THE APPLICABLE LAW

Olivier BEDDELEEM

International Trade Contracts

ISEG

I- The Rome Convention

• A- Presentation of the Rome convention

• B- Who must apply it ?

• B- Which relations does it regulate ?1) Contract

• 2) International

II- The choice of the applicable law

• A- The autonomy principle– Since 1910 : Free choice

– 3) Advantages et disadvantages• - Advantages

– Parties’ will

– Efficiency

• Disadvantages– Fraud

– Absence of choice

• B- The Rome Convention – 1) Form of the choice

• No needed formality• Separate contract or contract term

– 2) Moment of the choice• Any moment

– 3) Law chosen• - Need to chose a law ? Only one ? • - Link with the contract ?

• C- Limits to the power to chose– 1) International contract

– 2) Fraud• Example : Contract for the sale of cannabis applying

Columbian law.

– 3) Public order• Example : Surrogate mother contract between two

American people living in France.

III- Absence of choice

• Rome Convention Art 4

• A) Close connection

• B) Presumption : Characteristic performance– Definition : What a party receives in exchange

of a payment• Example : A sells 10 computers to B for 10.000

Euros

• C) Exceptions– - Immovable Property

– - Carriage of goods

– - Closer connection• Example : A Belgian company, settled in France, sells

computers produced in Belgium to a Belgian client settled in Belgium. The computers are delivered in Belgium and paid on the seller’s Belgian bank account.

IV- Competing principles

• Definition

• A- Rules of protection– 1) Labour contract

• - Absence of choice– Art 6 : habitual place of performance

– If not single, place through which the employee was hired

– Example : German employee hired by the French factory of a Japanese company’s French factory as a commercial agent for the Belgium and Luxemburg markets.

• - Choice of the parties– Example: The parties choose American law in the contract

– 2) Consumer contracts• - Absence of choice

– Example : A French Company sends an offer to a Greek consumer to sell him a MP3 player for 50 euros. The Greek consumer claims that the MP3 player is defective.

• - Choice of the parties– Example : The contract applies French law. French law

imposes to have a lawyer to go to court (what Greek law does not) and gives the consumer 2 years to claim for hidden defects (whereas Greek law gives only 1 year to do this).

• B- Public policy rules– 1) Rationale

– 2) Public policy rules• - Applicable law public policy rules

– Example : A Belgian seller sells cigarettes to a French buyer. The parties chose to apply French law. (allowed in Belgian law but illegal in French law)

• - Forum (judge) public policy rules (art 16)– Example : A Belgian seller sells cigarettes to a French buyer.

The parties chose Belgian law (or the contract is silent). The Buyer does not pay

• - Other public policy rules– Example : A French seller sells cigarettes to a Belgian buyer.

The parties chose Belgian law and the seller does not deliver.