International Contract Law

International Contract Law

Importance of contracts in international business relations: a best protection in minimizing the risks of doing international business. Larry A Dimatteo, internation business law and the legal environment, 3rd ed Routledge, 2017, p9.

International contracts: they are posible as long as there is « freedom of contract » => CHINA = art 4 CCL : « a party is entitled to enter into a contract voluntarily under the law, and no entity or individual shall interfere with such right ».

FRANCE= art 1102 Civil Code: « everyone is free to contract or not to contract, to choose the person with whom to contract, and to determine the content and form of the contract, within the limits imposed by legislation ».

UK = privy Council UKPC 22(2013)

Consequence → bound by the contract

UK : Arnold V. Britton {UKSC. 15 (2015)} contract are bindind and must be performed in their literal terms.

France = art 1103 Civil Code 

No distinction between domestic and international contracts : same effect → freedome and binding.

Homework: 5 pages

Legal research : Are international contracts treated in specific way in your own jurisdiction ? Do they apply the domestic law to international contract? Main object: tell the main features of the national approach to the international contract.

Monday 22th october

International contract : a necessity because the domestic market is never enough in terms of business expansion and opportunies → increase. You dont have enough clients in your own country so you have to expand to other countries.

Supreme Court of the USA Zapata casa 1972 and Scherk 1974 : international contract are not treated as the domestic one → the parties to an international contract could validly stipulate provisions which, in a domestic setting, would be prohibited.  the american party to such a contract could not renege on commitments freely indertaken towards a foreign party by seeking refuge in an american …

In order to do business, we cannot impose our laws and which court shall have the case.

Introduction:

Differences between national and international contexts. Eg : refusal to apply to national contracts principles of the international contract law :

• Monetary/currency → what national money (not payment → how it will be paid: cash, check, when, where) clauses.
• Choice of forum clause

➔ These clauses are valid in international contract and not in domestic contracts.

1. International contract:

more than one country → 2 domestic legal systems.

Eg. CISG: “this convention applies to contracts … between parties whose places of business are in different States” (article1).

Court of Cassation 1st civil 2017: ISO PLUS contract with ITALIAN AGENT, and his has to distribute ISO PLUS in Italy.  Pb: ITALIAN AGENT decided to bring the case in Italia Court and the Italian court told him he cannot decide their case because its international contract and they signed a clause giving jurisdiction to the court of Strasbourg. Even if the distribution takes place in Italy, you have stipulated in a clause the jurisdiction of Strasbourg.

➔ Consequences of the international nature of a contract: conflict of jurisdiction and Applicable law?

E.g. Hague principles: “when parties enter into a contract that has connections with more than one state, the question of which legal rules governs the transaction necessarily arises”.

1. Risks in international contracts

1. Various nature of risks
2. General risks

1. Risky transports (sea, air…): risks of loss or damage
2. Cultural differences:

• Differing business practices (eg. Gifts or corruption)
• “Etiquette”

1. Monetary risk
2. Legal risks

• Unpredictability and uncertainty

• Differences between legal traditions (eg. Offer and acceptance)
• No comprehensive international uniform law
• No international court
• No predictability as to interpretation (even if the principles may be similar)
• No predictability as to jurisdiction

• Costs related to legal risks

• Letter of credit recommended
• Litigation costs
• Enforcement of judgments

When no previsions on the CISG, we will look for the domestic law.

Lex mercatoria: used to reduce risk about international contract.

Eg. : Contract between 2 country → dispute between them → CISG exclude certain kinds of goods so the CISG does not applicate → we refer to domestic law → if even the domestic law doesn’t work → lex mercatoria: usages.

French court of cassation 1991: instead of the law of a specific country contracting parties involved in an international contract can submit it to the usages of international trade.

Pay Attention to:

• Importance of party autonomy
• Role of arbitration
• Role of lawyers

In case of dispute:

Arbitration clause → choose what the arbitrators can decide

Choice of court clause → law is widely defined

PART 2:

Conflict of jurisdiction

Eg: French and German contract. Business in Belgium and china and the contract is signed is Washington. What law is applicable?

International contract: party autonomy → parties are free to choose the jurisdiction in case of dispute.