How does the court determine what law will apply to the claims?

Litigation (2nd edition)

Austria Small Flag Austria

In general, Austrian and European conflict of law rules acknowledge choice of law agreements. Austrian law applies without question if both parties are domiciled in Austria and no choice of law exists.

In case of commercial disputes with a cross-border element, the applicable law in question is either governed by Austrian rules on conflict of laws or European regulations; provided that Austrian jurisdiction is given and no choice of law exists.

If at least one of the contracting parties is domiciled in an EU member state, the Rome I and II Regulations determine the applicable law with respect to contractual and non-contractual obligations (such as claims for damages or unjustified enrichment) in civil and commercial matters. Outside the scope of EU law, the Austrian Act on International Private Law (“Internationales Privatrechtsgesetz”) provides an answer to the issue of applicable law.

Japan Small Flag Japan

Basically, the formation and effect of a juridical act are governed by the law of the jurisdiction chosen by the parties at the time of the act (Act on General Rules for Application of Laws, Article 7). In the absence of this, in principle, they are governed by the law of the place with which the act is most closely associated at the time of the act (Id., Article 8(1)).

Tort claims, however, are governed by the law of the place where the result of the wrongful act occurred; however, if the occurrence of the result at that place was ordinarily unforeseeable, then the law of the place where the wrongful act was committed will govern (Id., Article 17).

Monaco Small Flag Monaco

In Commercial matters the applicable law is the law chosen either contractually or implicitly by the parties. Failing such choice, Article 69 of the Private International Law n° 1448 applies.

It provides that, in the absence of a choice of the governing law being made, the contract shall be governed by the law of the State where the party required to effect the performance of the contract has his domicile.

The party who effects the performance under the contract is :

  1. In a contract of sale, the seller;
  2. in a contract for the provision of services, the service provider;
  3. in a franchise agreement, the franchisee;
  4. in a distribution contract, the distributor;
  5. in a contract of carriage, the carrier;
  6. in an insurance contract, the insurer.

Notwithstanding the first paragraph of the above,

  1. a contract for the sale of goods by auction shall be governed by the law of the State where the auction takes place, if such a place can be determined;
  2. a contract relating to real rights in immovable property or to a tenancy of immovable property shall be governed by the law of the State where such property is situated.

Where the specific performance cannot be determined, the contract shall be governed by the law of the State with which it is the most closely connected.

China Small Flag China

Basically, the matter of applicable laws exists only in case with foreign-related civil relations. Domestic Chinese disputes shall automatically apply the Chinese law. Foreign-related civil relations refer to the relations that: (1) at least one party of the dispute is a foreign citizen, foreign legal entity, foreign organization, or a stateless person; (2) the habitual residence of one party of the dispute is located outside the territory of China; (3) the subject matter of the case is located outside the territory of China; or (4) the legal facts that trigger, change or terminate the civil relation take place outside the territory of China.

For the disputes where foreign-related civil relation exists, law application is governed by the Chinese choice of law statute, the Act of Application of Laws to Foreign-related Civil Relations of PRC. The principle of this statute is to apply the law which is most closely related to the relations involving in the foreign related disputes if the parties do not make the choice by themselves.

Romania Small Flag Romania

According to the procedural rules, the parties establish the limits of the trial, both with respect to the facts and to the applicable law. However, based on its active role, the judge may qualify a claim and to determine its applicable law. Altogether, the judge is obliged to protect the public order. as the judge has the main role in establishing the truth. As a limitation, the judge cannot determine the applicable law by himself if the parties have expressly agreed the legal ground for it, but without bringing prejudice to other people’s rights.

Cyprus Small Flag Cyprus

With respect to contractual obligations, the Cypriot courts will apply the provisions of Regulation (EC) No 593/2008 on the law applicable to contractual obligations (“Rome I”), which establishes uniform rules for the purposes of determining the applicable law to contractual obligations in civil and commercial matters throughout the European Union. Subject to certain safeguards, Rome I upholds the freedom of the parties to choose the applicable law. Where the parties have not chosen the applicable law, the applicable law is generally determined with reference to the nature of the contract. With respect to non-contractual obligations, the Cypriot courts will apply the provisions of the Regulation (EC) No 864/2007 on the law applicable to non-contractual obligations (“Rome II”). In cases not falling within the scope of application of Rome I or Rome II, the Cypriot courts will apply the common law rules concerning the determination of the applicable law and their own case law.

Denmark Small Flag Denmark

If there is an agreement between the parties containing provisions regarding choice of law, the court will generally apply the law agreed by the parties.

In absence of an agreement, the court will apply Danish private international law to determine the law applicable to the claim. Danish private international law distinguishes between claims in contract and claims in tort.

For claims based on contracts the Rome Convention determines the applicable law. The main rule is that the law of the country which the contract has a closer connection to should govern the contract. The contract is most closely connected with the country where the party who is to effect the performance which is characteristic of the contract has, at the time of conclusion of the contract, his habitual residence, or, in the case of a body corporate or unincorporate, its central administration. Exceptions apply, including for consumer contracts.

In tort cases the main rule is that the law of the country where the harmful action has taken place will apply in accordance with the “lex loci delicti” principle.

Egypt Small Flag Egypt

Generally, the court applies Egyptian Law to the disputed claims, however Egyptian Law stipulates a set of rules to determine the applicable law to the disputed claims, if it deems that Egyptian law is not applicable to the disputed claims. For example, the Egyptian law stipulates that the law governing the formalities of a contract may be the law where the contract was concluded, further it stipulates that the contract may be governed by the law that governs the substantive matters in the contract.

Russia Small Flag Russia

The general conflict of law rule is that the court applies the law which was chosen by the parties of a contract. Where there is no agreement of the parties on applicable law, court applies the law of the country where, at the time of the conclusion of the contract, the place of residence or principal place of business of the party making the decisive contractual performance is located. For most types of contracts the national legislation provides which party’s performance is considered to be of decisive importance.

However, if so follows from the legislation, substance of a contract or from totality of relevant circumstances of the case, court will apply the law of the country, with which the contract has the closest connection (the doctrine of proper law).

In case a foreign law is applied, a court is obliged to establish the content of its rules in compliance with the official construction, application practices and doctrine thereof. For the purposes of the latter, a court may either use expert services or apply to the Ministry of Justice of the Russian Federation for assistance and clarification of foreign law. Also, the parties may present documents confirming the content of foreign law – in practice, expert reports of foreign lawyers are often produced by the parties.

Mexico Small Flag Mexico

Commercial litigation in Mexico is governed by the Commerce Code and both, the Federal Code of Civil Proceedings and local proceedings law, as a supplementary provisions, so the Court does not has to decide which law to apply to the procedure. Except for bankruptcy proceedings and class actions, which have their own applicable rules.

However, each action is also governed on the merits by specific laws such as the General Securities and Credit Operation Act (Ley General de Títulos y Operaciones de Crédito) and the General Mercantile Entities Act (Ley General de Sociedades Mercantiles), and so on, which can also provide specific rules to the proceedings.

Germany Small Flag Germany

In contractual and tort matters, German courts are bound to apply the Rome I and Rome II Regulations. Both Regulations also apply as loi uniforme in litigations with parties from non-EU states. In general, the parties are free to choose the applicable law in contractual matters (Art. 3 (1) Rome I). If such an agreement does not exist, Art. 4 of the Rome I Regulation provides for different connecting factors such as the seller’s or service provider’s residence. In tort cases, the applicable law is usually the law of the country in which the damage occurs (Art. 4 (1) Rome II Regulation).

In accordance with the principle of iura novit curia, the parties do not need to plead questions of law but can limit their submissions to the facts of the case (although counsel also address questions of law in practice). With respect to conflict-of-laws rules, it is therefore up to court to establish the applicable law. Yet if a foreign law applies, sec. 293 ZPO provides for an exception to this rule by stipulating that the parties must demonstrate and prove provisions of the applicable foreign law to the extent that the court is not aware of them. However, the court is not bound by the parties’ submissions but may also resort to other sources of reference. In practice, foreign law issues are often delegated to comparative law experts such as university professors or researchers at the Max Planck Institute for Comparative and International Private Law in Hamburg, acting as court-appointed legal experts.

Hong Kong Small Flag Hong Kong

Generally in commercial disputes arising from contract, the parties will have agreed on the governing law in their contract, and the courts in Hong Kong will respect the parties’ choice as long as it is bona fide, legal and is not against public policy.

The choice of law will not be given effect if the choice is against public policy (e.g. gambling) or mandatory governing law in certain areas (e.g. employment, sale of goods and supply of services, real estate, insolvency and bankruptcy, financial services regulation) which are codified by Hong Kong statutes, or the performance of the agreement is illegal under the laws of the place of performance.

In the absence of choice, the court will decide the governing law by identifying the legal system which has the most “real and substantial connection” to the contract. Factors that may be taken into account include the place of intended performance, the domicile or residence of the parties, the currency of payment and choice of governing law in other related contracts.

In respect of tortious claims, Hong Kong will generally be the governing law applicable to torts committed locally. For torts committed outside of Hong Kong, the court will generally apply the “double actionability” rule: that the wrong must be actionable both under Hong Kong law and under the law of the jurisdiction in which the relevant acts took place. In cases where the “double actionability” rule would give rise to injustice, the court may determine that the governing law shall be the law of the jurisdiction which has the most significant relationship with the parties and the relevant acts committed.

Guernsey Small Flag Guernsey

In the majority of cases, the Royal Court will respect the parties’ choice to submit to a particular governing law if expressly agreed between the parties.

India Small Flag India

Generally speaking, two Indian nationals contesting a dispute are not permitted to derogate from Indian law and the same may be opposed to the public policy of the country. Also for all procedural matters the law of the forum (lex fori) will apply. For substantive dispute it will apply the law chosen by the parties or the law which has closest nexus to the dispute. However a plea based on a point of foreign law ought to be pleaded like any other fact as Indian courts do not take judicial notice of foreign laws. Further, it has also been held that the Evidence Act permits proof being tendered and opinion of experts being adduced in evidence in proof of a point of foreign law [Hari Shanker Jain v. Sonia Gandhi (2001) 8 SCC 233].

In the case of arbitration proceedings, the arbitral tribunal for a domestic arbitration taking place in India is required to decide the dispute submitted to arbitration in accordance with the substantive law of India. However, in the case of international commercial arbitrations taking place in India, Section 28(1)(b)(i) of the Arbitration Act provides that the arbitral tribunal is required to decide the dispute in accordance with the law designated by the parties.

Isle of Man Small Flag Isle of Man

Much will depend on the nature of the claim but (absent effective alternative choice of law by the parties in contractual disputes) usually Manx law would apply. In some cases where the law of another foreign jurisdiction is relevant expert evidence may need to be adduced before the court.

Italy Small Flag Italy

Law No. 218/1995 also provides for the criteria for determining the applicable law (Articles 13-19) in international disputes taking place in Italy.

In particular, Article 13 of said Law considers the cases in which it is possible (or not) to take into account the reference made by foreign private international law to the law of another State.

In any case, as provided by Article 14, the assessment of foreign law is carried out ex officio by the judge, who can ask for the collaboration of experts.

If the judge cannot determine the contents of the indicated foreign law, even with the help of the parties, the law referred to by the applicable connecting factors for the same hypothesis shall apply.

Lacking other available connecting factors, Italian law should apply.

In any case, foreign law is not applied if its effects are contrary to public order (Article 16), and the Italian provisions that must be applied in spite of the reference to foreign law in consideration of their object and purpose (so called “necessary application rules”) prevail regardless of the reference to foreign law (Article 17).

Usually, in contractual disputes, the Court will apply the law chosen by the parties.

Philippines Small Flag Philippines

As a rule, Philippine courts will apply Philippine law. If a party claims that foreign law should be applied, such party must establish the basis for the application of foreign law and prove the contents of the foreign law. In determining whether to apply foreign law, courts take into account various factors, including the stipulation of the parties as to the law that should govern their agreement, the place where the contract was executed, and the place of performance of contractual duties.

Portugal Small Flag Portugal

The applicable law is determined in the first instance through an analysis of the will of the parties. However, it must always be taken into consideration that the will must meet all the relevant criteria prescribed by the Portuguese Civil Procedural Code.

Slovakia Small Flag Slovakia

The general principle that “the court knows the law” applies – in other words, if a foreign element is present in a commercial relationship, the court alone is responsible for determining which law applies to a particular case, and how. The court may on its own initiative take evidence necessary to determine which law applies.

In the event of conflict of laws, the court in determination of applicable law proceeds:

  • according to the EU regulations if the parties have their primary residence or registered office in the EU member state – in particular according to Regulation (EC) No 593/2008 on the law applicable to contractual obligations (Rome I) or Regulation (EC) No 864/2007 on the law applicable to non-contractual obligations (Rome II);
  • according to a bilateral or convention arrangement or AoIPPL (and where existing arrangements such as a bilateral or convention arrangement do not exist), if the parties do not have their primary residence or registered office in the EU member state.

Sweden Small Flag Sweden

Private international law in Sweden is codified only in part, and consists of a combination of statute and case law. The statute law is for the most part aimed at giving effect to international conventions to which Sweden is a party. For example, as regards contractual disputes, Sweden is bound by Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (the Rome I Regulation) and as regards non-contractual disputes Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (the Rome II Regulation) is applicable.

The parties’ autonomy with regard to applicable substantive law is one of the main principles of Swedish law. Thus, the parties can normally agree on any law to be applied to a specific matter or agreement. However, there are also some Swedish mandatory rules that apply despite the choice of law, for example in competition and real estate law.

United Kingdom Small Flag United Kingdom

The choice of law rules applicable in English courts are set out in Regulation 593/2008 (the “Rome I Regulation”) and Regulation 864/2007 (the “Rome II Regulation”). The Rome I Regulation, which applies to contractual obligations, generally upholds the parties’ freedom to choose the applicable law. In the absence of party choice, the applicable law is usually the law of the place where the party performing the service characterising the contract has his habitual residence. The Rome II Regulation, which applies to non-contractual obligations, contains a basic rule providing that the applicable law is the law of the place where the damage occurs, or is likely to occur. In circumstances where the Rome I and Rome II Regulations do not apply, the English court will apply common law choice of law rules to determine the applicable law.

Bahrain Small Flag Bahrain

The court shall first refer to the parties’ agreement on the applicable law to their contract. Should this law be a foreign law, the party relying on the same shall prove the relevant texts of the law (or precedents in case of Common Law) to the satisfaction of the court (in terms of language and form). The court/BCDR will not apply the agreed upon law if the same contradicts with the public order, morality or mandatory provisions under Bahraini law.

In the absence of an agreement as to the applicable law, the applicable law will be decided in accordance with the Law No. 6 of the year 2015 with respect to Conflict of Laws in Civil and Commercial Foreign Matters, and foreign law provisions shall be subject to the same requirements provided herein above, otherwise Bahraini law will be applied.

Dominican Republic Small Flag Dominican Republic

Based on the generally accepted iura novit curia principle, judges are allowed to choose local applicable legislation. This means that judges have a proactive power to decide cases based upon the specific part of the law that they deem more accurate. Moreover, the law for private international matters (Law 544-14) allows judges to apply international legislation, when applicable, ex officio, although this is not customary.

Indonesia Small Flag Indonesia

The hierarchy of the source of law is regulated by Article 7 of Law Number 12 of 2011 on Formulation of Legislation, which ranks the precedence of Indonesian legislation as follows:

a. the 1945 Constitution;
b. a decision of the People’s Consultative Assembly;
c. a law or a government regulation in replacement of the law;
d. a government regulation;
e. a presidential regulation;
f. a provincial government regulation; and
g. a regional government regulation.

Cases are argued based on the aforesaid sources of the law. The validity of the argument will depend on whether the plaintiff can defend and prove their argument with evidence.

Malaysia Small Flag Malaysia

Generally, Malaysian law should apply to causes of action that arise within the jurisdiction unless provided otherwise by way of an express choice of foreign law as agreed to by the parties.

In contractual disputes, the parties to the contract should agree on a choice of law to be the proper law of contract. This choice of law will determine the validity, interpretations, rights and obligations of the contract. If a contractual dispute with a clause dictating a foreign choice of law is tried in the courts in Malaysia, the substance of contract will be governed by the specified foreign law whilst the procedural matters will be governed by the lex fori ie Malaysian law. [See the Federal Court case of Scandinavian Bunkering (Singapore) Pte Ltd v MISC Bhd [2015] 3 MLJ 753] The choice of governing law will always be respected by the courts in Malaysia unless it is against public policy.

On the other hand, there is no codified Malaysian statute governing tortious claims. There are generally three (3) main sources of the law of torts in Malaysia, namely English common law, local judicial decisions and the common law principles.

Chile Small Flag Chile

In Chile there is one legislation applicable to all its territory, and therefore the same law will always apply.

It can happen, however, that in a certain situation the foreign law must be applied. In this case, there are a few rules of referral in our legislation. The general rules of the so-called "private international Law" have been expressly accepted for certain issues (e.g. international sales of goods).

Malta Small Flag Malta

When determining what law will apply to claims, Maltese Courts apply the provisions of Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) which establishes uniform choice of law rules for the purposes of determining the law applicable to contractual obligations in civil and commercial matters throughout the European Union. In relation to non-contractual claims, Maltese Courts apply the provisions of Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II).

These instruments are applied regardless of the nationality or domicile of the parties, and can point to the application of any law, whether EU or non-EU.

Switzerland Small Flag Switzerland

As already mentioned under question 2, the court (other than the Swiss Federal Tribunal in ap-peals proceedings) must apply the law ex officio (principle of iura novit curia).

In purely domestic cases, Swiss law applies to the merits of the claims. Following the civil law tradition, Swiss law is mainly subject to statutory rules of law. In practice, court precedent, even though it is not considered to be an actual source of law, is nevertheless of utmost significance, mostly in terms of interpretation but occasionally also in terms of development of the law.

In international cases, the court must first determine whether Swiss or foreign law applies to the merits of the claim. If no specific legislation (especially international treaties taking precedence over the PILA) is pertinent, a Swiss court will determine the applicable law based on the conflict of law rules provided for in the PILA. The PILA (or applicable specific legislation, if any) also specifies whether, to what extent and under what conditions the parties may enter into an agreement regulating the law applicable to their legal relationship. Such choice of law clauses are typically provided for in international commercial contracts and are generally enforceable. Although parties are in principle free to choose any foreign law to govern their contracts, it would appear most logical and certainly most practical to choose Swiss law if the proceedings are meant to be brought before a Swiss court (for example if a jurisdiction clause in the same contract provides that Swiss courts shall have jurisdiction to decide claims arising out of such contract). In certain areas, a choice of law clause declaring Swiss substantive law applicable may refer to a different set of rules than the court would apply in a purely domestic case. This is for example the case for contracts dealing with the sale of goods: While the court would apply the Swiss Code of Obligations in a purely domestic case, a choice of law clause declaring Swiss law applicable may lead to the application of the Vienna Convention on the International Sale of Goods (CISG) in an international context. This is so because the CISG is deemed part of Swiss law. One therefore of-ten sees that in choice of law clauses providing for the application of Swiss law the application of the CISG is expressly excluded so as to ensure that "genuinely" domestic Swiss law applies.

If the Swiss courts have to apply foreign law, either because the parties have chosen a foreign law or because the conflict of law rules in the PILA or other pertinent legislation declare a foreign law applicable, the court shall establish the content of the foreign law ex officio. It may, however, request the parties’ assistance to do so and, in case of pecuniary claims, the court may even impose the burden to prove the content of the foreign law upon the parties. If the content of the foreign law cannot be established in such cases, the court may apply Swiss law. Moreover, the court would not apply the foreign law to the extent that it would lead to a result contrary to Swiss public policy (ordre public). Under certain (restrictive) circumstances, mandatory Swiss or foreign provisions may be applicable and take precedence over the law designated by the PILA or by agreement of the parties.

Greece Small Flag Greece

In litigation proceedings the rule is “iura novit curia”, i.e. the court knows the law. That means that the parties do no have to prove the Greek law, in the sense to provide evidence as regards the pertinent legal framework. However, in case the parties have chosen to submit their agreement into a foreign law, said parties shall provide experts’ opinion with regard to the foreign legal framework. In case no choice has been made by the parties and in the event that the relevant EU legal framework is not applicable, then the Court shall apply to the claim the law that is closer to the agreement of the parties considering all specific circumstances of the case.

Norway Small Flag Norway

Choice of law in Norway is primarily based on non-statutory law. According to a precedent set by the Norwegian Supreme Court, the test is: Which state, on a global assessment of all relevant criteria, has the closest connection to the case? The tendency in the Norwegian Supreme Court today is to take into account the more precise criteria under EU-law as part of this global assessment. The Rome I Regulation is relevant for choice of law in contractual obligations, and Rome II Regulation is relevant for non-contractual obligations. Propositions regarding choice of law is currently on hearing in Norway, and the mentioned regulations from EU may be statutory in the near future.

Luxembourg Small Flag Luxembourg

There exists no code of private international law in Luxembourg. Therefore, when the applicable law has not been agreed on by the parties, the Luxembourg judge, in the absence of a choice of law made by the parties prior to the conflict, will either apply the existing international conventions or the EU regulations, or, where these international instruments are not applicable, some specific provisions of particular laws, dealing with private international law issues (as for instance the Law of 5 April 1992 relative to the financial sector), or it will decide on the basis of the developed doctrine and case law, built on some provisions of the Civil code.

United States Small Flag United States

In commercial litigation, in cases not involving a federal question, a court will determine which state’s substantive law(s) will apply to the claims alleged in the complaint. To the extent the case concerns a federal question, federal substantive law applies.

In certain instances, the parties may have negotiated in advance the state’s law that will apply to any contractual dispute by including a choice-of-law provision in the governing contract. Some state courts may be reluctant to apply choice-of-law provisions to extra-contractual rights at issue in a commercial dispute.

Iran Small Flag Iran

Under the Civil Code 1935, laws of the jurisdiction where the forum is situated will govern the question of court jurisdiction as well as civil procedure.

With respect to substantive contractual rights and obligations, laws of the place of formation of the contract apply, except in cases where the parties to the contract are both foreign nationals and have explicitly or impliedly declared the transaction to be subject to the laws of a country other than Iran.

Courts do not recognise a governing foreign law chosen by the parties if application of such law would, in the court’s opinion, be contrary to public order or good morals.

The Netherlands Small Flag The Netherlands

Dutch courts are obliged to apply the rules on conflict of laws ex officio. This means that in a cross-border matter it will have to apply the rules on conflict of laws, even though the parties have been silent about the question of applicable law.

In contractual and tort matters, Dutch courts are bound to apply the Rome I and Rome II Regulations. If the case at hand falls outside the scope of Rome I and no other convention applies, the provisions of the Rome I Regulation are declared analogously applicable by Dutch domestic rules on conflict of laws. The same goes for the Rome II Regulation.

Ecuador Small Flag Ecuador

Applicable law in commercial litigations are chiefly the Commerce Code and the Civil Code. In addition, the Arbitration and Mediation Act is applied in arbitration proceedings. The covenant on the application of foreign law is respected by the Courts, but cases where jurisdiction lies in Ecuador and applicable law is foreign are rare.

UAE Small Flag UAE

The Court determines the applicable law based on the subject matter of the dispute. For example, in employment matters the UAE Labour Law will be applied. However, in some cases more than one law may be applicable to one dispute, or if specific law does not cover a certain aspect of the dispute, the Court may then revert to the Civil Transactions Law which is the most general law that tackles most if not all principles of law.

Armenia Small Flag Armenia

According to parts 3-4 of the article 4 of the Civil Procedure Code: ‘The Court may apply the laws of other States in accordance with the Constitution, the international treaty ratified by the Republic of Armenia or the law. The court, in case the application of the foreign law is necessary, determines existence and content of the norms of the latter, in accordance with their interpretation and rules of practice in a foreign country.’ Thus, the application of foreign law is to be necessary and prescribed by the legislation.

Updated: July 3, 2019