The Choice of Law Contract

by Maria Hook, Paul Beaumont

Overview

This book offers a contractual framework for the regulation of party autonomy in choice of law. The party autonomy rule is the cornerstone of any modern system of choice of law; embodying as it does the freedom enjoyed by parties to a cross-border legal relationship to agree on the law applicable to it. However, as this study shows, the rule has a major shortcoming because it fails to give due regard to the contractual function of the choice of law agreement. The study examines the existing law on choice of law agreements, by reference to the law of both common and civil law jurisdictions and international instruments. Moreover, it suggests a new coherent approach to party autonomy that integrates both the law of contract and choice of law. This important new study should be read with interest by private international law scholars.

Product Details

ISBN-13:	9781509926800
Publisher:	Bloomsbury Academic
Publication date:	01/24/2019
Series:	Studies in Private International Law
Pages:	288
Product dimensions:	6.14(w) x 9.21(h) x 0.60(d)

About the Author

Maria Hook is a Lecturer in Law at the University of Otago.

Table of Contents

Series Editors' Preface v

Acknowledgements vii

Table of Cases xvii

Table of Legislation xxv

1 Introduction 1

I The Contractualisation of Choice of Law 1

A Extent of the Contractualisation of Choice of Law 2

i Common Law Jurisdictions 3

ii Civil Law Jurisdictions 4

iii United States 5

iv International Instruments 6

B Contractualisation-But Divorced from the Law of Contract 9

i Closed Approach to Party Autonomy and its Consequences 9

ii Freedom of Contract at all Costs? 11

II A New Perspective: The Choice of Law Contract 12

A Understanding the Choice of Law Contract 13

i An International Contract 13

ii …that is Independent of the Parties' Underlying Relationship 14

iii …and whose Existence and Validity Is Determined by the Law Applicable to the Choice of Law Contract 14

iv … as well as by Modal Choice of Law Rules 15

B Regulating Freedom of Contract 16

i The Law of Contract as a Tool of Regulation 16

ii Regulating the Freedom to Choose the Applicable Law 17

iii Fusing the Law of Contract and Choice of Law 18

2 Selection of the Applicable Law by Contract 19

I A Mutual Intention to Choose the Applicable Law 19

A The Party Autonomy Rule 20

B The Choice of Law Agreement as a Legally Binding Agreement 22

II The Factual View: Choice of Law as an Extra-legal Agreement 24

A Party Choice as a Mere Factor in the Choice of Law Process 24

i The Non-delegable 'Public' Function of Choice of Law 25

ii The Power-conferring Nature of the Party Autonomy Rule 26

B Ascertaining the Choice of Law Agreement as a Matter of Fact 27

i The Putative Nature of the Choice of Law Agreement 28

ii The Pasty Autonomy Rule as a Source of Exclusive Regulation 28

C Common intention-A Qualitative Difference? 29

i Intentions that Happen to Coincide 30

ii The Declaratory Effect of Choice of Law Agreements 32

III The Choice of Law Agreement as a Contract 33

A Does the Choice of Law Agreement Create Rights and Obligations? 34

i An Obligation to Do What? 34

ii Consideration 38

iii The Arbitrator's Contract 39

B The Choice of Law Agreement as a 'Contract of Disposition'? 39

i The Concept of Disposition of Rights 40

ii Is the Choice of Law Agreement a Disposition of Rights? 40

iii The Choice of Law Agreement as a Disposition of Norms 41

C The Choice of Law Contract 41

3 The Scope of Party Autonomy 44

I Party Autonomy as Freedom of Contract 44

A Freedom of Contract 45

B Freedom of Contract in Choice of Law 46

C Default and Mandatory Rules of Choice of Law 47

II Functions of Objective Choice of Law 48

A Localising Connecting Factors 49

i Uniformity of Outcome 50

ii External Interests 50

in The Parties' Interests 51

B Substantive Choice of Law Rules 53

i Designating the Law Most Closely Connected to the Weaker Party 53

ii Designating the Applicable Law on the Basis of a Desired Outcome 54

iii The Forum Rule 55

C Mixed Choice of Law Rules 57

III The Risks and Benefits of Contractualisation 58

A Value of Party Autonomy 59

B Capacity to Enter into a Free and Informed Choice of Law Cent tact 60

C Commodification of the Applicable Law 61

IV Reconciling Party Choice with Public Policy 63

A Restrictions on the Choice of Applicable Laws 63

B Specific Exclusions to the Party Autonomy Rule 65

C Restrictions on the Effect of the Chosen Law 66

i Reliance on Simple Mandatory Rules of the Objective Applicable Law 66

ii Internationally Mandatory Rules/Public Policy of the Objective Applicable Law 66

iii Classification as Internationally Mandatory Rule/Public Policy 68

V Scope of the Party Autonomy Rule 69

A Contract 69

B Tort 70

C Family Matters 71

D Property 72

E Choice of Non-national Rules 73

VI Practical Implications 74

4 Independence of the Choice of Law Contract 75

I Choice of Law in Contract-By Contract 75

A A Distinct Rather than a Separable or Severable Contract 75

B Putativity as an Excuse for Unilateral Choice 77

C A Residual Role for the Putative Chosen Law 78

II Putative Reasoning 79

A The Proper Law Approach and Qualified Putativity 80

i The Proper Law Approach and Putativity 80

ii Qualified Putativity 81

B Putativity Unbound 84

i The Proper Law Approach and Putativity Unbound 85

ii A Notionally Independent but Putative Choice of Law Contract 86

iii Putativity Under Rome I 86

iv Putativity Under the Hague Principles 88

III The Choice of Law Contract as an Independent Contract 88

A Characterisation of the Choice of Law Contract 90

B Determining the Existence and Validity of the Choice of Law Contract 90

i The Law Applicable to the Choice of Law Contract 91

ii Different Factual Considerations 91

iii Consideration 92

iv The Choice of Law Contract as a Term 92

C Nullity or Non-existence of the Underlying Contract 93

D Timing of the Choice 94

IV Implications for the Substantive Contract 94

A One Issue, Two Contracts 95

i One Issue, One Governing Law 95

ii Two Contracts, Two Applicable Laws 96

iii Estoppel 97

B Is the Underlying Contract Conditional on the Choice of Law Contract? 99

i Conditionality as an Explanation for Putative Reasoning 99

ii Conditionally versus Severability 100

iii A Case-by-case Assessment 100

V Conclusion 101

5 Regulating the Choice of Law Contract 104

I Importance of a Cohesive Framework 104

II Underlying Principles 106

A Law of Contract 107

B Conflict of Laws 108

III Law of Contract 109

A Fundamental Role of the Law of Contract 109

i Factual Approach 110

ii Modal Choice of Law Rules as an Exclusive Source of Regulation 111

B Identification of Applicable Rules of Contract 112

i Rules on the Process of Agreement 112

ii Rules on the Content of Agreement 113

iii Rules on the Performance and Breach of Contract 115

C The Putative Chosen Law and its Exceptions 115

i Alternative Connecting Factors 116

ii Overriding Mandatory Rules 117

iii Identification of the Putative Chosen Law 118

IV Modal Choice of Law Rules 118

A Supplement the General Law of Contract 120

B Replace the General Law of Contract 122

C Foreign Modal Choice of Law Rules 123

V Limitations on the Scope of the Party Autonomy Rule 125

A Overriding Mandatory Rules and Public Policy: Lex Fori 126

B Overriding Mandatory Rules and Public Policy: Objective Applicable Law 127

C Limits on the Selection of Applicable Laws 129

VI A Cohesive Framework 129

6 Agreement to Choose the Applicable Law 132

I Introduction 132

II Intention or Expectation? 133

A Acting with a Legal System in Mind 134

i Distinction Between Expectation and Intention 135

ii Choice of Law Alternatives 137

B Procedural Choice of Law 139

i Distinction Between Expectation and Intention 139

ii Preclusion 140

C Conclusion 141

III Subjective or Objective Intention? 142

A Relevance of the Law of Contract 143

B Regulation Through Modal Choice of Law? 144

IV A Real or Hypothetical Agreement? 145

A Hypothetical Choice of Law, and Hypothetical Reasoning in Contract 146

B The Implied Choice of Law Contract 149

i Why did the Parties not Express their Choice? 149

ii Choice of Law Contracts as Implied Terms 152

C Indicators of Implied Choice of Law 155

i Presumptive Indicators 155

ii Putative Indicators of Implied Choice 156

iii Rule of Validation 158

D Ambiguous Choice of Law Contracts 159

V Conclusion 161

7 Formation of the Choice of Law Contract 162

I Introduction 162

II Extrinsic Evidence 163

A Applying Rules of Evidence to Choice of Law Contracts 164

B A Modal Choice of Law Rule on the Admissibility of Evidence? 166

III Offer and Acceptance 167

A Communicating Acceptance 168

B Conflicting Choice of Law Clauses 169

i Proposed Solutions 169

ii A Modal Choke of Law Rule Based on the Knockout Principle 170

IV Certainty and Floating Choice of Law Contracts 171

A Predictability and Unfairness 172

B A Modal Choice of Law Rule for Floating Choice of Law Contracts 172

V Formal Validity 174

A Purpose of Formalities 175

B Formalities for Choice of Law Contracts 176

i Consumer and Employment Relationships 176

ii Matrimonial Relationships 177

VI Capacity 180

A Relevance of Capacity to Choice of Law Contracts 181

B A Modal Choice of Law Rule on Incapacity 182

VII Transparency in Standard Terms 183

A Relevance of the Law of Contract 184

B A Modal Choice of Law Rule on Transparency in Standard Terms 185

VIII Informed Choice 187

A Pre-contractual Disclosure Obligations 188

B Legal Advice 189

C Post-dispute Agreements 193

IX Conclusion 194

8 Validity of the Choice of Law Contract 196

I Introduction 196

II Mistake and Misrepresentation 197

A Mistake of Law 198

B Foreign Law as Fact 199

C A Modal Choice of Law Rule on Mistake? 201

III Fairness in Substance 203

A Substantive Fairness and the Law of Contract 203

B What is an Unfair Choice of Law Contract? 205

i Existing Modal Choice of Law Rules 205

ii Comparing the Chosen with the Objective Law 208

iii Conflicts Interests in the Application of the Chosen Law 210

C The Rule on Substantive Fairness and its Potential Role 211

D Procedural Fairness 213

IV Changes in the Chosen Law 214

A Change in Circumstances 215

B Freezing Clauses and Other Options 216

V Remedies 217

VI Conclusion 218

9 Conclusion 219

I Contractualising Choice of Law: Unfinished Business 219

A False Parallelism 220

B Existence and Validity 221

C Implications 222

II Reform of Objective Choice of Law Rules? 223

III The Case for a Contractual Approach 225

A Establishing Agreement 225

I Putative Choice of Law Contracts are Ineffective 226

ii A Real Agreement on the Applicable Law 226

B Reform of Modal Choice of Law 227

i Gap-filling 227

ii Striking the Right Balance 228

C Implementing Reform 230

Select Bibliography 231

Index 245

Editorial Reviews

The book, that is comparative throughout, thus offers a lot to both European private law and PIL experts.

The range, depth and originality of the analysis of complex and intricate aspects of party autonomy in applicable law make this a must read for anyone engaged in research in this field.
Maastricht European Private Law Institute Blog

From the Publisher