) Implied
Although there was no express choice of law made by parties on the fact, the terms that
English court jurisdiction/arbitration to heard their case in the event of any dispute in the
contract demonstrating that parties have also chosen English choice of law to apply.
Thus, applying Art.3(1) of both frameworks, an express choice of jurisdiction is an implied
choice of the proper law. It is also noted that authority to consider jurisdiction/arbitration
agreement to demonstrates choice of law for convention has developed throughout case
laws (The Komninos, The Parouth, Compagnie, Amin Rasheed Shipping v Kuwait
Insurance), whereas for Rome I it been codified under Recital 12. The only different is
that Convention states choice must be demonstrated “with reasonable certainty” by the
terms of the contract, whereas Rome I slightly different words used by requiring “clearly
demonstrated”. Therefore, it could argue that Convention lacks an express choice by just
asked for demonstrates choice of law “with reasonable certainty”. Whereas Rome I
require choice to be “clearly demonstrated” thus trying to avoid the uncertainty linked up
with the former notion of reasonableness and so prevent court too easily surprising
parties by inferring choice of law on assumption of what a reasonable person under the
same circumstances would have chosen (Dicey, Morris and Collins). Hence such
predictability better secured under Rome I. However, the truth is that, unless parties have
made an express choice, it is impossible to say whether or not the parties actually made
a choice (Jeffey).
o JA - In The Komninos, a clause found in the bill of lading “…all disputes to be
referred to British courts…”. Although initial Lord Leggatt in High court refused to
imply choice of law, the case went on appeal and Lord Bingham states that “…
British is synonym for English …” thus implied English choice of law.
o AA - In The Parouth, there was an arbitration agreement for matters to be
arbitrated in England. From this term, an implied English choice of law was made.
Similar facts to The Parouth, in Egan v Libera, there was an arbitration agreement
to arbitrate matters in London. Lord Mance and Clarke agree to implied English
choice of law.
o Standard form - Certain contracts can take in a standard form which are drafted
against the background of a particular system of law. In Amin Rasheed Shipping v
Kuwait Insurance, Marine Insurance Policy known as Lloyd’s SG which is
governed by the Marine Insurance Act 1906 - Contract was based on Lloyd’s SG
format with no express choice of law. Lord Diplock decides that only the English
statute MIA 1906 can interpret that.
o Got Express COL - However, according to the case of Compagnie v Cle
Tunisienne, although there was an arbitration agreement to arbitrate matters in
London, court held there is no need for implied choice of law since there was
Clause 13 which was an express choice of law (French law). Similarly, if the
express choice of law by AB and CD was logically consistent, there would be no
need to implied choice of law base on the existence of jurisdiction
agreement/arbitration agreement.
Although there was no express choice of law made by parties on the fact, the
circumstance that parties had chosen express choice of English law in previous dealing
may make sense to demonstrate that parties have also intend to use the same law in the
current contract (GL Report). Thus, applying Art.3(1), an express choice of English law
in previous dealing is an implied choice of current contract. However, the truth is that,
R is advising that there are two frameworks to find applicable law of the contract, which using
Rome Convention (RC) if the contract made after 1st April 1991 and Rome I Regulation if the
contract made after 17th December 2009. Where neither framework applies, then English
common law shall govern. Convention and Rome I applies to contractual obligations arising in civil
and commercial matters.
Intro
C would be suing D for his royalty payment. There are two main issue raise in the
question in regard to choice of law for contract between C and D. First whether is there
any express choice of law by parties or can the court implied choice of law. Secondly
whether there is any limiting effect that can displace such choice of law. Alternative if
there was no choice of law, contract will be governed by the law applicable in the
absence of such choice.
Since the fact is silent as to when contract created, both framework of Rome Convention
and Rome I would be discussed.
Rome Convention
The fact mentioned that contract between them entered into in 2001, therefore relevant
framework would be Rome Convention. Convention incorporated to UK via Contract
Applicable Law Act 1990 (CALA) and it’s applied to contractual obligation (Art.1(1))
regardless it is a contracting state law (Art.29).
A3(1) Express
There is no express choice of law between parties on the fact, Art.3(1) is not applicable.
Rome I & RC = The express choice of law between parties on the fact, that governing
law for DVD manufacturer’s right to be English law and for singer to be Spanish law. The
cornerstone of Rome I is the principle of party autonomy (recitals 11 Rome I),
nevertheless it appears to have no substantial changes, at least as far as party autonomy
is concerned. In Art.3(1) of both frameworks, contract will be governed by law chosen by
parties (Compagnie v Cle Tunisienne) ** and allowed parties to depecage (pick and
choose) different law to govern different part of contract, as they did so, provided choices
are logically consistent (Giuliano Lagarde Report 1985). In any event, if court deems
the choice are incompatible/illogical/inconsistent/conflict-each-other, court may drop
express choice and proceed to implied choice of law.
Floating col - But the fact to choose the law upon dispute, create greater uncertainty.
Lord Megaw in Armar Shipping v Caissey said floating choice is unacceptable since
governing law cannot be decide retrospectively and contract cannot be treated as being
anarchic, thus governing law must be seen from the outset. However, today Armar must
be read in line with Art.3(2) of both frameworks, where parties allowed to change their
choice of law upon breach of contract and also in circumstance where parties have not
made any choice of law, they were allowed for delayed choice of law. Thus, until partial
decide the law, Art.4(1) govern the matter.
**In Compagnie v Cle Tunisienne, clause 13 law was interpreted by Lord Diplock as
an express choice of law (French law) even though the Compagnie only had 5 vessels
(used the French flag) and the remainder 7 vessels used other flags. The decision by
Lord Diplock was based on the reason that the parties has contemplated that
performance of contract would require vessels being chartered from other vessels and
due to this anticipation, clause 13 was not treated as meaningless. However, on the fact,
it is unclear whether parties had similar vision. Therefore, it could be argued that there is
no express choice of law.
There is an express choice of English law between parties which suggest for breach of
contract, however French law excused from such performance. These fact mirror
Compagnie v Cle Tunisienne. In Compagnie, claimant sue defendant for non-
, performance due to war broke out in middle east based on English law which suggests
non-performance is a breach of contract, meanwhile defendant argue French law which
suggest frustration. HOL decide clause 13 was express choice and French is governing
law, thus frustration has taken place and defendant is not liable. Thus, applying express
choice of English law under Art.3(1), D would be liable.
A3(1) Implied
Although there was no express choice of law made by parties on the fact, the terms that
English court jurisdiction/arbitration to heard their case in the event of any dispute in the
contract demonstrating that parties have also chosen English choice of law to apply.
Thus, applying Art.3(1) of both frameworks, an express choice of jurisdiction is an implied
choice of the proper law. It is also noted that authority to consider jurisdiction/arbitration
agreement to demonstrates choice of law for convention has developed throughout case
laws (The Komninos, The Parouth, Compagnie, Amin Rasheed Shipping v Kuwait
Insurance), whereas for Rome I it been codified under Recital 12. The only different is
that Convention states choice must be demonstrated “with reasonable certainty” by the
terms of the contract, whereas Rome I slightly different words used by requiring “clearly
demonstrated”. Therefore, it could argue that Convention lacks an express choice by just
asked for demonstrates choice of law “with reasonable certainty”. Whereas Rome I
require choice to be “clearly demonstrated” thus trying to avoid the uncertainty linked up
with the former notion of reasonableness and so prevent court too easily surprising
parties by inferring choice of law on assumption of what a reasonable person under the
same circumstances would have chosen (Dicey, Morris and Collins). Hence such
predictability better secured under Rome I. However, the truth is that, unless parties have
made an express choice, it is impossible to say whether or not the parties actually made
a choice (Jeffey).
o JA - In The Komninos, a clause found in the bill of lading “…all disputes to be
referred to British courts…”. Although initial Lord Leggatt in High court refused to
imply choice of law, the case went on appeal and Lord Bingham states that “…
British is synonym for English …” thus implied English choice of law.
o AA - In The Parouth, there was an arbitration agreement for matters to be
arbitrated in England. From this term, an implied English choice of law was made.
Similar facts to The Parouth, in Egan v Libera, there was an arbitration agreement
to arbitrate matters in London. Lord Mance and Clarke agree to implied English
choice of law.
o Standard form - Certain contracts can take in a standard form which are drafted
against the background of a particular system of law. In Amin Rasheed Shipping v
Kuwait Insurance, Marine Insurance Policy known as Lloyd’s SG which is
governed by the Marine Insurance Act 1906 - Contract was based on Lloyd’s SG
format with no express choice of law. Lord Diplock decides that only the English
statute MIA 1906 can interpret that.
o Got Express COL - However, according to the case of Compagnie v Cle
Tunisienne, although there was an arbitration agreement to arbitrate matters in
London, court held there is no need for implied choice of law since there was
Clause 13 which was an express choice of law (French law). Similarly, if the
express choice of law by AB and CD was logically consistent, there would be no
need to implied choice of law base on the existence of jurisdiction
agreement/arbitration agreement.
Although there was no express choice of law made by parties on the fact, the
circumstance that parties had chosen express choice of English law in previous dealing
may make sense to demonstrate that parties have also intend to use the same law in the
current contract (GL Report). Thus, applying Art.3(1), an express choice of English law
in previous dealing is an implied choice of current contract. However, the truth is that,
