The Directed Studies of The Hague Academy on Private International Law – An Insider’s View (pt. 6)

Résumé: Ce post est le dernier d’une série de six, dont le but est de retracer les thèmes abordés durant les Directions d’études de l’école d’été de l’Académie de La Haye. Lors de notre dernière session, nous avons examiné les Principes de La Haye sur le choix de la loi applicable aux contrats commerciaux internationaux.

The present post is the last of a series of six posts, which summarises the discussions held at the Directed Studies sessions of the Hague Academy on private international law (a link to the summary of our previous sessions is available below). For our sixth meeting, the French- and English-speaking groups gathered together and analysed the provisions of the Hague Principles on Choice of Law in International Commercial Contracts (hereafter, the Hague Principles or the Principles). To achieve this, we were happy to benefit from the expertise of Prof. Geneviève Saumier, a member of the Working Group that dealt with the elaboration of the Hague Principles.

Brief Overview of the Principles

Party autonomy, as the cornerstone of modern contract law, is a widely-known and recognised principle. Nevertheless, the scope of this principle varies from State to State. Acknowledging the importance of party autonomy, the Hague Conference on Private International Law commissioned feasibility studies on the opportunity to adopt an instrument related to choice of law in 2006 (an overview of the preparatory work is available here). In 2009, a Working Group composed of a pool of experts was set up. Those experts elaborated twelve Principles on choice of law in international commercial contracts, which were published in 2015. Notably, said Principles do not constitute a binding instrument, but aim at fostering party autonomy through the construction of best practices for lawmakers, as well as practitioners. Last but not least, it has to be highlighted that a commentary accompanies the Hague Principles, thereby facilitating their understanding and interpretation.

A Closer Look at Articles 2(4), 3, and 6(1)(b)

The next paragraphs shed light on the important discussions that took place at our sixth meeting. Due to space constraints, we chose to streamline our comments to three fundamental provisions, namely Articles 2(4), 3, and 6(1)(b).

To start with, Article 2(4) allows parties to select the law applicable to their contract without imposing any requirement of a connection. This provision advocates a broad application of party autonomy and adapts to the current globalised context, in which commercial transactions are often detached from any legal order. In this sense, the Hague Principles differ from the solution adopted in some States, such as the United States, where the Restatement (Second) requires a substantive connection between the chosen law and the parties or their transaction.

As for Article 3, it equally promotes party autonomy by enabling parties to designate non-State law –i.e. « rules of law »- to govern their international commercial contract. While this option is usually available in arbitration, it is still largely unknown to the litigation system. Therefore, Article 3 represents an innovative provision, inasmuch as it extends the scope of party autonomy within the judicial field. Nevertheless, significant limitations entangle Article 3. Indeed, parties may only select rules of law that are “generally accepted on an international, supranational or regional level” and represent “neutral and balanced set of rules”. In all cases, courts may refuse to give effect to a choice of law clause that designates non-State law, in the event that the law of the forum limits parties’s ability to do so.

We observe two additional shortcomings regarding this provision: first of all, Article 3 does not deal with the proof and interpretation of non-State law. Therefore, it remains to be seen how national courts will tackle these specific questions. Second of all, the above-mentioned limitations will equally apply to the arbitration field. Such a result is unfortunate since arbitration practice has been more liberal than Article 3 so far.

Lastly, Article 6(1)(b) deals with battle of forms –i.e. cases in which parties exchange standard terms, each designating a different applicable law. To date, courts have been dealing inconsistently with this issue: for some, one of the two forms used (the first or the last one depending on the legal order) prevail. For others, battle of forms lead to the non-application of the choice of law clause. Finally, in some States, hybrid solutions exist.

Article 6(1)(b) of the Hague Principles is a good example of compromise between the different national approaches described above. In a nutshell, this provision states the following: in case choice of law clauses conflict but eventually designate the same prevailing standard terms, then the law designated in those terms applies. If choice of law clauses lead to contradictory results, the Principles consider that there is no choice of law. For more details and comments on Article 6, we refer to the very good case scenarios provided by the commentary.

What Does the Future Holds?

From a dogmatic perspective, the Hague Principles represent a significant contribution to the academic discourse. But will they contribute to practical developments in a similar way? On the one hand, one may regret the non-binding character of the Principles (although it can entail advantages as well) and their limited substantive coverage. Indeed, they could perhaps have encompassed closely-related questions, such as  the validity and interpretation of choice of law clauses. On the other hand, the Hague Principles may serve as a common denominator that could guide future codifications and foster uniform interpretation. As Prof. Symeonides wrote: the principles “can function as the focal point and guiding light in the search for proper solutions to the various problems encountered in honoring, and defining the limits of, contractual choice of law in international contracts” (p. 29). Only time will tell whether the Principles will endorse such a role or not.

A summary of all our previous sessions is available here:

  • Session 1: The role of private international law in a global environment compared to other disciplines
  • Session 2: The sources of private international law
  • Session 3: The recognition method
  • Session 4: Public policy and substantive justice
  • Session 5: The application and proof of foreign law

 

Alexia Pato, Research assistant at the EBS University (Wiesbaden)

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