How does the court determine what law will apply to the claims?
When determining what law will apply to claims, Maltese Courts adhere to the provisions of the 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.
Claims in contract
In respect of claims in contract, the courts will adopt the following approach:
- The Court first identifies if the parties to the contract in question have expressly chosen a system of law to govern that contract.
- In absence of an express choice of law, the Court considers whether the intention of the parties, as to the governing law, may be inferred from the circumstances. The express or inferred choice of contracting parties is virtually conclusive of the proper law governing the contract, provided that the choice is bona fide, legal and not against public policy.
- Where neither an express nor inferred choice of law is identified, the Court determines the objective proper law of the contract. This refers to the system of law with the closest and most real connection to the contract and the contracting parties.
Claims in tort
In respect of claims in tort, whether for wrongs committed abroad or in Singapore, the Singapore Court applies the double actionability rule. The plaintiff must thus show that the act of the defendant: (i) would be actionable under Singapore law, had it been committed in Singapore; and (ii) would attract civil liability under the law of the place where the act was committed.
In exceptional cases, the double actionability rule is not applied, enabling the Court to displace either Singapore law or the law of the place where the act was committed. Alternatively, where the parties and surrounding factors have little connection to Singapore and the place where the act was committed, a third possible law might govern the action concerned.
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.
Commercial courts respect the choice of law agreed by the parties, except in those matters mandatory subject to Spanish law.
When it comes to disputes in which there is an international element involved, Private International Law should be taken into account, since the EU has enacted various Directives and Regulations, namely Rome I and Rome II, as well as some national rules, mainly the Spanish Civil Code.
By virtue of the iura novit curia principle, the court is obliged to know national laws. This principle, however, does not apply to foreign law. Therefore, if the parties have stipulated that foreign law will be applied, they will have to prove that the rules they are basing their claims upon exist, that they are in force, and that their interpretation is the one they are claiming it is, unless both parties agree on these premises.
The hierarchy of the sources of law is regulated by Article 7 of the Law Number 12 of 2011 concerning the Formulation of Legislation as follows:
a. The 1945 Constitution;
b. Decision of the People’s Representatives Assembly;
c. The laws or government regulation in replacement of the laws;
d. Government regulations;
e. Presidential regulations;
f. Provincial government regulations;
g. Regional government regulations.
Cases are argued based on the aforesaid sources of law. The validity of the arguments depends on whether the accusing party can defend and prove against such arguments with evidence.
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.
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 set of 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.
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.
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 :
- In a contract of sale, the seller;
- in a contract for the provision of services, the service provider;
- in a franchise agreement, the franchisee;
- in a distribution contract, the distributor;
- in a contract of carriage, the carrier;
- in an insurance contract, the insurer.
Notwithstanding the first paragraph of the above,
- 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;
- 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.
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 if 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.
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.
If the claim is, for example, a contractual claim, the court will look to the terms of the contract when determining the governing law to apply to the claim. Specifically, the court will consider whether or not the contract includes a choice of law clause. In the absence of a choice of law clause, the governing law will depend on the nature of the claim. For example, a contract for the sale of goods shall be governed by the law of the seller’s habitual residence. For a company, this would be its place of central administration.
If the dispute is not contractual in nature, for example tort claims, the general rule is that the applicable law will be that which applies where the relevant damage occurred. This general rule can be displaced by agreement of the parties.
The applicable law is determined ex officio. In an international context, the Swiss courts apply the Swiss Federal Code on Private International Law in order to determine the applicable law on the merits. This Code further provides the possibility for the parties to choose the law for certain types of legal relationships (e.g. for commercial contracts). Accordingly, the court is bound by a (valid) choice of law made by the parties and has therefore to apply the chosen law. Switzerland can therefore be considered as very liberal in respect to contractual provisions on the applicable law. However, if the parties in an international context chose a place in Switzerland to have jurisdiction over disputes, the parties would in all likelihood chose Swiss law to be applicable, not only because of the familiarity of the Swiss courts with Swiss law, but because Swiss law with its equitable and predictable nature is met by the parties with great acceptance.
If the court is not familiar with a foreign applicable law, it may require the parties to cooperate in determining the content and the meaning of the foreign law.
Switzerland furthermore ratified several international conventions regarding the choice and the application of law to particular subjects of private law, such as the Vienna Convention on the International Sale of Goods (CISG).
As a general rule Chilean law will be applied, but the parties may incorporate choice of law provisions to the contract and those provisions will be recognized in Chile as long as they do not go against Chilean public policy.
Issues regarding applicable law are questions pertaining to substantive law and consequently the court will not ex officio inquire what law is applicable in a commercial dispute. Normally, the court will render an intermediate award regarding what law is applicable if the issue is at dispute. The court will rule on the choice of law based on the international legislation or treaties applicable or, in the absence thereof, national sources of law.
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 Code.
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.
The concept of private international law, or conflict of laws, has only limited application before Saudi Arabian courts. Whenever a Saudi Arabian court or judicial tribunal is properly seized of a dispute, the case will be decided only in accordance with Saudi Arabian law, even if a contract is expressed to be governed by the laws of a country other than the Kingdom of Saudi Arabia. On the other hand, the Saudi Arabian courts give effect to agreements to submit disputes to the courts of, or arbitration in, another jurisdiction.
This is decided based on non-statutory law. However, Norwegian courts will take into account the two Rome regulations regarding the law applicable to contractual and non-contractual obligations.
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.
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.
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).
In relation to contractual obligations, the English courts will generally apply Regulation 593/2008/EC (“Rome I”), which is in force across the EU and generally upholds the parties’ freedom to choose the applicable law. Where Rome I does not apply, common law rules prevail, which determine the proper law either through (1) the express choice of law within the contract, (2) inferring the intended law to apply and (3) the system of law with which the contract has its closest and most real connection. Regulation 864/2007/EC, or Rome II, applies to non-contractual obligations.
In Danish private international law there is a distinction between claims in contract, claims under Sale of Goods Act, claims in tort and claims dealing with right to property. Thus different rules apply.
In contracts the Rome Convention determines the law applicable. The Rome I Regulation is to replace the Rome Convention. However the Regulation does not apply for Denmark due to the opt-out on EU justice and home affairs. Therefore only the Rome Convention should be applied in Denmark.
According to both the Regulation and the Convention the parties have "freedom of choice" and can agree upon which law to govern the contract. Under the Rome Convention the law of the country which the contract has a closer connection to should govern the contract if no agreement has been made. It is presumed that the contract is most closely connected to the country where the party who is to effect the "characteristic performance" has his habitual residence at the time of the conclusion of the contract. The Rome Convention applies in every case, also in cases were one of the parties is a non-EU member state. According to the Rome I Regulation the contract shall be governed by the country where the service provider, seller or the party who is to effect the characteristic performance e.g. have their habitual residence. In consumer lawsuits both the Rome Convention and the Rome I Regulation states that the law of the country of the consumer is to govern the case. However the parties can agree upon the law applicable but the consumer cannot be deprived the protection afforded by the mandatory rules of the country in which he has his habitual residence.
In sale of goods cases the Hague Convention applies. For Consumers the Rome Convention and Rome I Regulation applies as stated above since the Hague Convention does not apply in consumer cases. The Rome Convention and Rome I Regulation shall not prejudice the application of international conventions to which a Contracting State is a party. According to the Hague Convention the parties have freedom of choice. In the absence of an agreement the law applicable will be the law of the place where the seller has his habitual residence, unless the seller has received the order in the country of the buyer. Then the buyer's habitual residence will determine the law applicable.
Often CISG will govern the order, even if there is a reference to Danish law.
In tort cases the law of the place where the harmful action has taken place will apply as a main rule, "lex loci delicti". However the courts does not apply the rule mechanically, and it is questionable whether the place of action or the place of consequence determines the law. Further, other connecting factors may be taken into account. The Rome II Regulation does not apply in Denmark.
In property/things cases neither the Rome Convention nor Hague Convention applies. The general principle is based on connection, "lex rei sitae". The law applicable is determined by the place the property/thing is situated.
The applicable law is determined by application of (i) the EU Regulation no. 593/2008 (Rome I) on the law applicable to contractual obligation, or (ii) the EU Regulation no. 867/2007 (Rome II) on the law applicable to non-contractual obligations.
Regarding contractual obligations:
- the applicable law is in principle the law chosen by the parties;
- in the absence of such choice, Article 4 of the Rome I Regulation provides a set of rules relating to specific contracts, aiming at determining the applicable law. For instance, a contract for the sale of goods shall be governed by the law of the country where the seller has his habitual residence; a contract for the provision of services shall be governed by the law of the country where the service provider has his habitual residence. If the contract at stake does not fall within those which are expressly specified, the applicable law is the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence;
- Rome I Regulation also contains special rules aimed at protecting the weaker parties (e.g. consumers, workers, policy holders).
Regarding non-contractual obligations:
- the applicable law is in principle the law of the country where the harm was incurred by the victim;
- parties may nonetheless choose the applicable law, subject to some restrictions: the agreement must be entered into after the occurrence of the event giving rise to the damage. Where all parties are pursuing a commercial activity, the applicable law may be chosen by an agreement freely negotiated before the event giving rise to the damage;
- Rome II Regulation also contains special conflict of law rules regarding, for example, environmental damages and unfair competition.
In general, French courts will set aside the law determined by application of the conflict of law rules when the concrete application of that law is contrary to French public policy. Besides, by derogation to the traditional conflict of law rules, French law may apply as overriding mandatory provisions (e.g. labour law protecting workers).
In certain specific subjects, such as traffic accidents and product liability, French courts may also apply international conventions, which provide for special conflict of law rules.
In the unlikely event where neither the Rome I and II Regulations, nor any international convention applies, French courts will apply domestic conflict of law rules, which have mainly been set out by case law. For contractual obligations, the principle is the application of the law chosen by the parties. For non-contractual obligations, the applicable law is normally the law of the country where the damage was caused or incurred, whichever has the closest link with the situation.
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.