Business Law Lesson 7 PDF

Lesson 7 z Business Law INTERNATIONAL CONTRACT IF A CONTRACT HAS LINKS WITH MORE THAN ONE STATE IT IS AN INTERNATIONAL CONTRACT 1. PARTIES FROM DIFFERENT NATIONS OR 2. FOREIGN ELEMENTS (irrespective of parties’ nationality) e.g. - parties based in...

Lesson 7 z Business Law INTERNATIONAL CONTRACT IF A CONTRACT HAS LINKS WITH MORE THAN ONE STATE IT IS AN INTERNATIONAL CONTRACT 1. PARTIES FROM DIFFERENT NATIONS OR 2. FOREIGN ELEMENTS (irrespective of parties’ nationality) e.g. - parties based in different countries - contract to be executed abroad MORE COUNTRIES = DIFFERENT LEGISLATION CONFLICT OF LAWS EACH STATE HAS GOT ITS OWN SET OF RULES TO DEAL WITH CONTRACTS INVOLVING FOREIGN ELEMENTS > PRIVATE INTERNATIONAL LAW - procedural rules meant to determine the applicable law > INTERNATIONAL CIVIL PROCEDURAL LAW - meant to determine a) the jurisdiction b) enforceability of a foreign ruling IN REGARD OF THE SAME CONTRACT, THE LAW OF EACH NATION MAY LEAD TO DIFFERENT CONCLUSIONS Private International Law – International Civil Procedural Law CONNECTING FACTORS Most significant ones are a) Citizenship / nationality b) Domicile / Habitual residence c) Place where the contract is made d) Place of execution e) Place where the object is located f) Currency of payment g) Place of payment  NATIONAL / INTERNATIONAL SUBSTANTIVE RULES Ø Either national rules will apply irrespective of contract’s international nature Ø Or international rules will apply by virtue of an international agreement (e.g. The Vienna Convention on the International sale of Goods)  THE CLOSEST CONNECTION (PROXIMITY RULE) AN INTERNATIONAL CONTRACT SHOULD PREFERABLY BE GOVERNED BY THE LEGAL SYSTEM WITH WICH IT HAS THE CLOSEST CONNECTION ABSENCE OF A CHOICE BY THE PARTIES APPRECIATION OF THE JUDGE GENERALLY, THE COUNTRY WHERE THE PARTY BOUND TO EFFECT THE PERFORMANCE HAS HIS HABITUAL RESIDENCE  APPLICABLE LAW PARTIES’ AUTONOMY - which law will govern their obligations - which Court will be competent in case of dispute CONTRACTUAL FREEDOM GOVERNING LAW AS ‘GAP FILLER’  CHOICE CAN BE EXPRESS OR IMPLIED EXPRESS THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE (SUBSTANTIVE) LAW OF…… IMPLIED CAN BE IINDIRECTLY INFERRED FROM OTHER PROVISIONS OF THE CONTRACT AND OTHER CIRCUMSTANCES e.g. language of contract, currency of payment, seat of arbitral tribunal FREEDOM OF CHOICE IS BROAD - Entire contract or depeçage - No restriction based on nationality or geographical links - Changes LIMIT - Capacity - Mandatory rules and public policy  LEX MERCATORIA SETS OF RULES DEVELOPED BY INTERNATIONAL BUSINESS COMMUNITY CUSTOM / PRACTICE / GENERAL LEGAL PRINCIPLES INTERNATIONAL ORGANIZATIONS UNIDROIT PRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACT 1994 – adopted by the International Institute for the Unification of Private Law UNIDROIT 2004 / 2010 / 2016 - revisions AIM > ESTABLISH A BALANCED SET OF RULES FOR USE THROUGHOUT THE WORLD IRRESPECTIVE OF LEGAL TRADITION AND POLITICAL AND ECONOMIC CONDITION - MODEL FOR NATIONAL LEGISLATION - DIRECTLY APPLICABLE IF AGREED BY THE PARTIES - ALSO APPLICABLE IN CASE OF REFERENCES TO GENERAL PRINCIPLES OF LAW, LEX MERCATORIA OR THE LIKE  MANDATORY RULES AND PUBLIC POLICY 1. RULES RESTRICTING PARTIES FREEDOM Rules in the public interest of a country, will be applicable irrespective of the law chosen by the parties (import/export restrictions, tax provisions, antitrust law) 2. FUNDMENTAL VALUES of a legal system that cannot be affected by the application of a foreign law