COUNCIL - Archive of European Integrationaei.pitt.edu/1891/1/Obligations_report__Guiliano_OJ_C...COUNCIL REPORT on the Convention on the law applicable to contractual obligations (1)

31. 10. 80 Official Journal of the European Communities No C 282/1

(Information)

COUNCIL

REPORT

on the Convention on the law applicable to contractual obligations (1)

by Mario Giuliano

Professor, University of Milan

(who contributed the introduction and the comments on Articlesand 13)

, 3 to 8, 10, 12

and Paul Lagarde

Professor, University of Paris I

(who contributed the comments on Articles 2, 9, 11 , and 14 to 33)

(1) The text of the Convention on the law applicable to contractual obligations was published inOfficial Journal No L 266 of 9 October 1980.

The Convention, open for signature in Rome on 19 June 1980, was signed on that day by thePlenipotentiaries of the following seven Member States: Belgium , Germany, France , IrelandItaly, Luxembourg and the Netherlands.

No C 282/2 Official Journal of the European Communities 31. 10. 80

INTRODUCTION

CONTENTS

1. Proposal by the Governments of the Benelux countries to the Commission of theEuropean Communities .

......................................................

2. Examination of the proposal by the Commission and its consequences. . .

. . . . . . . . . .

3. Favourable attitude of Member States to the search for uniform rules of conflict, thesetting of priorities and establishment of the working group to study and work out theserules. .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4. Organization , progress and initial results of the Group s work at the end of 1972

. . . .

5. Re-examination of Group work in the light of oberservations by the Governments oforiginal and new Member States of the EEC and results achieved in February 1979 .

6. Finalization of the Convention within the Council of the European Communities

. . .

7. Review of the internal sources and nature of the rules in force in the EEC Member Statesrelating to the law applicable to contractual obligations

. . . . . . . . . . . . . . . . . . . . . . . . . .

8. Universal application of the uniform rules

......................................

9. On the normally general nature of the uniform rules in the Convention and theirsignificance in the unification of laws already undertaken in the field of private

international law "

TITLE I: Scope of the Convention

Article I: Scope of the Convention "

Article 2: Application of law of non-Contracting States. .

. . . . . . . . . . . . . . . . . . . . .

TITLE II: Uniform rules

Article 3

Article 4:

Article 5

Article 6:

Article 7

Article 8:

Article 9:

Article 10:

Article 11:

Article 12:

Article 13:

Article 14:

Article 15:

Freedomofchoice...............................................Applicable law in the absence of choice "

Certain consumer contracts "

Individual employment contracts "

Mandatoryrules.................................................Materialvalidity........................................"Formalvalidity........................................."Scope of the applicable law

...,... " " " '" .....

Incapacity "

Voluntary assignment "

Subrogation "

Burdenofproof etc..............................................Exclusion of renvoi "

Article 16: 'Ordrepublic

' "

Article 17: No retrospective effect "

Page

31. 10. Official Journal of the European Communities No C 282/3

Article 18:

Article 19:

Article 20:

Article 21:

Article 22:

Uniform interpretation "

States with more than one legal system......................... ....Precedence of Community law "

" "

Relationship with other Conventions.................

...... ........

Reservations "

TITLE III: Fial provisions

Article 23: Unilateral adoption by a contracting State of a new choice of law rule

Articles 24and 25: NewConventions

.. .......................... ...........,.....

Article 26: Revision......................................

.............,...

Articles 27to 33: Usual protocol clauses.................................... ........Protocol relating to the Danish Statute on Maritime Law Article 169 . . .

. . . . . . . .

NOTES. .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ..........,......

LIST OF PARTICIPANTS. . .

. .. .. . . . .. . . .. .. . . .. .. .. .. . . . . .. .. . . .. .. . . . . . .. .. .. .

Page


INTRODUCTION

1. Proposal by the Governments of the Benelux

countries to the Commission of the EuropeanCommunities

On 8 September 1967 the Permanent Representativeof Belgium extended to the Commission, in the nameof his own Government and those of the Kingdom ofthe Netherlands and the Grand Duchy ofLuxembourg, an invitation to collaborate with theexperts of the Member States, on the basis of the draftBenelux convention, in the unification of private

international law and codification of the rules ofconflict of laws within the Community.

The object of this proposal was to eliminate theinconveniences arising from the diversity of the rulesof conflict, notably in the field of contract law.Added to this was 'an element of urgency , havingregard to the reforms likely to be introduced in someMember States and the consequent 'danger that theexisting divergences would become more marked'

In the words of Mr T. Vogelaar, Director-General forthe Internal Market and Approximation ofLegislation at the Commission, in his openingaddress as chairman of the meeting of governmentexperts on 26 to 28 February 1969: 'This proposalshould bring about a complete unification of the

rules of conflict. Thus in each of our six countries,instead of the existing rules of conflict and apartfrom cases of application of internationalAgreements binding any Member State, identical

rules of conflict would enter into force both inMember States' relations inter se and in relationswith non-Community States. Such a developmentwould give rise to a common corpus of unified legalrules covering the territory of the CommunityMember States. The great advantage of this proposalis undoubtedly that the level of legal certainty wouldbe raised, confidence in the stability of legalrelationships fortified, agreements on jurisdictionaccording to the applicable law facilitated, and theprotection of rights acquired over the whole field ofprivate law augmented. Compared with theunification of substantive law , unification of the

rules of conflict of laws is more practicable,especially in the field of property law, because therules of conflict apply solely to legal relationsinvolving an international element' (l).

2. Examination of the proposal by the Commissionand its consequences

In examining the proposal by the Benelux countries

the Commission arrived at the conclusion that atleast in some special fields of private internationallaw the harmonization of rules of conflict would belikely to facilitate the workings of the commonmarket.

Mr Vogelaar s opening address reviews the groundson which the Commission s conclusion was foundedand is worth repeating here:

According to both the letter and spirit of the Treatyestablishing the EEC, harmonization is recognized asfulfilling the function of permitting or facilitating thecreation in the economic field of legal conditionssimilar to those governing an internal market. Iappreciate that opinions may differ as to the precisedelimitation of the inequalities which directly affectthe functioning of the common market and thosehaving only an indirect effect. Yet there are still legalfields in which the differences between national legalsystems and the lack of unified rules of conflictdefinitely impede the free movement of persons,goods, services and capital among the MemberStates.

Some will give preference to the harmonization orunification of substantive law rather than theharmonization of rules of conflict. As we know, theformer has already been achieved in various fields.However, harmonization of substantive law does notalways contrive to keep pace with the dismantling ofeconomic frontiers. The problem of the law to beapplied will therefore continue to arise as long as

substantive law is not unified. The number of cases inwhich the question of applicable law must beresolved increases with the growth of private lawrelationships across frontiers.

At the same time there will be a growing number ofcases in which the courts have to apply a foreign law.The Convention signed on 27 September 1968 onjurisdiction and the enforcement of judgments incivil and c9mmercial matters uniformly governs theinternational jurisdiction of the courts within the


Community. It should help to facilitate and expeditemany civil actions and enforcement proceedings. Italso enables the parties. in many matters , to teachagreements assigning jurisdiction and to chooseamong several courts. The outcome may be thatpreference is given to the court of a State whose lawseems to offer a better solution to the proceedings. Toprevent this "forum shopping increase legalcertainty, and anticipate more easily the law whichwill be applied, it would be advisable for the rules ofconflict to be unified in fields of particular economicimportance so that the same law is appliedirrespective of the State in which the decision isgIven.

To sum up, there are three main considerationsguiding our proposal for harmonizing the rules ofconflict for a few well-defined types of legalrelations. The first is dictated by the history of privateinternational law: to try to unify everything is to

attempt too much and would take too long. Thesecond is the urgent necessity for greater legalcertainty in some sectors of major economicimportance. the third is the wish to forestall anyaggravation of the differences between the rules ofprivate international law of the various MemberStates ' (2).

These were in fact the motives which prompted theCommission to convene a meeting of experts fromthe Member States in order to obtain a completepicture of the present state of the law and to decidewhether and to what extent a harmonization orunification of private international law within theCommunity should be undertaken. The invitationwas accompanied by a questionnaire designed tofacilitate the discussion (3).

3. Favourable attitude of Member States to thesearch for uniform rules of conflict, the setting priorities and establishment of the working group to

study and work out these rules

The meeting in question took place on 26 to 28February 1969. It produced a first survey of thesituation with regard to prospects for and possibleadvantage of work in the field of unification of rulesof conflict among Member States of the EuropeanCommunities (4).

However, it was not until the next meeting on 20 to 22October 1969 that the government experts were ableto give a precise opinion both on the advisability andscope of harmonization and on the workingprocedure and organization of work.

As regards advisability of harmonization theMember States ' delegations (with the sole exceptionof the German delegation) declared themselves to befundamentally in agreement on the value of the workin making the law more certain in the Community.The German delegation, while mentioning somehesitation on this point in professional and businesscircles, said that this difference of opinion was notsuch as to affect the course of the work at the presenttime.

As regards the scope of harmonization, it wasrecognized (withoUt prejudice to futuredevelopments) that a start should be made on mattersmost closely involved in the proper functioning the common market, more specifically:

I. the law applicable to corporeal and incorporealproperty;

2. the law applicable to contractual and non-contractual obligations;

3. the law applicable to the form of legaltransactions and evidence;

4. general matters under the foregoing heads(renvoi, classification , application of foreign lawacquired rights public policy, capacity,representation).

As for the legal basis of the work, it was theunanimous view that the proposed harmonizationwithout being specifically connected with theprovisions of Article 220 of the EEC Treaty, wouldbe a natural sequel to the Convention on jurisdictionand enforcement of judgments.

Lastly, on the procedure to be followed, all thedelegations were in favour of that adopted for workon the Conventions already signed or in process ofdrafting under Article 220 and of seeking the mostsuitable ways of expediting the work (5).

The results of the meeting were submitted through theDirectorate-General for the Internal Market anApproximation of Legislation to the Commissionwith a proposal to seek the agreement of MemberStates for continuance of the work and preparationof a preliminary draft Convention establishinguniformity of law in certain relevant areas of privateinternational law.

The Commission acceded to the proposal. At itsmeeting on 15 January 1970 the Committee ofPermanent Representatives expressly authorized theGroup to continue its work on harmonization of therules of private international law, on theunderstanding that the preliminary draft or draftswould give priority to the four areas previouslyindicated.

No C 282/6 Official Journal of the European Communities 31. 10.

Following the abovementioned decision of thePermanent Representatives Committee. the Groupmet on 2 and 3 February 1970 and elected itschairman, Mr P. Jenard, Director of Administrationin the Belgian Ministry of Foreign Affairs andExternal Trade, and its vice-chairman , Prof. MiccioCounsellor to the Italian Court of Cassation.

Having regard to the decision of the previousmeeting that the matters to be given priority shouldbe divided into four sectors, the Group adopted theprinciple that each of the four sectors should have itsown rapporteur appointed as follows , to speed up thework:

1. in the case of the law applicable to corporeal andincorporeal property, by the Germandelegation;

2. in the case of the law applicable to contractual

and extracontractual obligations, by the Italiandelegation:

3. in the case of the law applicable to the form oflegal transactions and evidence, by the Frenchdelegation;

4. in general matters, by the Netherlandsdelegation, in agreement with the Belgian andLuxembourg delegations.

As a result the following were appointed: Prof. K.Arndt, Oberlandsgerichtsprasident a. d. ; Prof. M.Giuliano, University of Milan; Prof. P. Lagarde,

University of Paris I; Mr T. van Sasse van YsseltDirector in the Netherlands Ministry of Justice.

Other matters were dealt with at the same meeting,notably the kind of cenvention to be prepared, as towhich the great majority of delegates favoured auniversal convention not based upon reciprocity; themethod of work; participation of observers from theHague Conference on Private International Law andthe Benelux Commission on Unification ofLaw (6).

4. Organization, progress and initial results of theGroup s work at the end of 1972

The Group took as its starting point the examinationand discussion of the questionnaires prepared by therapporteurs, Messrs Giuliano, Lagarde and vanSasse van Y sselt in their respective fields. They werediscussed at a meeting of the rapporteurs chaired byMr Jenard on I to 4 June 1970. The threequestionnaires were subjected to a thorough analysis,extending both to the rules of conflict (national orestablished by convention) in force in theCommunity Member States and to the evolutionary

trends already apparent in case law and legal theoryin certain countries or worthy of consideration inrelation to certain present-day reqirements ininternational life. This oral analysis was furthersupplemented by the written replies given by eachrapporteur on the basis of the statutes, case law andlegal theory of his own country (of the three Beneluxcountries in the case of Mr van Sasse) to thequestionnaires drawn up by his colleagues andhimself C).

This preliminary work and material enabled each ofthe rapporteurs to present an interim report, withdraft articles on the matter considered, as a workingbasis for the Group meetings. It was agreed that thesemeetings would be devoted to an examination of MrGiuliano report on the law applicable tocontractual and non-contractual obligations and tothe subject matter of Mr Lagarde s and Mr van Sassevan Ysselt's report to the extent that this was relevantto Mr Giuliano s subject.

It was agreed that Mr Arndt's report on the lawapplicable to corporeal and incorporeal propertywould be discussed later, Mr Arndt having explainedthat a comparative study of the principal laws onsecurity rights and interests should precede his reportand that the need for such a study had been generallyrecognized.

Apart from the meeting of rapporteurs in June 1970

the work fully occupied 11 Group plenary sessionseach with an average duration of five days (8).

At its meeting in June 1972 the Group completed thepreliminary draft convention on the law applicableto contractual and non-contractual obligations anddecided that it should be submitted, together with thereports finalized at a meeting of rapporteurs on 27

and 28 September 1972 to the PermanentRepresentatives Commitee for transmission to theGovernments of the Community Member States (9).

5. Re-examination of Group work in the light ofobsenations by the Governments of original aDd newMember States of the EEC and results achieved in

February 1979

It follows from the foregoing observations that the1972 draft dealt both with the law applicable tocontractual obligations and with that applicable tonon-contractual obligations. At the same time itprovided solutions relating to the law governing theform of legal transactions and evidence, questions ofinterpretation of uniform rules and their relationship


with other rules of conflict of international origin, tothe extent to which these were connected with thesubject of the preliminary draft.

Following the accession of the United KingdomDenmark and Ireland to the EEC in 1973 theCommission extended the Group to includegovernment experts from the new Member States andthe Permanent Representatives Commiteeauthorized the enlarged Group to re-examine in thelight of observations from the Governments of theoriginal and of the new Member States of the EEC,the preliminary draft convention which theCommission had submitted to it at the end of 1972.The Group elected Prof. Philip as vice-chairman.

Nevertheless the preliminary draft was not re-examined immediately. The need to allow the expertsfrom the new Member States time to consult theirrespective Governments and interested parties on theone hand and the political uncertainties in the UnitedKingdom concerning membership of the EuropeanCommunities (which were not settled until the 1975referendum) on the other, resulted in a significantreduction (if not suspension) of the Group s activitiesfor about three years. It was not until the end of 1975that the Group was able properly to resume its workand proceed with the preparation of the Conventionon the law applicable to contractual obligations. Infact the Group decided at its meeting in March 1978to limit the present convention to contracts alone andto begin negotiations for a second Convention , onnon-contractual obligations, after the first had beenworked out. Most delegations thought it better forreasons of time to finish the part relating tocontractual obligations first.

The original preliminary draft, with the limitationreferred to, was re-examined in the course of 14

plenary sessions of the Group and three specialmeetings on transport and insurance contracts; eachoftbe plenary sessions lasted two to five days (10). Atthe meeting in February 1979 the Group finished thedraft convention, decided upon the procedure fortransmitting the draft to the Council before the endof April and instructed Professors Giuliano andLagarde to draw up the report; this was then finalizedat a meeting of rapporteurs on 18 to 20 June 1979 inwhich one expert per delegation participated , andtransmitted in turn to the Council and to theGovernments by the chairman , Mr Jenard.

6. Finalization of the Convention within the Councilof the European Communitees

On 18 May 1979 the Group s chairman , Mr Jenard,sent the draft Convention to the President of the

Council ofthe European Communities with a requestthat the Governments make their comments on thedraft by the end of the year so that the Conventioncould then be concluded during 1980.

On 20 July 1979 Mr Jenard sent the President of theCouncil a draft report on the Convention , which wasthe predecessor of this report.

The General Secretariat of the Council receivedwritten comments from the Belgian, Netherlands,

Danish, Irish, German, Luxembourg ahd UnitedKingdom Governments. In addition, on 17 March1980, the Commission adopted an opinion on thedraft Convention, which was published in OflicialJournal of the European Communities No L 94 of April 1980.

On 16 January 1980 the Permanent RepresentativesCommitee set up an ad hoc working party on privateinternational law whose terms of reference weretwofold:

to finalize the Convention text in the light of thecomments made by Member StatesGovernments,

to consider whether, and if so within what limits,the Court of Justice of the EuropeanCommunities should be given jurisdiction tointerpret the Convention.

The ad hoc working party met twice, from 24 to 28March and 21 to 25 April 1980, with Mr Brancacciofrom the Italian Ministry of Justice in the chair (II).Working from the Governments ' written commentsand others made orally during discussions, theworking party reached general agreement on thesubstantive provisions of the Convention and on theaccompanying report.

The only problems unresolved by the working partyconcerned the problem of where the Convention

stood in relation to the Community legal order. Theyarose in particular in determining the number ofratifications required for the Convention to comeinto force and in drafting a statement by theGovernments of the Member States on the conferralof jurisdiction on the Court of Justice.

Following a number of discussions in the PermanentRepresentatives Committee, which graduallybrought agreement within sight the CouncilPresidency deemed circumstances to be ripepolitkally for the points of disagreement to bediscussed by the Ministers of Justice with a goodchance of success at a special Council meeting on June 1980 in Rome.


At that meeting, a final round of negotiationsproduced agreement on a number of seven MemberStates required to ratify in order for the Conventionto come into force. Agreement was also reached onthe wording of a joint statement on the interpretationof the Convention by the Court of Justice, whichfollowed word for word the matching statementmade by the Governments of the original six MemberStates of the Community. when .the Convention onjurisdiction and enforcement was concluded on 27September 1968 in Brussels. In adopting thestatement, the Representatives of Governments ofthe Member States, meeting within the Council, alsoinstructed the ad hoc Council working party onprivate international law to consider by what meanspoint 1 of the statement could be implemented andreport back by 30 June 1981.

With these points settled, the President-in-Office ofthe Council, Tommaso Morlino, Italian Minister ofJustice recorded the agreement of theRepresentatives of the Governments of the MemberStates meeting within the Council, on thefollowing:

adoption of the text of the Convention and of thetwo joint statements annexed to it

the Convention would be open for signing from19 June 1980

the Convention and accompanying report wouldbe published in the Official Journal. of theEuropean Communities for information.

The Convention was signed on 19 June 1980 by theplenipotentiaries of Belgium, the Federal Republic ofGermany, France , Ireland, Italy, Luxembourg andthe Netherlands.

7. Review of the intemal sources and nature of therules in force in the EEC Member States relating to the

law applicable to contractual obligations

The chief aim of the Convention is to introduce intothe national laws of the EEC Member States a set ofuniform rules on the law applicable to contractualobligations and on certain general points of privateinternational law to the extent that these are linked

with those obligations.

Without going here into details of positive lawthough it may be necessary to return to it in thecomments on the uniform rules, a short survey cannow be given of the internal sources and the nature ofthe rules of conflict at present in force in theCommunity countries in the field covered by the

Convention. This survey will bring out both the valueand the difficulties of the unification undertaken bythe Group and of which the convention is only thefirst fruit.

Of the nine Member States of the Community, Italyis the only one to have a set of rules of conflictenacted by the legislature covering almost all thematters with which the Convention is concerned.These rules are to be found for the most part in thesecond paragraph of Article 17 and in Articles 25 , 26,

. 30 and 31 of the general provisions constituting theintroduction to the 1942 Civil Code, and in Articles 9and 10 of the 1942 Navigation Code.

In the other Member States of the Community,however, the body of rules of conflict on the lawapplicable to contractual obligations is founded only'On customary rules or on rules originating in case

law. Academic studies and writings have helpedconsiderably to develop and harmonize these rules.

The position as just stated has not been alteredsubstantially either by the French draft lawsupplementing the Civil Code in respect of privateinternational law (1967) or by the Benelux Treatyestablishing uniform rules of private internationallaw signed in Brussels on 3 July 1969. These two textsare certainly an interesting attempt to codify the rulesof conflict and also, in the case of the Benelux

countries, to make these rules uniform on an inter-State level. The Group did not fail to take account oftheir results in its own work. However, the entry intoforce of the Benelux Treaty has not been pursuedand the French draft law seems unlikely to beadopted in the near future.

8. Universal application of the uniform rules

From the very beginning of its work the Group hasprofessed itselfto be in favour of uniform rules whichwould apply not only to the nationals of MemberStates and to persons domiciled or resident withinthe Community but also to the nationals of thirdStates and to persons domiciled or resident therein.The provisions of Article 2 specify the universalapplication of the convention.

The Group took the view that its main purpose was toframe general rules such as those existing inlegislative provisions currently in force in Italy andin the Benelux Treaty and the French draft law. such a context these general rules, which wouldbecome the 'common law ' of each Member State forsettling conflicts of laws, would not prejudice thedetailed regulation of clearly delimited matters


arising from other work, especially that of the HagueConference on private international law. Theapplication of these particular conventions safeguarded by the provisions of Article 21.

9. On the normally general nature of the uniform

. rules in the Convention alld their siinificance in the

unification of laws already undertaken in the field

private intemationallaw

At the outset of its work the Group had also todetermine the nature and scope of the uniform rulesof conflict to be formulated. Should they be generalrules, to be applied indiscriminately to all contracts,or would it be better to regulate contractualobligations by means of a series of specific rulesapplicable to the various categories of contract, oragain should an intermediate solution be envisagednamely by adopting general rules and supplementingthem by specific rules for certain categories ofcontract ?

Initially the rapporteur advocated the latter method.This provided that, in default of an express ofimplied choice by the parties, the contract would begoverned (subject to specific provisions for certaincategories) by one system of law.

When the Group tackled the question of whether tosupplement the general rules for determining the law

applicable to the contract by some specific rules forcertain categories of contract it became clear that thepoint was no longer as significant as it had been inthe context of the rapporteur s initial proposals. TheGroup s final version of the text of Article 4 providedsatisfactory solutions for most of the contracts whoseapplicable law was the subject of specific rules ofconflict in the rapporteur proposals, notably

because of its flexibility. The Group therefore merelyprovided for some exceptions to the rule contained inArticle 4, notably those in Articles 5 and 6concerning the law applicable respectively to certainconsumer contracts and to contracts of employmentin default of an express or implied choice by theparties.

The normally general nature of the uniform rulesmade it necessary to provide for a few exceptions andto allow the judge a certain discretion as to theirapplication in each particular case. This aspect willbe dealt with in the comments on a number ofArticles in Chapter III of this report.

As declared in the Preamble, in concluding thisConvention the nine States which are parties to theTreaty establishing the European EconomicCommunity show their desire to continue in the fieldof private international law the work of unificationalready undertaken in the Community, particularlyin matters of jurisdiction and enforcement ofjudgments. The question of accession by third Statesis not dealt with in the Convention (see page 41penultimate paragraph).


SCOPE OF THE CONVENTION

TITLE I

Article

Scope of the Convention

1. As provided in Article 1 (1) the uniform rules inthis Convention apply generally to contractualobligations in situations involving a conflict oflaws.

It must be stressed that the uniform rules apply to theabovementioned obligations only ' in situationsinvolving a choice between the laws of differentcountries . The purpose of this provision is to definethe true aims of the uniform rules. We know that thelaw applicable to contracts and to the obligationsarising from them is not always that of the countrywhere the problems of interpretation or enforcementare in issue. There are situations in which this law isnot regarded by the legislature or by the case law asthat best suited to govern the contract and theobligations resulting from it. These are situationswhich involve one or more elements foreign to theinternal social system of a country (for example, thefact that one or all of the parties to the contract areforeign nationals or persons habitually residentabroad , the fact that the contract was made abroadthe fact that one or more of the obligations of theparties are to be performed in a foreign country, etc.thereby giving the legal systems of several countriesclaims to apply. These are precisely the situations inwhich the uniform rules are intended to apply.

Moreover the present wording of paragraph 1 meansthat the uniform rules are to apply in all cases wherethe dispute would give rise to a conflict between twoor more legal systems. The uniform rules also apply those systems coexist within one State (cf. Article19 (1)). Therefore the question whether a contract isgoverned by English or Scots law is within the scopeof the Convention , subject to Article 19 (2).

2. The principle embodied in paragraph however subject to a number of restrictions.

First, since the Convention is concerned only withthe law applicable to contractual obligations

property rights and intellectual property are notcovered by these provisions. An Article in theoriginal preliminary draft had expressly so provided.However, the Group considered that such aprovision would be superfluous in the present text,especially as this would have involved the need torecapitulate the differences existing as between thevarious legal system of the Member States of theCommunity.

3. There are also the restrictions set out paragraph 2 of Article

The first of these, at (a), is the status or legal capacityof natural persons, subject to Article 11; then, at (b),contractual obligations relating to wills andsuccession, to property rights arising out ofmatrimonial relationships, to rights and dutiesarising out of family relationships parentage,marriage or affinity, including maintenanceobligations in respect of illegitimate children. TheGroup intended this enumeration to exclude fromthe scope of the Convention all matters of familylaw.

As regards maintenance obligations, within themeaning of Article 1 of the Hague Convention on thelaw applicable to maintenance obligations, theGroup considered that this exclusion should alsoextend to contracts which parties unter a legalmaintenance obligation make in performance of thatobligation. All other contractual obligations, even ifthey provide for the maintenance of a member of thefamily towards whom there are no legal maintenanceobligations, would fall within the scope of theConvention.

Contrary to the provisions of the second paragraphof Article 1 in the original preliminary draft, thecurrent wording of subparagraph (b) does not ingeneral exclude gifts. Most of the delegationsfavoured the inclusion of gifts where they arise froma contract within the scope of the Convention, evenwhen made within the family, provided they are notcovered by family law. Therefore the onlycontractual gifts left outside the scope of the uniform


rules are those to which family law, the law relatingto matrimonial property rights or the law ofsuccession apply.

The Group unanimously affirmed that mattersrelating to the custody of children are outside thescope of the Convention, since they fall within thesphere of personal status and capacity. However, theGroup thought it inappropriate to specify thisexclusion in the text of the Convention itself, therebyintending to avoid an a contrario interpretation ofthe Convention of 27 September 1968.

To obviate any possibility of misconstruction, thepresent wording of subparagraphs (a) and (b) usesthe same terminology as the 1968 Convention jurisdiction and enforcement of judgments.

4. Subparagraph (c) excludes from the scope of theuniform rules in the first instance obligations arisingfrom bills of exchange, cheques , promissary notes.

In retaining this exclusion, for which provision hadalready been made in the original preliminary draft,the Group took the view that the provisions of theConvention were not suited to the regulation of

obligations of this kind. Their inclusion would haveinvolved rather complicated special rules. Moreoverthe Geneva Conventions to which several MemberStates of the Community are parties govern most ofthese areas. Also, certain Member States of theCommunity regard these obligations as non-contractual.

Subparagraph (c) also excludes other negotiableinstruments to the extent that the obligations undersuch other negotiable instruments arise out of theirnegotiable character. If a document, though theobligation under it is transferable , is not regarded asa negotiable instrument, it falls outside the exclusion.This has the effect that such documents as bills oflading, similar documents issued in connection withtransport contracts, and bonds debentures,guarantees letters of indemnity, certificates ofdeposit, warrants and warehouse receipts are onlyexcluded by subparagraph (c) if, they can beregarded as negotiable instruments; and even thenthe exclusion only applies with regard to obligationsarising out of their negotiable character.Furthermore , neither the contracts pursuant to whichsuch instruments are issued nor contracts for thepurchase and sale of such instruments are excluded.Whether a document is characterized as a negotiableinstrument is not governed by this Convention and isa matter for the law of the forum (including its rulesof private international law).

5. Arbitration agreements and agreements on thechoice of court are likewise excluded from the scopeof the Convention (subparagraph (d)).

There was a lively debate in the Group on whether ornot to exclude agreements on the choice of court. Themajority in the end favoured exclusion for thefollowing reasons: the matter lies within the sphere ofprocedure and forms part of the administration justice (exercise of State authority); rules on thismatter might have endangered the ratification of theConvention. It was also noted that rules onjurisdiction are a matter of public policy and there isonly marginal scope for freedom of contract. Eachcourt is obliged to determine the validity of theagreement on the choice of court in relation to itsown law, not in relation to the law chosen. Given thenature of these provisions and their fundamentaldiversity, no rule of conflict can lead to a uniformsolution. Moreover, these rules would in any case befrustated if the disputes were brought before a courtin a third country. It was also pointed out that so faras concerns relationships within the Community, themost important matters (valitidity of the clause andform) are governed by Article 17 of the Conventionof 27 September 1968. The outstanding pointsnotably those relating to consent, do not arise inpractice, having regard to the fact that Article provides that these agreements shall be in writing.Those delegations who thought that agreements onchoice of court should be included within theConvention pointed out that the validity of such anagreement would often be dealt with by theapplication of the same law that governed the rest ofthe contract in which the agreement was includedand should therefore be governed by the same law asthe contract. In some systems oflaw , agreement as tochoice of court is itself regarded as a contract and theordinary choice of law rules are applied to discoverthe law applicable to such a contract.

As regards arbitration agreements certaindelegations, notably the United Kingdomdelegation, had proposed that these should not beexcluded from the Convention. It was emphasizedthat an arbitration agreement does not differ fromother agreements as regards the contractual aspects,and that certain international Conventions do notregulate the law applicable to arbitration agreements,while others are inadequate in this respect. Moreoverthe international Conventions have not been ratifiedby all the Member States of the Community andeven if they had been, the problem would not besolved because these Conventions are not ofuniversal applications. It was added that there wouldnot be unification within the Community on thisimportant matter in international commerce.

Other delegations, notably the German and Frenchdelegations, opposed the United Kingdom proposal

No C 282/12 Official Joarnal of the European Communities 31. 10. 80

emphasizing particularly that any increase in the

number of conventions in this area should avoided, that severability is accepted in principle inthe draft and the arbitration clause is independentthat the concept of 'closest ties' difficult to apply toarbitration agreements, that procedural andcontractual aspects are difficult to separate, that thematter is complex and the experts ' proposals showgreat divergences; that since procedural matters andthose relating to the question whether a dispute wasarbitrable would in any case be excluded, the onlymatter to be regulated would be consent; that theInternational Chamber of Commerce - which, as

everyone knows, has great experience in this matterhas not felt the need for further regulation.

Having regard to the fact that the solutions which canand have been considered generally for arbitrationare very complex and show great disparity, a delegateproposed that this matter should be studiedseparately and any results embodied in a Protocol.The Group adopted this proposal and consequentlyexcluded arbitration agreements from the scope ofthe uniform rules, subject to returning to anexamination of these problems and of agreements onthe choice of court once the Convention has beenfinally drawn up.

The exclusion of arbitration agreements does notrelate solely to the procedural aspects, but also to theformation, validity and effects of such agreements.Where the arbitration clause forms an integral part ofa contract, the exclusion relates only to the clauseitself and not to the contract as a whole. Thisexclusion does not prevent such clauses being takeninto consideration for the purposes of Article 3 (I).

6. Subparagraph (e) provides that the uniform rulesshall not apply to questions governed by the law ofcompanies, and other bodies corporate orunincorporate such as the creation, by registration orotherwise, legal capacity, internal organization orwinding-up of companies, and other bodiescorporate or unincorporate and the personal legalliability of officers and members as such for theobligations of the company or body.

This exclusion in no way implies that this aspect wasconsidered unimportant in the economic life of Member States of the Community. Indeed, this is anarea which, by virtue of its economic importance andthe place which it occupies in many provisions of theTreaty establishing the EEC, appears to have thestrongest possible reasons for not being separatedfrom Community work in the filed of unification ofprivate international law, notably in conflicts of lawspertaining to economic relations.

Notwithstanding the foregoing considerations, theGroup had thought it inadvisable, even in theoriginal preliminary draft, to include companies,firms and legal persons within the scope of theConvention, especially in view of the work beingdone on this subject within the EuropeanCommunities (12).

Confirming this exclusion, the Group stated that itaffects all the complex acts (contractualadministrative, registration) which are necessary tothe creation of a company or firm and to theregulation of its internal organization and winding-up, i. e. acts which fall within the scope of companylaw.

On the other hand, acts or preliminary contracts

whose sole purpose is to create obligations betweeninterested parties (promoters) with a view to forminga company or firm are not covered by theexclusion.

The subject may be a body with or without legalpersonality, profit-making or non-profit-making.Having regard to the differences which exist, it maybe that certain relationships will be regarded aswithin the scope of company law or might be treatedas being governed by that law (for example, societede droit civil nicht-rechtsfahiger Verein,partnership, Vennootschap onder firma, etc.) insome countries but not in others. The rule has beenmade flexible in order to take account of the diversityof national laws.

Examples of 'internal organization ' are: the callingof meetings, the right to vote, the necessary quorum,the appointment of officers of the company or firm,etc. 'Winding-up ' would cover either the terminationof the company or firm as provided by itsconstitution or by operation of law, or itsdisappearance by merger or other similar process.

At the request of the German delegation the Groupextended the subparagraph (e) exclusion to the

personal liability of members and organs, and also tothe legal capacity of companies or firms. On the otherhand the Group did not adopt the proposal thatmergers and groupings should also be expresslymentioned, most of the delegations being of theopinion that mergers and groupings were alreadycovered by the present wording.

As regards legal capacity, it should be made clearthat the reference is to limitations, which may beimposed by law on companies and firms, for examplein respect of acquisition of immovable property, not


to ultra vires acts by organs of the company or firm,which fall under subparagraph (t).

7. The solution adopted in subparagraph (t)involves the exclusion from the scope of the uniformrules of the question whether an agent is able to binda principal, or an organ to bind a company or bodycorporate or unincorporate, to a third party.

The exclusion affects only the relationships betweenthe principial and third parties, more particularly thequestion whether the principal is bound vis-a-visthird parties by the acts of the agent in specific cases.

It does not affect other aspects of the complex field ofagency, which also extends to relationships betweenthe principal and the agent and to agent-third partyrelationships. The exclusion is justified by the factthat it is difficult to accept the principle of freedom ofcontract on this point. On the other hand, principal-agent and agent-third party relationships in no waydiffer from other obligations and are thereforeincluded within the scope of the Convention in so faras they are of a contractual nature.

8. The exception in subparagraph (g) concernstrusts' in the sense in which they are understood in

the common law countries. The English word 'trust'is properly used to define the scope of the exclusion.On the other hand similar institutions undercontinental laws falls within the provisions of theConvention because they are normally contractual inorigin. Nevertheless it will be open to the judge treat them in the same way as the institutions of thecommon law countries when they exhibit the samecharacteristics.

9. Under subparagraph (h) the uniform rules do notapply to evidence and procedure, subject toArticle 14.

This exclusion seems to require no comment. Thescope and extent to which the exclusion is subject tolimitation will be noted in the commentary onArticle 14.

10. The question whether contracts of insuranceshould or should not be included in the sope of theuniform rules was discussed at length by the Group.The solution finally adopted was that which appearsin paragraph 3.

Under this paragraph the provisions of theConvention do not apply to contracts of insurancecovering risks situated in the territories of MemberStates of the European Economic Community. This

exclusion takes account of work being done withinthe Community in the field of insurance. Thus theuniform rules apply to contracts of insurance

covering risks situate outside those territories. TheStates are nevertheless free to apply rules based onthose in the Convention even to risks situate in theCommunity, subject to the Community rules whichare to be estabIL~hed.

Insurance contracts, where they cover risks situateoutside the Community, may also, in appropriatecases, fall under Article 5 of the Convention.

To determine whether a risk is situate in theterritories of the Member States of the Communitythe last phrase of paragraph 3 states that the judge isrequired to apply his own national law. Thisexpression means the rules in force in the judgecountry, to the exclusion of the rules of private

international law as stated by Article 15 of theConvention.

11. By virtue of paragraph 4 of Article I theexclusion provided for in paragraph 3 does not affectreinsurance contracts. In fact these contracts do notraise the same problems as contracts of insurance,where the need to protect the persons insured mustnecessarily be taken into account. Thus the uniformrules apply to reinsurance contracts.

Article

A,plicatioD of law of --C08tnu:tiDg States

This Article underlines the universal character of theuniform rules laid down in this Convention. TheConvention does not apply only in situationsinvolving some form of connection with one or otherof the Contracting States. It is of universalapplication in the sense that the choice of law whichit lays down may result in the law of a State not partyto the Convention being applied. By way of example,under Article 3 , parties to a contract may opt for thelaw of a third State, and in !be absence of any choicethat same law may be applied to the contract underArticles 4 and 5 if it is with that State that the contracthas the closest links. In other words, the Conventionis a uniform measure of private international lawwhich will replace the rules of private internationallaw in force in each of the Contracting States, withregard to the subject matter which it covers andsubject to any other convention to which theContracting States are party (see Article 21).


The solution is consistent with that adopted in mostof the Hague Conventions on private internationallaw that deal with choice of laws (stricto sensu). Thetext follows that of the Hague Convention drafted

during the XlIIth session (Conventions of 14 March1978 on the law applicable to matrimonial propertyregimes, Article 2, and on the law applicable toagency, Article 4).


UNIFORM RULES

TITLE II

Article

Freedom of choice

1. The rule stated in Article 3 (1) under which thecontract is governed by the law chosen by the partiessimply reaffirms a rule currently embodied in theprivate international law of all the Member States ofthe Community and of most other countries.

In French law the rule conferring this power (orautonomie de la volonte' as it is called) upon theparties is founded on case law dating back to thejudgment delivered on 5 December 1910 by the Courtof Cassation in American Trading Company Quebec Steamship Company Limited. The French

draft law of 1967 to supplement the Civil Code inmatters of private international law merely confirmsthe state of French law in this matter by providing inthe first paragraph of Article 2312: 'Contracts of aninternational character and the obligations arisingfrom them shall be subject to the law under which theparties intended to place themselves.

The firm establishment of the rule in French case lawwas accompanied by corresponding developments inlegal theory. The most eminent contemporary writersdeclare themselves fundamentally in favour of the

principle of the parties' freedom of contract indetermining the law applicable to the contract, oraccording to the opinion of some legal writers, thelocalization' of the contract in a specific legal

system (13).

The same applies to the law of the German FederalRepublic, where the subject of contractualobligations was not dealt with by the legislature in thefinal version of the ' introductory law' of 1896. Therule conferring upon the parties the power to specifythe law applicable to their contract is neverthelessfounded on case law which has been developed andstrengthened in recent decades despite the oppositionof the great majority of earlier German legaltheorists. At all events present-day theory is in entireagreement with the position taken by the caselaw (14).

Unlike the situation in France and Germany, in Italythe principle of freedom of contract of thecontracting parties was expressly enacted as early as1865 in the preliminary provisions of the Civil Code.It is currently based upon the first paragraph ofArticle 25 of the preliminary provisions of the 1942Civil Code, in which the freedom of the parties tochoose the law applicable to their contract is formallyaccepted, as in Articles 9 and 10 of the NavigationCode, where it is provided that the power of theparties to designate the applicable law may also beexercised in seamen s contracts and in contracts fotthe use of ships, boats and aircraft. According to thepreponderant view of theorists and consistentdecisions by the Court of Cassation, the lawapplicable to the contract must be determinedprimarily on the basis of the express will of theparties; only in default of such a nomination will thelaw of the contract be determined by the connectingfactors stipulated in the abovementionedprovisions (15).

As regards Belgium, Luxembourg and theNetherlands, the rule that the contracting partiesenjoy freedom of contract in choosing the applicablelaw has also been sanctioned by judicial practice andby contemporary legal writers.

In its judgment of 24 February 1938 in SA Antwerpiav. Ville d'Anvers the Belgian Court of Cassation

stated for the first time, in terms clearly suggested bythe French judgment of 5 December 1910, that: 'thelaw applicable to contracts, both to their formationand their conditions and effects, (is) that adopted bythe parties ' (16). Several Belgian writers havecontributed to the firm establishment of the rule intheory and in practice (17).

In the Netherlands the Hoge Raad put the finishingtouches to the developments in case law in this fieldin its judgment of 13 May 1966 in the Alnati case. Theprevious decisions of the Supreme Court and thediffering views of writers on the precise scope of thefreedom of contract rule would not have permitteddefinition of the state of Netherlands law in thismatter with sufficient certainty (18).


At all events the 1969 Benelux Treaty on uniformrules for private international law, even though thesignatory States have not pursued its entry into force,is clear evidence of their present views on thissubject. Article 13 (1) of the uniform law states:Contracts shall be governed by the law chosen by theparties as regards both essential and ancillaryprovisions

English law recognizes that the parties to a contractare free to choose the law which is to govern it ('theproper law of the contract'). This principle offreedom of choice is founded on judicialdecisions (19). In Vita Food Products Inc. Y. UnusShipping Co. Ltd (20) Lord Wright indicated that theparties' choice must be bona fide and legal and couldbe avoided on the ground of public policy. In certainareas the parties ' freedom of choice is subject tolimitations imposed by statute (20a), the mostimportant of these being in the field of exemptionclauses (20b

The law of Scotland is to similar effect (2Oc) and Irishlaw draws its inspiration from the same principles asthe English and Scottish legal systems.

Under English law (and the situation is similar inScots law and Irish law), in the case where the partieshave not expressly chosen the law to govern theircontract (lOci), the court will consider whether theparties ' choice of law to be applied can be inferredfrom the terms of the contract. The most commoncase in which the court may infer a choice of theproper law is where the contract contains anarbitration or choice of jurisdiction clause naming aparticular country as the seat of arbitration orlitigation. Such a clause gives rise to an argument thatthe law of the country chosen should be applied asthe proper law of the contract. This inferencehowever is not conclusive and can be rebutted by anycontrary inferences which may be drawn from theother provisions of the contract and the relevantsurrounding circumstances (20e).

Finally, as regards Denmark, the principle of thefreedom of contracting parties to choose the law

applicable to their contract already seems to haveinspired several opinions by Supreme Court judgesduring this century. Today at all events this principleforms the basis of Danish case law , as can be seenfrom the judgment in 1957 in Baltica v. M 1. VermaasScheepvaart bedrijf, with full support from legalwriters (21).

2. The principle of the parties ' freedom to choosethe law applicable is also supported both byarbitration decisions and by international treaties

designed to unify certain rules of conflict in relationto contracts.

The rule, which had already been cited in 1929 by thePermanent Court of International Justice in itsjudgment in the case of the Brazilian Loans (22), veryclearly underlay the award made by the arbitrationtribunal on 29 August 1958 in Saudi Arabia Arabian American Oil Company (Aramco) in whichit was stated that the 'principles of privateinternational law to be consulted in order to find thelaw applicable are those relating to freedom ofchoice, by virtue of which, in an agreement which isinternational in character, the law expressly chosenby the parties must be applied first. . . ' (23). Similarlyin the arbitration findings given on 15 March 1963 inSapphire International PeuoJeums Ltd v. NationalIranian Oil Company, the sole arbitrator, Mr Cavinaffirmed that it is the will of the parties thatdetermines the law applicable in matters ofcontract (24). The rule was reaffirmed even morerecently by the sole arbitrator, Mr Dupuy, in theaward which he made on 19 January 1977 in LibyanArab Republic v. California Asiatic Oil Companyand. Texaco Overseas Petroleum Company (25).

As regards international treaties, the rule of freedomof choice has been adopted in the Convention on thelaw applicable to international sales of goodsconcluded at the Hague on 15 June 1955 whichentered into force on 1 September 1964. Article 2 ofthis Convention, which is in force among severalEuropean countries, provides that: 'The sale shall begoverned by the internal law of the countrynominated by the contracting parties.

Article VIII of the European Convention oninternational commercial arbitration concluded atGeneva on 21 April 1961 , which entered into force on7 January 1964, provides that the parties are free todetermine the law which the arbitrators must apply ina dispute.

The same principle forms the basis of the 1965Convention for the settlement of disputes relating toinvestments between States and nationals of otherStates, which entered into force on 14 October 1966when it provides in Article 42 that 'the Tribunal shallrule on the dispute in accordance with the rules oflaw adopted by the parties

The Hague Convention of 14 March 1978 on the lawapplicable to agency provides in Article 5 that ' theinternal law chosen by the principal and the agent isto govern the agency relationship betweenthem ' (26).


3. The parties ' choice must be express or bedemonstrated with reasonable certainty by the termsof the contract -or the circumstances of the case. Thisinterpretation, which emerges from the sesondsentence of Article 3 (1), has an importantconsequence. The choice of law by the parties will often be expressbut the Convention recognizes the possibility that theCourt may, in the light of all the facts, find that theparties have made a real choice oflaw although this isnot expressly stated in the contract. For example , thecontract may be in a standard form which is knownto be governed by a particular system of law eventhough there is no express statement to this effectsuch as a Lloyd' s policy of marine insurance. In othercases a previous course of dealing between the partiesunder contracts containing an express choice of lawmay leave the court in no doubt that the contract inquestion is to be governed by the law previouslychosen where the choice of law clause has been

omitted in circumstances which do not indicate adeliberate change of policy by the parties. In somecases the choice of a particular forum may show in nouncertain manner that the parties intend the contractto be governed by the law of that forum , but this mustalways be subject to the other terms of the cntract andall the circumstances of the case. Similarly referencesin a contract to specific Articles of the French CivilCode may leave the court in no doubt that the partieshave deliberately chosen French law , although thereis no expressly stated choice of law. Other mattersthat may impel the court to the conclusion that a realchoice of law has been made might include anexpress choice of law in related transactions betweenthe same parties, or the choice of a place wheredisputes are to be settled by arbitration incircumstances indicating that the arbitrator shouldapply the law of that place.

This Article does .not permit the court to infer achoice of law that the parties might have made wherethey had no clear intention of making a choice. Sucha situation is governed by Article 4.

4. The last sentence of Article 3 (1) acknowledgesthat the parties ' choice of the law applicable mayrelate to the whole of the contract or to only partthereof. On the question whether severability(depe~ge) was to be allowed, some experts observedthat the contract should in principle be governed byone law, unless that contract, although apparently asingle contract, consists in reality of several contractsor parts which are separable and independent of eachother from the legal and economic points of view. Inthe opinion of these experts, no reference toseverability should have been made in the text of theConvention itself. In the view of others, on the

contrary, severability is directly linked with theprinciple of freedom of contract and so would bedifficult to prohibit. Nevertheless when the contractis severable the choice must be logically consistenti. e. it must relate to elements in the contract whichcan be governed by different laws without giving riseto contradictions. For example, an ' index-linkingclause ' may be made subject to a different law; on theother hand it is unlikely that repudiation of thecontract for non-performance would be subjected totwo different laws, one for the vendor and the otherfor the purchaser. Recourse must be had to Article 4of the Convention if the chosen laws cannot belogically reconciled.

In the opinion of these experts the danger that theargument of. severability might be used to avoidcertain mandatory provisions is eliminated by theoperation of Article 7. The experts concerned alsoemphasized that severability should not be limited tocases of express choice of law.

The solution adopted in the last sentence of Article3 (1) is prompted by exactly this kind of idea. TheGroup did not adoptthe idea that the judge can use apartial choice of law as the basis for a presumption infavour of one law invoked to govern the contract inits entirety. Such an idea might be conducive to errorin situations in which the parties had reachedagreement on the choice of law solely on a specificpoint. Recourse must be had to Article 4 in the case ofpartial choice.

5. The first sentence of Article 3 (2) leaves theparties maximum freedom as to the time at which thechoice of applicable law can be made.

It may be made either at the time the contract isconcluded or at an earlier or later date. The secondsentence of paragraph 2 also leaves the partiesmaximum freedom as to amendment of the choice ofapplicable law previously made.

The solution adopted by the Group in paragraph 2corresponds only in part to what seems to be the

current state of the law on this point in the MemberStates of the Community.

In the Federal Republic of Germany and in Francethe choice of applicable law by the parties canapparently be made even after the contract has beenconcluded, and the courts sometimes deduce theapplicable law from the parties ' attitude during theproceedings when they refer with clear agreement toa specific law. The power of the parties to vary thechoice of law applicable to their contract also seemsto be very widely accepted (27


Case law in the Netherlands seems to follow the sameline of interpretation (28).

In Italy, however, the Court of Cassation (sitting as afull court) stated in its judgment of 28 June 1966 No1680 in Assael Nissim v. Crespi that; 'the partieschoice of applicable law is not admissible if madeafter the contract has been drawn up ' (29).

According to this dictum which Italiancommentators do not wholly support (30) the choice

can be made only at the time the contract isconcluded. Once the choice is made, the parties nolonger have the option of agreeing to nominate a lawother than that nominated at the time of concludingthe contract.

In the laws of England and Wales, ScotlandNorthern Ireland and Ireland, there is no clearauthority as to the law which governs the possibilityof a change in the proper law.

6. The liberal solution adopted by the Group seemsto be in accordance with the requirement of logicalconsistency. Once the principle of freedom ofcontract has been accepted, and having regard to thefact that the requirement of a choice of law by theparties may arise both at the time of conclusion of thecontract and after that time, it seems quite logical thatthe power of the parties should not be limited solelyto the time of conclusion of the contract. The sameapplies to a change (by a new agreement between theparties) in the applicable law previously chosen.

As to the way in which the choice of law can bechanged, it is quite natural that this change should besubject to the same rules as the initial choice.

If the choice of law is made or changed in the courseof proceedings the question arises as to the limits

within which the choice or change can be effective.However, the question falls within the ambit of the-national law of procedure, and can be settled only inaccordance with that law.

7. The second sentence of Article 3 (2) states that achange in the applicable law after the contract hasbeen concluded shall not prejudice its formal validityunder Article 9 or adversely affect the rights of thirdparties. The purpose of the reservation concerningthe formal validity of the contract is to avoid asituation whereby the agreement between the partiesto subject the contract to a law other than that whichpreviously governed it could create doubts as to the

validity of the contract during the period precedingthe agreement between the parties. The preservationof third-party rights appears to be entirely justified.In certain legal systems, a third party may haveacquired rights in consequence of a contractconcluded betwen two other persons. These rightscannot be affected by a subsequent change in thechoice of the applicable law.

8. Article 3 (3) provides that the choice of a foreignlaw by the parties, whether or not accompanied bythe choice of a foreign tribunal, shall not, where allother elements relevant to the situation at the time ofthe choice are connected with one country only,prejudice the application of the law of that countrywhich cannot be derogated from by contracthereinafter called 'mandatory rules

This solution is the result of a compromise betweentwo lines of argument which have been diligentlypursued within the Group: the wish on the one handof certain experts to limit the parties ' freedom ofchoice embodied in this Article by means of acorrecting factor specifying that the choice of aforeign law would be insufficient per se to permit theapplication of that law if the situation at the momentof choice did not involve another foreign element

and on the other the concern of other expertsnotably the United Kingdom experts , that such acorrecting factor would be too great an obstacle tothe freedom of the parties in situations in which theirchoice appeared justified, made in good faith, andcapable of serving interests worthy of protection. Inparticular these experts emphasized that departuresfrom the principle of the parties ' freedom of choiceshould be authorized only in exceptionalcircumstances, such as the application of themandatory rules of a law other than that chosen bythe parties; they also gave several examples of casesin which the choice of a foreign law by the parties wasfully justified, although there was apparently other foreign element in the situation.

The Group recognized that this concern was wellfounded, while maintaining the principle that thechoice by the parties of a foreign law where all theother elements relevant to the situation at the time ofthe choice are connected with one country only shallnot prejudice the application of the mandatory rulesof the law of that country.

9. Article 3 (4) merely refers questions relating tothe existence and validity of the parties ' consent as tothe choice of the law applicable to the provisions ofArticles 8 , 9 and 11. We will return to these matters inthe comments on those Articles.


Article

Applicable law in the absence of choice

1. In default of an express or implied choice by theparties, there is at present no uniform way ofdetermining the law applicable to contracts in the

legal systems of the: Member States of theCommunity (31).

In French and Belgian law no distinction is to bedrawn between the express and hypothetical (orpresumed) will of the parties. Failing an expresschoice of applicable law, the courts look for variouspointers ' capable of show~ng that the contract islocated in a particular country. This localization issometimes regarded subjectively as equivalent to theprobable wish of the parties had such a wish beenexpressed, sometimes objectively as equivalent to thecountry with which the transaction is most closelyconnected (32).

The objective concept seems \to be receiving moreand more support from legal writers and from caselaw. Following this concept, the Paris Court stated inits judgment of 27 January 1955 (Soc. Jansen v. Soc.Heurtey) that, in default of an indication of the willof the parties, the applicable law 'is determinedobjectively by the fact that the contract is located byits context and economic aspec1s in a particularcountry, the place with which the transaction is mostclosely connected being that in which the contract isto be performed in fulfilment of the obligationcharacteristic of its nature ' (33).

It is this concept of the location of the contracts thatis referred to , in terms clearly modelled on the abovejudgment, in the second paragraph of Article 2313 ofthe French draft, which states that in default of theexpressed will of the parties ' the contract is governedby the law with which it is most closely connected byits economic aspects, and notably by the main placeof performance

Similarly, in German law the solution adopted by thecourts in determining the law of the contract in theabsence of choice by the parties is based largely uponthe search for 'pointers' capable of showing thehypothetischer Parteiwille , the presumed will of theparties, having regard to the general interests at stakein each particular case. If this gives no result, the lawapplicable to the contract according to, German caselaw is determined by the place of performance: moreprecisely, by the place of performanc(~ of each of theobligations arising from the contraf;;t, because theGerman courts take the view that if the variouscontractual obligations are to be: performed in

different countries, each shall be governed by the lawof the country in which it is performed (34).

In English law where the parties have not expresslychosen the proper law and no choice can be inferredthe law applicable to the contract is the system of lawwith which the transaction has its 'closest and mostreal connection ' (35). In such a case the judge doesnot seek to ascertain the actual intensions of the

contracting parties, because that is non-existent, butseeks 'to determine for the parties what is the properlaw which, as just and reasonable persons, they oughtto have intended if they had thought about thequestion when they made the contract' (36). In thisinquiry, the court has to consider all thecircumstances of the case. No one factor is decisive;instead a wide range of factors must be taken intoaccount, such as for instance, the place of residenceor business of the parties, the place of performancethe place of contracting and the nature and subject-matter of the contract.

Scots law adopts a similar approach (36a), as does the

law of Ireland.

In Italian law, where the presumed will of the partiesplays no part, the matter is settled expressly anddirectly by the legislature. Failing a choice of law bythe parties, the obligations arising from the contractare governed by the following:

(a) contracts for employment on board foreignships or aircraft, by the national law of the shipor aircraft (Naval Code Article 9);

(b) marine, domestic and air hiring contractscharters and transport contracts , by the nationallaw of the ship or aircraft (Naval Code Article10);

(c) all other contracts, by the national law of thecontracting parties, if common to both;otherwise by the law of the place where the

contract was concluded (preliminary provisionsof the Civil Code Article 25 firstsubparagraph ).

The abovementioned laws are of subsidiary effectonly; they apply only in default of an expression ofthe parties ' will as to the law applicable. Italian caselaw so holds and legal writers concur with thisview (37).

To conclude this short survey, only the provisions ofthe third and fourth paragraphs of Article 13 of the1969 Benelux Treaty which has not entered into forceremain to be mentioned. According to the thirdparagraph, in default of a choice by the parties ' the


contract shall be governed by the law of the countrywith which it is most closely connected', anaccording to the fourth paragraph ' when it impossible to determine that country, the contractshall be governed by the law of the country In whichit was , concluded' One may note a tendency Netherlands case law to formulate special rules ofreference for certain types of contract (see ' Journaldu Droit Int. 1978

, pp.

336 to 344' and ' Neth. Int.Law Rev. 1974

, pp

315 to 316' ), i. e. contracts ofemployment, agency contracts and comracrs ofcarnage.

The foregoing survey has shown that, with the soleexception of Italy, where the subsidiary lawapplicable to the contract is detennined once and forall by hard-and- fast connecting factors, all the otherCommunity countries have preferred and continue toprefer a more flexible approach, leaving the judge toselect the preponderant and decisive connectingfactor for determining the law applicable to thecontract in each specific case among the variouselements of the contract and the CIrcumstances of thecase.

2. Having considered the advantages anddisadvantages of the solutions adopted by thelegislatures and the case law of the Member States ofthe Community and after analyzing a range of ideasand alternatives advanced both by the rapporteurand by several delegates , the Group agreed upon theuniform rule embodied in Article

The first paragraph of this Article provides that , indefault of a choice by the parties, the contract shall begoverned by the law of the country with which it hasthe closest connection.

In order to determine the country with which the

contract is most closely connected, it is also possibleto take account of factors which supervened after theconclusion of the contract.

In fact the beginning of the first paragraph does notmention default of choice by the parties ~ theexpression used is ' to the extent that the lawapplicable to the contract has not been chosen inaccordance with Article 3' . The use of these words isjustified by reference to what has been said inparagraph 4 of the commentary on Article

However, the flexibility of the general principleestablished by paragraph I is substantially modifiedby the presumptions in paragraphs 2, 3 and 4, and bya strictly limited exception in favour of severability atthe end of paragraph

3. According to Article 4 (2), it. is presumed that thecontract has the closest connecjLlon with the countryin which the party who is to effect the performancewhich is characteristic of the c('Jntract has his habitualresidence at the time when the contract is concluded

, in the case of a body corporate or unincorporateits central administration. If the contract concluded by that party in tht course of his trade orprofession, the country conc(~rned is that in which hisprincipal place of business is situated or, if thecontract is to be performec through a place ofbusiness other than the prmclpal place of businessthe ,:ountry in which that other place of business issituated. Article 4 (2) e;stablishes a presumptionwhi,~h may t)e rebutted iu accordance with Article (5).

The kind of idea upon yvhich paragraph 2 is based iscertainly not entirely uI'Lknown to some specialists. Itgives effect to a tendency which has been gainingground both in legal writings and in case law in manycountries in recent decades C8). The submission ofthe contract, in the abs'ence of a choice by the parties,to the law appropriate l.O the characteristicperformance defines the connecting factor of thecontract from the inside, and not from the outside byelements unrelated LO the es:,ence of the obligationsuch as the nationality of the contracting parties orthe place w here the contract was concluded.

In addition it is possible to relate the concept ofcharacteristlc per:formance to an even more generalidea, namely thf~ idea that his performance refers tothe function which the legal relationship involvedfulfils in the economic and social life of any country.The concept IJf characteristic performance essentiallylinks the (;ontract to the social and economicenvironment of which it will form a part.

Identifying the characteristIc performance of contract obviQusly presents no difficulty in the caseof unilc.teral contracts. By contrast, in bilateral(reciprocal) contracts whereby the parties undertakemutual. reciprocal perfonnance the coumer-performance by one of the parties in a moderneconomy usmally takes the form of money. This isnot. of course, the characteristic performance of thecon tract. It is the performance for which the paymentis due, i. e. depending on the type of contract, theddivery of goods, the granting of the right to makeu:;e of an item of property, the provision of a service,transport, insurance, banking operations, security,,~tc" which usually constitutes the centre of gravityand the sodo-,~conomic function of the contractualtransaction

As for the geogI'aphicallocation of the characteristicperforman~:e, it is quite natural that the country in


which the party liable for the performance ishabitually resident or has his central administration(if a body corporate or unincorporate) or his place ofbusiness , according to whether the performance inquestion is in the course of his trade or profession ornot, should prevail over the country of performancewhere, of course, the latter is a country other thanthat of habitual residence , central administration orthe place of business. In the solution adopted by theGroup the position is that only the place of habitualresidence or of the (;entral administration or of theplace of business of the party providing the essentialperformance is decisive in locating the contract.

Thus , for example, in a banking contract the law ofthe country of the banking establishment with whichthe transaction is made will normally govern thecontract. It is usually the case in a commercialcontract of sale that the law of the vendor s plac.e ofbusiness will govern the contract. To take anotherexample, in an agency contract concluded in Francebetween a Belgian commercial agent and a Frenchcompany, the characteristic performance being thatof the agent, the contract will be governed by Belgianlaw if the agent has his place of business inBelgium (39).

In conclusion , Article 4 (2) gives specific form andobjectivity to the, in itself, too vague concept ofclosest connection . At the same time it greatlysimplifies the problem of determining the lawapplicable to the contract in default of choice by theparties. The place where the act was done becomesunimportant. There is no longer any need determine where the contract was concluded, with allthe difficulties and the problems of classification thatarise in practice. Seeking the place of performance orthe different places of performance and classifyingthem becomes superfluous.

For each category of contract it is the characteristicperformance that is in principle the relevant factor inapplying the presumption for determining theapplicable law, even in situations peculiar to certaincontracts, as for example in the contract of guarantee.where the characteristic performance is always thatof the guarantor, whether in relation to the principaldebtor or the creditor.

To counter the possibility of changes in theconnecting factor Cconflits mobiles in theapplication of paragraph 2 , it has been made clearthat the country of habitual residence or of theprincipal place of business of the party providing thecharacteristic performance is the country in which heis habitually resident or has his centraladministration or place of business, as appropriateat the time of conclusion of the contract

According to the last part of paragraph 2, if thecontract prescribes performance by an establishmentother than the principal place of business, it ispresumed that the contract has the closest connectionwith the country of that other establishment.

4. Article 4 (3) establishes that the presumption inparagraph 2 does not operate to the extent that thesubject of the contract is a right in immovableproperty or a right to use immovable property. It ispresumed in this case that the contract is most closelyconnected with the country in which the immovableproperty is situated.

It is advisable to state that the provision in questionmerely establishes a presumption in favour of the lawof the country in whkh the immovable property issituate. In other words this is a presumption which,like that in paragraph 2, could also be rebutted ifcircumstances so required.

For example, this presumption could be rebutted iftwo persons resident in Belgium were to make acontract for renting a holiday home on the island ofElba (Italy). It might be thought In such a case ' thatthe contract was most closely connected with thecountry of the contracting parties ' residence , not withItaly.

Finally it sliould be stressed that paragraph 3 doesnot extend to contracts for the construction or repairof immovable property. This is because the mainsubject-matter of these contracts is the constructionor repair rather than the immovable property itself.

5. After a long and animated discussion the Groupdecided to include transport contracts within the

scope of the convention. However, the Groupdeemed it inappropriate to submit contracts for thecarriage of goods to the presumption contained inparagraph 2 , ha ving regard to the peculiarities of thistype of transport. The contract for carriage of goodsis therefore made subject to a presumption of its ownnamely that embodied in paragraph 4. Thispresumption may be rebutted in accordance withArticle 4 (5).

According to this fourth paragraph it is presumed inthe case of contracts for the carriage of goods that ifthe country in which the carrier has his principalplace of business at the time the contract is concludedis also the country of the place of loading orunloading or of the principal place of business of theconsignor, the contract is most closely connectedwith that country. The term ' consignor' refers ingeneral to any person who consigns goods to the


carrier (Afzender, Aflader, Verzender, Mittente

Caricatore, etc.

Thus the paragraph 4 presumption rests upon acombination of connecting factors. To counter thepossibility of changes in the connecting factor inapplying the paragraph, it has been made clear herealso that the reference to the country in which thecarrier has his principal place of business must betaken to refer to the carrier s place of business ' at thetime the contract is concluded'

It appears that for purposes of the application of thisparagraph the places ofloading and unloading whichenter into consideration are those agreed at the timewhen the contract is concluded.

It often happens in contracts for carriage that a

person who contracts to carry goods for another doesnot carry them himself but arranges for a third partyto do so. In Article 4 (4) the term 'the carrier ' meansthe party to the contract who undertakes to carry thegoods, whether or not he performs the carriage

himself.

In addition, the third sentence of paragraph

provides that in applying that paragraph single-voyage charterparties and other contracts whosemain purpose is the carriage of goods shall be treatedas contracts for the carriage of goods. The wording ofparagraph 4 is intended to make it clear thatcharterparties may be considered to be contracts forthe carriage of goods in so far as that is theirsubstance.

6. Contracts for the carriage of passengers remainsubject to the general presumption, i. e. that providedfor in Article 4 (2).

This solution was adopted by majority vote withinthe Group. Certain delegations favoured the specialpresumption emodied in paragraph 4, arguing thatas with other types of transport, the need was for acombination of connecting factors , in view of the factthat reference solely to the place where the carrierwho provides the characteristic performance, has hisprincipal place of business may not be a significantconnecting factor: by way of example they cited thecase of transportation of French or Englishpassengers between London and Paris by American airline. It was also emphasized that in mixed contract (passengers and goods) the difficultyof applying two different laws would arise.

Nevertheless the other delegations were against the

special presumption their principal arguments

being: the application of several laws to passengerson the same journey would involve seriousdifficulties; the formulation of paragraph 4 is suchthat it would hardly ever apply to carriage ofpassengers, so recourse would usually be had to thefirst paragraph of Article 4, which does not give thejudge sufficiently precise criteria for decision;contracts of carriage normally contain a clauseconferring jurisdiction on the court of the carrierprincipal place of business, and paragraph 2 wouldoperate so that the law of the court of competentjurisdiction would coincide with the applicablelaw.

In any event it should be stated that the judge will notbe able to exclude consideration of the country in

which the carrier has his principal place of businessin seeking the places with which the contract is mostclosely connected.

Finally it is useful to note that the Group repeatedlystressed in the course of the discussions on transportproblems that the international conventions tookprecedence in this matter.

7. Article 4 (2) does not apply when thecharacteristic performance connot be determined.The case then falls under paragraph I i. e. thecontract will be governed by the law of the countrywith which it is most closely connected.

The first part of Article 4 (5) contains precisely thatprovision.

However, that paragraph also provides for thepossibility of disregarding the presumptions paragraphs 2, 3 , and 4 when all the circumstancesshow the contract to have closer connections withanother country. In this case the law of that othercountry is applied.

The grounds for the latter provision are as follows.Given the entirely general nature of the conflict rulecontained in Article 4, the only exemptions to whichare certain contracts made by consumers andcontracts of employment, it seemed essential toprovide for the possibility of applying a law otherthan those referred to in the presumptions inparagraphs 2, 3 and 4 whenever all the circumstancesshow the contract to be more closely connected withanother country.

Article 4 (5) obviously leaves the judge a margin discretion as to whether a set of circumstances existsin each specific case justifying the non-application ofthe presumptions in paragraphs 2 , 3 and 4. But this isthe inevitable counterpart of a general conflict ruleintended to apply to almost all types of contract.


8. Article 4 (I) allows parts of the contract to besevered under certain conditions. The last sentence ofthis paragraph provides that if one part of the

contract can be separated from the rest and is moreclosely connected with another country, then by wayof exception the law of that other country can be

applied to that part of the contract.

Discussion of the matter within the Group revealedthat no delegation wished to encourage the idea ofseverability (depe~ge). However, most of the expertswere in favour of allowing the court to effect a

severance, by way of exception, for a part of the

contract which is independent and separable, in

terms of the contract and not of the dispute, wherethat part has a closer connection with anothercountry (for example, contracts for joint venture,complex contracts).

As to whether or not the possibility of severanceshould be mentioned in the text of the conventionitself most delegations were in favour of its beingmentioned. It was emphasized in particular that merereference to the matter in the report would beinsufficient by itself, because in some Member Statesof the Community it is not usual to take account ofthe report. It was also emphasized that to include it inthe text would reduce the risk of variation in theapplication of the convention on this point, becausethe text would specify the conditions under whichseverance was allowed.

The wording of the last sentence in paragraph Iembodies precisely this idea. The words 'by way ofexception ' are therefore to be interpreted in the sensethat the court must have recourse to severance asseldom as possible.

9. It should be noted that the presumptionsmentioned in paragraphs 2, 3 and 4 of Article 4 areonly rebuttable presumptions.

Article

Certain consumer contracts

1. Article 5 of the convention establishes a specificconflict rule for certain contracts made byconsumers. Most of the experts who haveparticipated in the Group s work since 1973 havetaken the view that consumer protection, the presentaim of several national legislatures, would entail areversal of the connecting factor provided for inArticle 4 or a modification of the principle of

freedom of choice provided for in Article 3. On theone hand the choice of the parties should notadversely affect the mandatory provisions of theState in which the consumer is habitually resident; the other, in this type of contract it is the law of thebuyer (the weaker party) which should normallyprevail over that of the seller.

2. The definition of consumer contractscorresponds to that contained in Article 13 of the

Convention on jurisdiction and enforcement ofjudgments. It should be interpreted in the light of itspurpose which is to protect the weaker party and inaccordance with other international instruments withthe same purpose such as the Judgments Convention.Thus, in the opinion of the majority of thedelegations it will, normally, only apply where theperson who supplies goods or services or providescredit acts in the course of his trade or profession.

Similarly, the rule does not apply to contracts madeby traders, manufacturers or persons in the exerciseof a profession (doctors, for example) who buyequipment or obtain services for that trade profession. If such a person acts partly within , partlyoutside his trade or profession the situation only fallswithin the scope of Article 5 if he acts primarilyoutside his trade or profession. Where the receiver ofgoods or services or credit in fact acted primarilyoutside his trade or profession but the other party didnot know this and , taking all the circumstances intoaccount should not reasonably have known it, thesituation falls outside the scope of Article 5. Thus ifthe receiver of goods or services holds himself out asa professional, e. g. by ordering goods which mightwell be used in his trade or profession on hisprofessional paper the good faith of the other party isprotected and the case will not be governed byArticle 5.

The rule extends to credit sales as well as to cashsales, but sales of securities are excluded. The Grouphas specifically avoided a more precise definition ofconsumer contract' in order to avoid conflict withthe various definitions already given by nationallegislation. The rule also applies to the supply ofservices, such as insurance, as well as supply ofgoods.

3. Paragraph 2 embodies the principle that a choiceof law in a consumer contract cannot deprive theconsumer of the protection afforded to him by thelaw of the country in which he has his habitualresidence. This principle shall, however, only applyunder certain conditions set out in the three indentsof paragraph

The first indent reales to situations where the traderhas taken steps to market his goods or services in the


country where the consumer resides. It is intended tocover inter alia mail order and door-step selling.Thus the trader must have done certain acts such asadvertising in the press , or on radio or television , orin the cinema or by catalogues aimed specifically atthat country, or he must have made businessproposals individually through a middleman or bycanvassing. If, for example, a German makes acontract in response to an advertisement publishedby a French company in a German publication , thecontract is covered by the special rule. If, on the otherhand, the German repFes to an advertisement inAmerican publications, even if they are sold inGermany, the rule does not apply unless theadvertisement appeared in special editions of the

publication intended for European countries. In thelatter case the seller will have made a specialadvertisement intended for the country of thepurchaser.

The Group expressly adopted the words ' stepsnecessary on his part ' in order to avoid the classicproblem of determining the place where the contractwas concluded. This is a particularly delicate matterin the situations referred to, because it involvesinternational contracts normally concluded bycorrespondence. The word ' steps ' includes inter alia

writing or any action taken in consequence of anoffer or advertisement.

According to the second indent Article 5 shall applyin all situations where the trader or his agent hasreceived the order of the consumer in the country inwhich the consumer has his habitual residence. Thisprovision is a parallel to Article 3 (2) of the 1955Hague Convention on international sales

There is a considerable overlap between the first andthe second indents. This overlap is, however, notcomplete. For example, the second indent applies insituations where the consumer has addressed himselfto the stand of a foreign firm at a fair or exhibitiontaking place in the consumers country or to a

permanent branch or agency of a foreign firmestablished in the consumer s country even thoughthe foreign firm has not advertised in the consumercountry in a way covered by the first indent. Theword ' agent' is intended to cover all persons actingon behalf of the trader.

The third indent deals with a situation which is ratherspecial but where , on the other hand , a majority ofdelegations found a clear need for protecting theconsumer under the provisions of Article 5. It coverswhat one might describe as 'border-crossingexcursion-selling , i. e. for example , a situation wherea store-owner in country A arranges one-day bus

trips for consumers in a neighbouring country B withthe main purpose of inducing the consumers to buyin his store. This is a practice well-known in someareas. The situation is not covered by the first indentbecause there it is required that the consumer hastaken in his own country all the steps necessary on hispart for the conclusion of the contract. The thirdindent is , unlike the rest of paragraph 2 , limited tocontracts for the sale of goods. The condition that thejourney was arranged by the seller shall not beunderstood in the narrow way that the seller musthimself have taken care of the transportation. It issufficient that the seller has arranged the journey byway of an agreement with the transportationcompany.

In describing the situation in which Article 5 appliesto consumer contracts , the (:Jroup has not followedthe text of Article 13 (1) of the JudgmentsConvention as amended by the AccessionConvention. On the one hand Article 5 contains nospecial provision for hire purchase contracts andloans on deferred terms. On the other hand , Article13 of the Judgments Convention has no provisionsparallel to the second and third indents of Article 5(2,.

4. Article 5 (3) introduces an exception to Article 4of the Convention. According to this paragraph

notwithstanding the provisions of Article 4 and in theabsence of choice in accordance with Article 3 , acontract made by a consumer shall 'be governed bythe law of the country in whkh the consumer has hishabitual residence if. it is entered into in thecircumstances described in the second paragraph ofArticle 5'

The wording of paragraph 3 is sufficiently clear, andcalls for no additional examination.

5. Under the terms of paragraph 4 thereof, Article 5applies neither to contracts of carriage (a) nor to

contracts relating to the supply of services providedexclusively in a country other than that in which theconsumer is resident (b). The exclusion of contractsof carriag,; is justified by the fact that the specialprotective measures for which provision is made inArticle 5 are not appropriate for governing contractsof this type. Similarly, in the case of contractsrelating to the supply of services (for exampleaccommodation in a hotel, or a language course)which are supplied exclusively outside the State inwhich the consumer is resident, the latter ca~notreasonably expect the law of his State of origin to beapplied in derogation from the general rules ofAI1icles 3 ,md 4. in the cases referred to under (b) thecontract i~ more closely connected with the State in

Official Journal of the European Communities No C 282/253 I. 10. 80

which the oth,er contracting party is resident, even ifthe latter has performed one of the acts described inparagraph 2 ( advertising, for example) in the State inwhich the consumer is resident.

6. The intention of paragraph 5 is to ensure thatArticle 5, notwithstanding the exclusions made inparagraph 4 , shall apply to contracts providing forwhat is ir, English normally called a ' package touri. e. an QT'dinary tourist arrangement consisting of acombination of travel and accommodation for aninclusive price. If a package tour starts withtranspOJ.tation from the country in which theconsum er has his habitual residence the contract

would not be excluded according to paragraph 4. Theimport:ance of paragraph 5 is, therefore, that itensures application of Article 5 also in situationswhere the services provided for under a package tourstart with transportation from another country.Howf~ver, Article :; of course only applies to packagetours where the general conditions of paragraphs and 2 are fulfilled i. e. that the contract can beregarded as a consumer contract and that it is enteredinto in one of the situations mentioned inpar' agraph 2.

Wben formulating paragraph 5, the Group met withdifficulty in defining a ' package tour . The Groupconfined itself to a definition which underlines them2Lin elements of this type of contract well known inpractice, leaving it to the courts to solve any possibledoubt as to the exact delimitation. Theac;commodation which is a part of a package tourmust normally be separate from the transportationand so paragraph 5 would not apply to the provisionof a sleeper on a train.

Article

Individual employment contracts

1. Re-examination of the specific conflict rule inthe matter of contracts of employment led the Groupto make fundamental changes to this Article, whichalready appeared (as Article 5) in the originalpreliminary draft , and to harmonize its approachwith that of the present Article 5 on consumercontracts.

In both cases the question was one of finding a moreappropriate arrangement for matters in which theinterests of one of the contracting parties are not the

same as those of the other, and at the same time tosecure thereby more adequate protection for theparty who from the socia-economic point of view isregarded as the weaker in the contractualrelationship.

2. On this basis , Article 6 (1) sets a limit on theparties ' freedom to choose the applicable law, aspermitted by Article 3 of the convention , affirmingthat this choice in contracts of employment ' shall nothave the result of depriving the employee of theprotection afforded to him by the mandatory rules ofthe law which would be applicable under paragraph2 in the absence of choice

The purpose of this text is as follows:

if the law applicable pursuant to paragraph 2 grantsemployees protection which is greater than thatresulting from the law chosen by the parties, the

result is not that the choice of this law becomescompletely without effect. On the contrary, in thiscase the law which was chosen continues in principleto be applicable. In so far as the provisions of the lawapplicable pursuant to paragraph 2 give employeesbetter protection than the chosen law , for example bygiving a longer period of notice, these provisions setthe provisions of the chosen law aside and areapplicable in their place.

The mandatory rules from which the parties may notderogate conSIst not only of the provisions relating tothe contract of employment itself, but also provisionssuch as those concerning industrial safety andhygiene which are regarded in certain Member Statesas being provisions of public law.

It follows from this text that if the law of the countrydesignated by Article 6 (2) makes the collectiveemployment agreements binding for the employerthe employee will not be deprived of the protectionafforded to him by these collective employmentagreements by the choice of law of another State inthe individual employment contract.

Article 6 applies to individual employment contractsand not to collective agreements. Col1sequently, thefact that an employment contract is governed by aforeign law cannot affect the powers which anemployee s trade union might derive from collectiveagreements in its own country.

The present wording of Article 6 speaks of ' contractof employment' instead of ' employment relationshipas in the original preliminary draft. It should bestated , however , that the rule in Article 6 also covers


the case of void contracts and also de factoemployment relationships in particular thosecharacterized by failure to respect the contractimposed by law for the protection of employees.

3. According to Article 6 (2), in the absence ofchoice by the parties and notwithstanding theprovisions of Article 4 , the contract of employment isgoverned as follows:

(a) by the law of the country in which the employeehabitually carries out his work in performanceof his contract, even if he is temporarilyemployed in another country; or

(b) if the employee does not habitually carry out hiswork in any one country, by the law of thecountry in which the place of business throughwhich he was engaged is situated

unless it appears from the cirumstances as a wholethat the contract of employment is more closelyconnected with another country, in which case thelaw of that other country applies.

After a thorough examination of the variousproblems raised by contracts of employment inprivate international law, in the course of which

particular consideration was given both to the draftRegulation prepared in this connection by the EECCommission and to the latest trends in the legalliterature and case law of the Member States of theCommunity, the Group finally adopted the followingsolution. If the employee habitually works in one andthe same country the contract of employment isgoverned by the law of that country even if theemployee is temporarily employed in anothercountry. This is the rule which appears insubparagraph 2 (a). On the other hand, if theemployee does not habitually work in one and thesame country the contract of employment isgoverned by the law of the country in which the placeof business through which he was engaged is situated.This is the rule which appears in subparagraph 2(b).

These solutions obviously differ substantially fromthose which would have resulted from the Article 4presumption.

However, the last sentence of Article 6 (2) providesthat if it appears from the cirumstances as a wholethat the contract is more closely connected withanother country, the law of the latter country isapplied.

4. As regards work done outside the jurisdiction ofany State, the Group considered that the ruleadopted in Article 6 could in principle be applied. Inthe case of work on an oil-rig platform on the high

seas, the law of the country of the undertaking whichengaged the employee should be applied.

The Group did not seek a special rule for the work ofmembers of the crew on board a ship.

Article

Mandatory rules

I. The wording of Article 7 of the originalpreliminary draft has been considerably improved inthe course of the Group s re-examination of the textof the convention since 1973 , in order to permit abetter interpretation in the various situations inwhich it will have to be applied.

The Group reiterated at its last meeting that Article 7merely embodies principles which already exist in thelaws of the Member States of the Community.

The principle that national courts can give effectunder certain conditions to mandatory provisionsother than those applicable to the contract by virtueof the choice of the parties or by virtue of a subsidiaryconnecting factor, has been recognized for severalyears both in legal writings and in practice in certainof our countries and elsewhere.

For example, the principle was recognized in theabovementioned 1966 judgment of the NetherlandsSupreme Court in the Alnati case (cited supracommentary on Article 3 (1)) in which the Court saidthat, although the law applicable to contracts of aninternational character can, as a matter of principle,only be that which the parties themselves havechosen

, '

it may be that, for a foreign State, theobservance of certain of its rules, even outside itsown territory, is of such importance that the courtsmust take account of them, and hence apply them inpreference to the law of another State which mayhave been chosen by the parties to govern theircontract' .

This judgment formed the basis for the secondparagraph of Article 13 of the non-entered-into-forceBenelux Treaty of 1969 on uniform rules of privateinternational law, which provides that 'where thecontract is manifestly connected with a particularcountry, the intention of the parties shall not have theeffect of excluding the provisions of the law of thatcountry which, by reason of their special nature andsubject-matter, exclude the application of any otherlaw


The same attitude, at any event, underlies Article of the Hague Convention of 14 March 1978 on thelaw applicable to agency, whereby, in the applicationof that convention, effect may be given to themandatory rules of any State with which the situationhas a significant connection , if and to the extent that,by the law of that State, those rules are applicableirrespective of the law indicated by its confluctrules.

On the other hand, despite the opinion of somejurists, it must be frankly recognized that no clearindication in favour of the principle in question

seems discernible in the English cases (Ralli Bros Sota y Aznar; Regazzoni v. Sethia; Rossano Manufacturers Life Insurance Co. (40).

2. The wording of Article 7 (I) specifically providesthat in the application of the convention 'effect maybe given to the mandatory rules of the law of anothercountry with which the situation has a closeconnection if and in so far as, under the law of thelatter country, those rules must be applied whateverthe law applicable to the contract'

The former text did not specify the nature of theconnection ' which must exist between the contractand a country other than that whose law applicable. Several experts have observed that thisomission might oblige the court in certain cases totake a large number of different and evencontradictory laws into account. This lack ofprecision could make the court's task difficult,prolong the proceedings, and lend itself to delayingtactics. Accepting the force of these observations, theGroup decided that it is essential that there be genuine connection with the other country, and that amerely vague connection is not adequate. Forexample, there would be a genuine connection whenthe contract is to be performed in that other countryor when one party is resident or has his main place ofbusiness in that other country. Among the suggestedversions, the Group finally adopted the word ' closewhich seemed the most suitable to define thesituation which it wished to cover.

The connection in question must exist between thecontract as a whole and the law of a country otherthan that to which the contract is submitted. TheGroup rejected the proposal by one delegationdesigned to establish a connection between the pointin dispute and a specific law. In fact this proposalwould have given rise to a regrettable dismember-ment of the contract and would have led to theapplication of mandatory laws not foreseeable bythe parties. Nevertheless the Group preferred toreplace the word 'the contracts ' by ' the situation

Since the former text seemed to some delegations tobe lacking in clarity, the Group decided to improvethe wording. In the new text it has therefore statedthat the legal system of the country of which thesemandatory provisions are an integral part must beexamined to find out whether these provisions applyin the particular case whatever the law applicable tothe contract. Furthermore, in the French text theword ' loi' has been replaced by the word ' droit' in

order to avoid any doubts as to the scope of the rulewhich is to cover both ' legislative ' provisions of anyother country and also common law rules. Finally,after a long discussion , the majority of the Group, inview of the concern expressed by certain delegationsin relation to constitutional difficulties , decided thatit was preferable to allow the courts a discretion inthe application of this Article.

3. Article 7 (1) adds in relation to the mandatoryrules that their nature and purpose, and theconsequences of their application or non-application, must be taken into account in order todecide whether effect should be given to them.

Thus the application of the mandatory provisions ofany other country must be justified by their natureand by their purpose. One delegation had suggestedthat this should be defined by saying that the natureand purpose of the provisions in question should beestablished according to internationally recognizedcriteria (for example, similar laws existing in othercountries or which serve a generally recognizedinterest). However, other experts pointed out thatthese international criteria did not exist and thatconsequently difficulties would be created for thecourt. Moreover this formula would touch upon thedelicate matter of the credit to be given to foreign

legal systems. For these reasons the Group, while notdisapproving this idea, did not adopt this draftingproposal.

Additionally, in considering whether to give effect tothese mandatory rules, regard must be had to ' theconsequences of their application or non-application

Far from weakening the rule this subsequent elementwhich did not appear in the original preliminary

draft - defines, clarifies and strengthens it. In fact,the judge must be given a power of discretion, in

particular in the case where contradictory mandatoryrules of two different countries both purportsimultaneously to be applicable to one and the samesituation, and where a choice must necessarily bemade between them.

To complete the comments on Article 7 (1) it onlyremains to emphasize that the words ' effect may be


given ' impose on the court the extremely delicate taskof combining the mandatory provisions with the lawnormally applicable to the contract in the particularsituation in question. The novelty of this provisionand the fear of the uncertainty to which it could giverise, have led some delegations to a!'.k that reservation may be entered on Article 7 (1) (seeArticle 22 (1) (a)).

4. Article 7 (2) states that 'nothing in thisConvention shall restrict the application of the rulesof the law of the forum in a situation where they aremandatory irrespective of the law otherwiseapplicable to the contract'.

The origin of this paragraph is found in the concernof certain delegations to safeguard the nlles of thelaw of the forum (notably rules on cartels.competition and restrictive practices, consumerprotection and certain rules concerning carriage)which are mandatory in the situation whatever thelaw applicable to the contract may be.

Thus the paragraph merely deals with the applicationof mandatory. rules (lois d' application immediate:leggi di applicazione necessaria. etc) in a differentway from paragraph 1 (40a

Article

Material validity

I. Article 8 \ I) provides that the existence andvalidity of a contract , or of any term of a contractshall be determined by the law which would govern itunder this Convention if the contract or term werevalid.

The paragraph is intended to cover all aspects offormation of the contract other than general validity.As we have emphasized previously in paragraph 9 ofthe comments on Article 3 , thIS provision is also

applicable with regard to the existence and validity ofthe parties' consent as to choice of the lawapplicable.

The word ' term ' has been adopted to cover cases inwhich there is a dispute as to the validity of a term ofthe contract, such as a choice of law clause.

2. Notwithstanding the general rule in paragraph Iparagraph 2 provides a special rule which relatesonly to the existence and not to the validity ofconsent.

According to this special rule a party may rely uponthe law of the country in which he has his habitualresidence to establish that he did not consent if itappears from the circumstances that it would not bereasonable to determine the effect of his conduct inaccordance with the law specified in paragraph t.

The solution adopted by the Group in this respect isdesigned infer alia to solve the problem of theimplications of silence by one party as to the

. formation i)f the contract.

The word ' conduct' must be taken to cover bothaction and failure to act by the party in question; itdoes not, therefore, relate solely to silence.

The words ' if it appears from the circumstancesmean that the court must have regard to all thecircumstances of the case, not solely to those in whichthe party claiming that he has not consented to thecontract has acted. The Court will give particularconsideration to the practices followed by the partiesinter se as well as their previous businessrelationships.

According to the circumstances , the words ' a partycan relate either to the offeror or to the offeree.

The application of paragraph 2 can result in adecision releasing a party who would have beenbound under the terms of paragraph 1 , but it can

never produce the opposite effect of holding that acontract exists which is non-existent by its properlaw.

Article 9 (4) contains a special rule relating to actsintended to have legal effect, such as , in accordancewith the law of many countries, an offer. Such actshave not been mentioned in Article 8. Nonethelessthe rules in Article 8 apply to such acts by way ofanalogy.

Article

Formal validity

Article 9 deals with the formal validity of contractsand acts intended to have legal effect. The first fourparagraphs lay down rules governing all contractsand acts intended to have legal effect. The last twoparagraphs lay down special rules peculiar to certaintypes of contract.


General rules (paragraphs 1 to 4 inclusive)

The ~cope of these general rules needs to be specifiedbefore indicating the various laws which they declareto be applicable.

The scope of the general rules

1. Acts to which they apply.

Article 9 applies to contracts and unilateral actsintended to have legal effect. The preliminarydraft of 1972 used only the term ' act intended tohave legal effect ' (acte juridique) which, In the

terminology originating from Roman lawincludes both categories. The inclusion in Article9 of both contracts and acts intended to have legaleffect, mentioned successively, is due merely to awish to ensure darity, since the rules to be appliedare based on the same principles in both cases.

Unilateral acts intended to have legal effect whichfall within the scope of the Article are those whichare related to an existing or contemplatedcontract. Acts relating to a concluded contractcan be extremely varied: notice of terminationremission of a debt, declaration of rescission orrepudiation, etc.

But the act must be connected wIth a contract. Aunilateral undertaking, unconnected with acontract , as for example. in some legal systems , arecognition of a debt not arising under a contractor a unilateral act creating, transferring orextinguishing a right in rem would not fall withinthe scope of Article 9 or of any other provision inthe Convention since the latter is concerned onlywith contractual obligations.

Such an act must also , quite clearly, relate to acontract falling within the scope of theconvention. Ar::icle 9 does not apply to the formalvalidity of acts relating to contracts excludedfrom the convention under Article 1 (2) and (3).

, There is no provision expressly referring topublic acts . This omission is intentional. First,the concept of a public act is not recognized in allthe legal systems and could raise awkwardproblems of definition. Moreover, it seems wrongfor there to be special provisions governing theformal validity of private law aCts concludedbefore public officials. Indeed, as has recentlybeen pointed out(4:), it is because a public officialcan draw up an instrument only in accordance

with the law from which he derives his authoritythat the formal validity for the act concludedbefore him is necessarily subject to that Jaw. Iffor example, a notary has not observed the lawfrom which he derives his authority, the contracthe has drawn up will not of course be a valid

notarial act. But it will not be entirely void if thelaw which governs its substance (and which mayalso determine its formal validity by virtue ofArticle 9) does not require a special form for thattype of contract.

The genera! rules accordingly apply to ' publicact5 . This has the advantage of validating actsdrawn up by a public official who has thought itappropriate , as happens in tbe Netherlands, tofollow the forms laid down i')y the foreign lawwhi eh governs the substance of the contract.

2. Article 9 does not define what is to be understoodby the ' formal validity ' of acts. It seemed realisticto leave open this difficult problem of definitionesp,~cially as its importance has been slightlyreduced in consequence of the solutions foundfor the problem of the connecting factor which tosome extent equate formal and materialvalidity.

It is nevertheless permissible to consider ' formfor the purposes of Article 9, as including everyexternal manifestation required on the part of aperson expressing the will to be legally boundand in the absence of which such expression ofwiP would not be regarded as fully effective(42).Th s definition does not include the specialrequirements which have to be fulfilled wherethere are persons under a disability to protected , such as the need in French law for theconsent of a family council to an act for thebenefit of a minor, or where an act is to be validagainst third parties, for example the need inEnglish la\\1 for a notice of a statutory assignmentof a chose in action.

La ws to be applied

I. The principle of applying in the alternative theIt' x causae or the lex loci actus.

The system contained in Article 9 is acompromise between favor negotii which tendsto take a liberal attitude regarding the formalitiesrequired for acts, and the due observance offormalities which, most often , is merely givingeff\~ct to requirements of substance.

In supporting the former attitude , it did not seempossible tc) follow the example of the HagueConvention of 5 October 1961 concerningconflict of laws with regard to testamentarydispositions. Favor testamenti is justified by thefact that a will is an act of final disposition whichby definition cannot be reenacted if its validity ischallenged after the testator death. 111isconsideration does not affect other acts intendedto have legal effect in the case of which excessivefreedom W'th regard to formalities would result in


robbing of all effect the requirements in this fieldwhich are specified by the various legal systemsvery often with a legitimate aim in view.Moreover, the connection between questions ofform and questions of evidence (Article 14)makes it desirable to limit the number of lawsapplicable to formal validity.

On the other hand, in order to avoid parties beingcaught unawares by the annulment of their act onthe ground of an unexpected formal defectArticle 9 has, nonetheless, laid down a fairlyflexible system based on applying in thealternative either the law of the place where thecontract was entered into (or in the case of a

unilateral act the law of the country where the actwas done) or else the law which governs itssubstance.

This choice of applicable laws appears to besufficient and this is why the possibility ofapplying the law of the common nationality orhabitual residence of the parties was rejected (43).

On the other hand no priority has been accordedeither to the lex causae or to the lex loci actus.

the act is valid to one of these two laws , that isenough to prevent defects of form under the otherfrom affording grounds for nullity(44).

The Group did not examine the question of whichof the two laws would apply to an action broughtto annul the contract for formal defect in a casewhere the contract would be null and voidaccording to both these laws. If, for example, thelimitation period for bringing an action forannulment on the ground of a formal defect is notthe same in the two legal systems, it may seem tobe in keeping with the spirit of this Article toapply the law which provides for the shorterperiod and, in this respect, is more favourablethan the other to the validity of the act.

Renvoi must be rejected as regards formalvalidity as in all other matters governed by theConvention (cf. Article 15).

2. Problems raised by applying the law governingthe substance of the contract to the question offormal validity

The lex causae is already recognized asapplicable, either as the principal law or as asubsidiary option, to the question of formal

validity by the law of the Contracting States andits application is fully justified by the logicalconnection between substance and form(45).

The law governing the substance of the contractmust be determined by reference to Articles 3, 4and 6 of the Convention (for contracts providedfor under Article 5 , see II below, Special rules

peculiar to certain contracts). Article 3 (2)specifically governs the formal consequences of avoluntary change by the parties in the law

governing the substance of the contract. This textmeans that, on this assumption of changes in theconnecting facts, it is enough for the contract tobe formally valid in accordance with one or otherof the laws successively called upon to govern thesubstance of the contract.

A difficulty will arise when a contract is subject toseveral laws, either because the parties haveselected the law applicable to a part only of theircontract (Article 3 (1)), or because the court itselfby way of exception, has proceeded to sever thecontract (Article 4 (1)). Which of the lawsgoverning the substance of the contract is todetermine its formal validity? In such a case itwould seem reasonable to apply the lawapplicable to the part of the contract most closelyconnected with the disputed condition on whichits formal validity depends.

Article 8 (1), dealing with material validity, saysthat the existence and validity of a contract or ofany term of a contract shall be determined by thelaw which would govern it under the Conventionif the contract or term were valid. This is to avoidthe circular argument that where there is a choiceof the applicable law no law can be said to beapplicable until the contract is found to be valid.

similar point arises in relation to formalvalidity under Article 9, and although the textdoes not expressly say so it is intended that ' thelaw which governs it under this Conventionshould be the law which would govern thecontract if it were formally valid.

3. Problems raised by applying the locus regit actumrule to the question of formal validity

The application of the law of the country in whichcontract was entered into or in which a

unilateral act was done, in order to determine theformal validity of the contract or act, results fromthe age-old maxim locus regit actum recognizedalike, usually as a principal rule , by the law of theContracting States (46).

However a classic difficulty arises in determiningthe country in which the contract was entered intowhen the contract has been made betweenpersons in different countries.

To resolve this difficulty it is first necessary todescribe exactly what is meant by persons beingor not being in the same country. Where thecontract is concluded through the offices of one

more agents, Article 9 (3) indicates clearly thatthe place to be taken into consideration is wherethe agents are acting at the time when the contractis concluded. If the parties ' agents (or one partyand the agent of the other) meet in a givencountry and conclude the contract there, this

contract is considered, within the meaning ofparagraph I , to be concluded between persons in


that country, even if the party or partiesrespresented were in another country at the time.Similarly, if the parties ' agents (or one party andthe agent of the other) are in different countries atthe time when they conclude the contract, thiscontract is considered, within the meaning ofparagraph 2 , to be concluded between persons indifferent countries even if both the partiesrepresented were in fact in the same country at thetime.

The question of finding which law is the law ofthe place where the contract was entered into andtherefore determines the formal validity of acontract made between persons in differentcountries, in the sense just indicated , has beenvery widely debated. Solutions consisting infixing the conclusion of the contract either in theplace where the offer was made or in the placewhere the acceptance was made have beenrejected as rather artificial (47). The solutionconsisting in applying to offer and acceptanceseparately the law of the country in which eachwas made, directly based on the Frankensteindraft for a European code of private internationallaw and retained in the preliminary draft of 1972

and by the 1978 Swiss draft of Federal law onprivate international law , Article 125 (2), was alsorejected. It is clear that there are numerousrequirements as to formal validity which are laiddown with regard to the contract itself, taken as awhole and not stage by stage. This is the casewhere, for example, two signatures are requiredor where the contract has to be made in duplicate.Accordingly, rather than split the lawdetermining the formal validity of a contract, itseemed preferable to look for a law which wouldbe applicable to the formal validity of thecontract as a whole.

The choice was therefore between a liberalsolution retaining the application in thealternative of the law of one or other of thecountries which the persons concluding thecontract were at the time it was entered into, and astrict solution requiring the cumulativeapplication of these various laws. The liberalsolution was adopted by Article 9 (2). When acontract is concluded between persons indifferent countries, it is formally valid if itsatisfies the requirements as to form laid down bythe law of one of those countries or of the lawgoverning the substance of the contract.

4. Reservation regarding mandatory rules

Article 7 of the Convention, which contains areservation in favour of the application ofmandatory rules, may lead to the rejection of theliberal system based on the application in thealternative of either the law governing thesubstance of the contract or the law of the place

where it was entered into. It may happen thatcertain formal requirements laid down by the lawof the country with which a contract or act has aclose connection have a mandatory character somarked that they could be applied even thoughthe law of that country is not one of those whichwould normally determine formal validity underArticle 9.

In this connection mention was made of the rulesregarding form laid down by the law of thecountry where an employment contract is to becarried out, especially the requirement that a non-competition clause should be in writing, even

though the oral form is permitted by the law of theplace where the contract was entered into orunder the law chosen by the parties.

Of course, under the system established by Article, it will be for the court hearing the case to decide

whether it is appropriate to give effect to thesemandatory provisions and consequently todisregard the rules laid down in Article 9.

II. Special rules peculiar to certain contracts(paragraphs 5 and 6)

Paragraphs 5 and 6 provide special rules for theformal validity of certain contracts made byconsumers and of contracts the subject matter ofwhich is a right in immovable property or a right touse immovable property. It would have beenconceivable with regard to such contracts merely toapply Article 7 quite simply and , as an exception toArticle 9, to allow, for example, the application ofcertain formal provisions for consumer protectionlaid down by the law of the consumer s habitual placeof residence, or of certain mandatory requirements asto form imposed by the law of the country where theimmovable property is situated.

This solution , however, was not thought adequate toensure the effective application of these laws becauseof the discretionary power which Article 7 gives tothe court hearing the case. It was accordingly decidedto exclude the first four paragraphs of Article 9completely in the case of contracts of these kinds.

The fifth paragraph of Article deals with the

contracts mentioned in Article 5 (I), entered into inthe circumstances described in Article 5 (2), takinginto account Article 5 (4) and (5).

Just as Article 5 protects the consumer, despite anychoice of law specified in the contract, by imposing,as regards substance, the mandatory rules of the lawof the country in which he has his habitual residence

Official Journal of the European CommunitiesNo C 282/32

(Article 5 (3)), Article 9 (5) imposes the rules of thatsame country with regard to formal validity. This isjustified by the very close connection, in the contextof consumer protection, between mandatory rules ofform and rules of substance.

For the same reasons, it might have been expectedthat the formal validity of employment contractswould also have been made subject to mandatoryattachment to the rules of a particular national

law.

This idea , though at first contemplated , was finallyrejected. Indeed , contrary to Article 5 which providesexplicitly that consumer contracts , in the absence ofany choice by the parties , shall be subject as regardsformal validitv to the law of the countrv where theconsumer has his habitual residence, for the purposeof determining the connecting factors applying toemployment contracts Article 6 of the Conventiononly introduces rebuttable presumptions which mustbe disregarded in cases where it appears from thecircumstances that the employment contract is moreclosely connected with a country other than thatindicated by these presumptions. Consequently, if ithad been decided that the law governing thesubstance of the contract should be mandatory fordetermining the formal validity of employmentcontracts , it would have been impossible, at the timea contract was entered mto, to determine the lawgoverning its formal validity because of theuncertainty caused by Article 6. Therefore no specialrule was laid down regarding the formal validity ofemployment contracts , but thanks to Article 7 , it is tobe expected that the mandatory rules regardingformal validity laid down by the law of the countrywhere the work is to be carried out will frequently befound to apply.

The sixth paragraph of Article 9 deals with contractsthe subject matter of which is a right in immovableproperty or a right to use immovable property. Suchcontracts are not subject to a mandatory connectingfactor as regards substance, Article 4 (3) merelyraising a presumption in favour of the law of thecountry where the immovable property is situated. Itis clear, however, that if the law of the country wherethe immovable property is situated lays downmandatory rules determining formal validjty, thesemust be applied to the contract, but only in the

probably rather rare cases where" according to thatlaw , these formal rules must be applied even whenthe contract has been entered into abroad and governed by a foreign law.

The scope of this provision is the same as that ofArticle 4 (3).

3 J. 10. 80

Article 10

Scope of the applicable law

1. Article 10 defines the scope of the law applicableto the contract under the terms of thisConvention (48

The origina I preliminary draft contained no specificrule on this point. It confined irselfto the provision inArticle 15 that the law which governs an obligationalso governs the conditions for its performance , thevarious ways in which it can be discharged , and theconsequences of non-perfomlance. However, sinceAnicle 11 cf the preliminary ::iraft defined in detailthe scope of the law applicable to non-contractual

obligations , the principal subject of Article 15 wasthe scope a .

.~

the law of the ccntract.

2. Article 10 (1) lists the ma (tel'S which fall withinthe scope of the law applicable to the contract.However, this list is not exhaustive. as is indicated bythe words ' in particular

The law aprlicable to the contract under the terms ofhis Convention governs firstly its interpretation(subparagraph (a)).

Secondly the law applicable to the contract governsthe performance of the obligations arising from thecontract (subparagraph (b)).

This appears to embrace the totality of theconditions , resulting from the law or from thecontract, in accordance with which the act is essentialfor the fultilment of an obligation must performed ut not the manner of its performance (inso far as this is referred to in the second paragraph ofArticle 1 0 or the conditions rela.ting to the capacity ofthe persons who are to perform it (capacity being amatter exclr.ded from the scope of the uniform rulessubject to the provisions of Article 11) or theconditions relating to the forni of the act which is tobe done in Jerformance of the obligation.

The following therefore fall within the provisions ofthe first paragraph of Article 10: the diligence withwhich the obligation must be performed: conditionsrelating to the place and time of performance: theextent to which the obligation can be performed by aperson other than the party liable; the conditions asto performance of the obligation both in general andin relation lO certain categories of obligation Uointand s~vera I obligations alternative obligations

divisible and indivisible obligations, pecuniaryobligations); where performance consists of thepayment of a sum of money, Lhe conditions relatingto the discharge of the debtor who has made the


payment, the appropriation of the payment, thereceipt, etc.

Within the limits of the powers conferred upon thecourt by its procedural law , the law applicable to thecontract also governs the consequences of total partial failure to perform these obligations, includingthe assessment of damages insofar as this is governedby rules of law.

The assessment of damages has given rise to somedifficulties. According to some delegations theassessment of the amount of damages is a question offact and should not be covered by the Convention.To determine the amount of damages the court isobliged to take account of economic and socialconditions in its country; there are some cases inwhich the amount of damages is fixed by a jury; somecountries use methods of calculation \\ hich might notbe accepted in others. Other delegations countered these argumentshowever, by pointing out that in several legal systemsthere are rules for determining the amount ofdamages; some international conventions fix limitsas to the amount of compensation (for example,conventions relating to carriage); the amount ofdamages in case of non~performance is oftenprescribed in the contract and grave difficultieswould be created for the parties if these amounts hadto be determined later by the court hearing theaction.

By way of compromise the Group finally decided torefer in subparagraph (c) solely to rules of law inmatters of assessment of damages, given thatquestions of fact will always be a matter for the courthearing the action.

The expression 'consequences of breach' refers to theconsequences which the law or the contract attachesto the breach of a contractual obligation , whether it isa matter of the liability of the party to whom thebreach is attributable or of a claim to terminate thecontract for breach. Any requirement of service ofnotice on the party to assume his liability also comeswithin this context.

According to subparagraph 1 (d), the law applicableto the contract governs the various ways ofextinguishing obligations, and prescription andlimitation of actions. This Article must be appliedwith due regard to the limited admission ofseverability (depe~age) in Articles 3 and 4,

Subparagraph (e) also makes the consequences ofnullity subject to the applicable law. The workingparty principal objective in introducing thisprovision was to make the refunds which the parties

have to pay each other subsequent to a finding of

nullity of the contract subject to the applicablelaw.

Some delegations have indicated their opposition tothis approach on the grounds that , under their legalsystems, the consequences of nullity of the contractare non-contractual in nature. The majority ofdelegations have nevertheless said they are in favourof including such consequences within the scope ofthe law of contracts, but in order take account ofthe opposition expressed provision had been madefor any Contracting State to enter a reservation onthis matter (Article 22 (1) (b)).

3, Article 10 (2) states that in relation to the mannerof performance and the steps to be taken in the eventof defe(tive performance regard shall be had to thelaw of the country in which performance takesplace.

This is a restriction which is often imposed in thenational law of many countries as well as in severalinternational conventions. Many jurists havesupported and continue to support this restriction onthe scope of the law applicable to the contract even

when the contractual obligation is performed in acountry other than that whose law is applicable.

What is meant , however , by 'manner of performanceof an obligation? It does not seem that any preciseand uniJorm meaning is given to this concept in thevarious laws and in the differing views of learnedwriters. The Group did not for its part wish to give astrict definition of this concept. It will consequentlybe for the lex (on' to determine what is meant bymanner of performance . Among the matters

normaJJy falling within the description of ' manner ofperformance , it would seem that one might in anyevent mention the rules governing public holidaysthe manner in which goods are to be examined , andthe steps to be taken if they are refused(49).

Article 10 (2) says that a court may have regard to thelaw of the place of performance. This means that thecourt may consider whether such law has anyrelevance to the manner in which rhe contract shouldbe performed and has a discretion whether to apply itin whole or in part so as to do justice between theparties.

Article II

Incapacity

The legal capacity of natural persons or of bodiescorporate or unincorporate is in principle excludedfrom the scope of the Convention (Article 1 (2) (a)


and (e)). This exclusion means that each ContractingState will continue to apply its own system of privateinternational law to contractual capacity.

However, in the case of natural persons, the questionof capacity is not entirely excluded. Article I I isintended to protect a party who in good faithbelieved himself to be contracting with a person offull capacity and who, after the contract has beenentered into, is confronted by the incapacity of theother contracting party. This anxiety to protect a

party in good faith against the risk of a contract beingheld voidable or void on the ground of the otherparty s incapacity on account of the application of alaw other than that of the place where the contractwas concluded is clearly present in the countrieswhich subject capacity to the law of thenationality (50).

A rule of the same kind is also thought necessary inthe countries which make capacity subject to the lawof the country of domicile. The only countries whichcould dispense with it are those wich subject capacityto the law of the place where the contract was enteredinto or to the law governing the substance of thecontract.

Article II subjects the protection of the other party tothe contract to very stringent conditions. First, thecontract must be concluded between persons who arein the same country. The Convention does not wishto prejudice the protection of a party under adisability where the contract is concluded at adistance, between persons who are in differentcountries, even if, under the law governing thecontract, the latter is deemed to have been concludedin the country where the party with full capacity is.

Secondly, Article II is only to be applied where thereis a conflict of laws. The law which, according to theprivate international law of the court hearing thecase, governs the capacity of the person claiming tobe under a disability must be different from the lawof the country where the contract was condcluded.

Thirdly, the person claiming to be under a disabilitymust be deemed to have full capacity by the law ofthe country where the contract was concluded. This isbecause it is only in this case that the other party mayrely on apparent capacity.

In principle these three conditions are sufficient toprevent the incapacitated person from pleading hisincapacity against the other contracting party. Thiswill not however be so ' if the other party to thecontract was aware of his incapacity at the time of theconclusion of the contract or was not aware thereofas a result of negligence . This wording implies that

the burden of proof lies on the incapacitated party. Itis he who must establish that the other party knew ofhis incapacity or should have known of it.

Article

Voluntary assignment

I. The subject of Article 12 is the voluntaryassignment of rights.

Article 12 (I) provides that the mutual obligations assignor and assignee under a voluntary assignmentof a right against another person (the debtor) shall begoverned by the law which under this Conventionapplies to the contract between the assignor andassIgnee.

Interpretation of this provision gives rise to difficulty. It is obvious that according to thisparagraph the relationship between the assignor andassignee of a right is governed by the law applicableto the agreement to assign.

Although the purpose and meaning of the provisionleave hardly any room for doubt, one wonders whythe Group did not draft it more simply and probablymore elegantly. For example, why not say that theassignment of a right by agreement shall be governedin relations between assignor and assignee by the lawapplicable to that agreement.

Such a form of words had in fact been approvedinitially by most of the delegations, but it wassubsquently abandoned because of the difficulties ofinterpretation which might have arisen in Germanlaw , where the expression 'assignment' of a right byagreement includes the effects of it upon the debtor:this was expressly excluded by Article 12 (2).

The present wording was in fact finally adoptedprecisely to avoid a form which might lead to the ideathat the law applicable to the agreement forassignment in a legal system in which it is understoodas ' Kausalgeschaft' also determines the conditions ofvalidity of the assignment with respect to thedebtor.

2. On the contrary, under the terms of Article 12 (2)it is the law governing the right to which theassignment relates which determines its assignability,the relationship between the assignee and the debtorthe conditions under which the assignment can beinvoked against the debtor and any question whetherthe debtor s obligations have been discharged.

The words 'conditions under which the assignmentcan be invoked' cover the conditions of


transferability of the assignment as well as theprocedures required to give effect to the assignmentin relation to the debtor.

Notwithstanding the provisions of paragraph 2, thematters which it covers, with the sole exception ofassignability, are governed, as regards relationsbetween assignor and debtor if a contract existsbetween them, by the law which governs theircontract in so far as the said matters are dealt with inthat contract.

Subrogation

I. The substitution of one creditor for another mayresult both from the voluntary assignment of a right(or assignment properly so called) referred to in

Article 12 and from the assignment of a right operation of law following a payment made by aperson other than the debtor.

According to the legislation in various MemberStates of the Community, ' subrogration ' involves thevesting of the creditor s rights in the person who,being obliged to pay the debt with or on behalf of

others, had an interest in satisfying it: this is so underArticle 1251-3 of the French Civil Code and Article1203-3 of the Italian Civil Code. For example, in acontract of guarantee the guarantor who pays insteadof the debtor succeeds to the rights of the creditor.The same occurs when a payment is made by one of anumber of debtors who are jointly and severallyliable or when an indivisible obligation discharged.

Article 13 of the Convention embodies the conflictrule in matters of subrogation of a third party to therights of a creditor. Having regard to the fact that theConvention applies only to contractual obligationsthe Group thought it proper to limit the applicationof the rule adopted in Article 13 to assignments ofrights which are contractual in nature. Therefore thisrule does not apply to subrogation by operation oflaw when the debt to be paid has its origin in tort (forexample, where the insurer succeeds to the rights ofthe insured against the person causing damage).

2. According to the wording of Article 13 (I), wherea person (the creditor) has a contractual claim uponanother (the debtor), and a third person has a duty tosatisfy the creditor, or has in fact satisfied the creditorin discharge of that duty, the law which governs thethird person s duty to satisfy the creditor shalldetermine whether the third person is entitled toexercise against the debtor the rights which thecreditor had against the debtor under the lawgoverning their relationship and, if so, whether hemay do so in full or only to a limited extent.

The law which governs the third person s duty tosatisfy the creditor (for example, the law applicableto the contract of guarantee, where the guarantor haspaid instead of the debtor) will therefore determinewhether and to what extent the third person entitled to exercise the rights of the creditor againstthe debtor according to the law governing theircontractual relations.

In formulating the rule under analysis the Groupmade a point of considering situations in which aperson has paid without being obliged so to do bycontract or by law but having an economic interestrecognized by law as anticipated by Article 1251-of the French Civil Code and Article 1203-3 of theItalian Civil Code. In principle the same rule appliesto these situations, but the court has a discretion inthis respect.

As regards the possibility of a partial subrogationsuch as that provided for by Article 1252 of theFrench Civil Code and by Article 1205 of the ItalianCivil Code, it seems right that this should be subjectto the law applicable to the subrogation.

In addition, when formulating Article 13 the Groupenvisaged the possibility that the legal relationshipbetween the third party and the debtor was governedby a contract. This contract will obviously begoverned by the law which is applicable to it by theterms of this Convention. Article 13 in no way affectsthis aspect of the relationship between the third partyand the debtor.

3. Article 13 (2) extends the same rule in paragraphI to cases in which several person are liable for thesame contractual obligation (co-debtors) and thecreditor s interest has been discharged by one ofthem.

4. As well as the problem of voluntary assignmentof rights and the problem of assignment of rights byoperation of law (Articles 12 and 13), there exists theproblem of assignment of duties. However, theGroup did not wish to resolve this problem, becauseit is new and because there are still manyuncertainties as to the solution to be given.

Article 14

Burden of proof, etc.

Article 14 deals with the law to be applied to certain

questions of evidence.

There is no rule of principle dealing with evidence ingeneral. In the legal systems of the Contracting

States, except as regards the burden of proof


questions of evidence (both as regards facts and actsintended to have legal effect and as regards foreignlaw) are in principle subject to the law of the forum.This principle is, however, subject to a certainnumber of exceptions which are not the same in allthese legal systems. Since it was decided that onlycertain questions of evidence should be covered inArticle 14, it was thought better not to bind theinterpretation thereof by a general provision makingthe rules of evidence subject to the law of the forumon questions not decided by the Convention, such asfor example , the taking of evidence abroad or theevidential value of legal acts. In order that thereshould be no doubt as to the freedom retained by theStates regarding questions of evidence not decidedby the Convention, Article I (2) (h) excludes evidenceand procedure from the scope of the Conventionexpressly without prejudice to Article 14.

Two major questions have been covered and are eachthe subject of a separate paragraph. These are theburden of proof on the one hand and the recognitionof modes of proving acts intended to have legal effecton the other. After considerable hesitation the Groupdecided not to deal with the problem of evidentialvalue.

A. Burden of proof

The first paragraph of Article 14 provides for theapplication of the law of the contract 'to the extentthat it contains, in the law of contract, rules whichraise presumptions of law or determine the burden ofproof. Presumptions of law, relieving the party inwhose favour they operate from the necessity ofproducing any evidence, are really rules of substancewhich in the law of contract contribute to makingclear the obligations of the parties and therefore

cannot be separated from the law which governs the

contract. By way of example, where Article 1731 ofthe French Civil Code provides that 'where noinventory of the state of the premises has been takenthe lessee shall be deemed to have received them ingood tenantable repair and .must, in the absence ofproof to the contrary, restore them in suchcondition , the Article is in reality determining theobligation of the lessee to restore the let premises. It istherefore logical that the law of the contract shouldapply here.

The same observation applies to rules determiningthe burden of proof. By way of example, Article 1147of the French Civil Code provides that a debtor whohas failed to fulfil his obligation shall be liable fordamages 'unless he shows that this failure is due to anextraneous cause outside his control'. This textdetermines the burden of proof between the parties.The creditor must prove that the obligation has not

been fulfilled, the debtor must prove that the failureis due to an extraneous cause. But in dividing theburden, the text establishes the debtor s obligationson a vital point, since the debtor is liable for damageseven if the failure to fulfil is not due to a proven faulton his part. The rule is accordingly a rule ofsubstance which can only be subject to the law of thecontract.

Nevertheless the text of the first paragraph of Article14 does contain a restriction. The burden of proof isnot totally subject to the law of the contract. It is onlysubject to it to the extent that the law of the contractdetermines it with regard to contractual obligations('in the law of contract'), that is to say only to theextent to which the rules relating to the burden ofproof are in effect rules of substance.

This is not always the case. Some legal systemsrecognize rules relating to the burden of proof

sometimes even classed as presumptions of lawwhich clearly are part of procedural law and which itwould be wrong to subject to the law of the contract.This is the case, for example, with the rule wherebythe claim of a party who appears is deemed to besubstantiated if the other party fails to appear, or therule making silence on the part of a party to an actionwith regard to facts alleged by the other partyequivalent to an admission of those facts.

Such rules do not form part of ' the law of contract'and accordingly do not fall within the choice of lawrule established by Article 14 (1).

B. Admissibility of modes of proving acts intendedto have, legal effect

Paragraph 2 of Article 14 deals with the admissibilityof modes of proving acts intended to have legal effect(in the sense of voluntas negotium).

The text provides for the application in thealternative of the law ofthe forum or of the law whichdetermines the formal validity of the act. This liberalsolution favouring proof of the act is alreadyrecognized in France and in the Beneluxcountries(51). It seems to be the only solution capableof reconciling the requirements of the law of theforum with the desire to respect the legitimateexpectations of the parties at the time of concludingtheir act.

The law of the forum is normally employed todetermine the means which may be used for provingan act intended to have legal effect, which in thiscontext includes a contract. If, for example, that lawallows a contract to be proved by witnesses, it shouldbe followed, irrespective of any more stringentprovisions on the point contained in the law


governing the substance or formal validity of theact.

On the other hand, in the opposite case, if the lawgoverning the formal validity of the act only requiresoral agreement and allows such an agreement to beproved by witnesses, the expectations of parties whohad relied on that law would be disappointed if suchproof were to be held inadmissible solely on theground that the law of the trial court required writtenevidence of all acts intended to have legal effect Theparties must therefore be allowed to employ themodes of proof recognized by the law governingformal validity.

Nevertheless this liberalism should not lead toimposing on the trial court modes of proof which itsprocedural law does not enable it to administer.Article 14 does not deal with the administration ofmodes of proof, which the legal system of eachContracting State makes subject to the law of the trialcourt. Admitting the application of a law other thanthat of the forum to modes of proof ought not to leadto the rules of the law of the forum , as regards the

. administration of the modes of proof, being renderednugatory.

This is the explanation of the proviso which in

substance enables a court, without reference topublic policy, to disregard modes of proof which thelaw of procedure cannot generally allow, such as anaffidavit, the testimony of a party or commonknowledge. Consideration was also given to the caseof rights subject to registration in a public register

holding that the authority charged with keeping thatregister could, owing to that provision, onlyrecognize the modes of proof provided for by its ownlaw.

Such being the general system adopted, a proviso hadto be added regarding the law determining formalvalidity applicable as an alternative to the law of theforum.

The text refers to 'any of the laws referred to inArticle 9 under which that contract or act is formallyvalid' . This expression means that if, for example, theact is formally valid under the law governing thesubstance of the contract but is not formally valid

under the law of the place where it was done, theparties may employ only the modes of proofprovided for by the first of these two laws, even if thelatter is more liberal as regards proof. The referencein Article 14 (2) to the law governing formal validityis clearly based on the assumption that the law

governing formal validity has been observed. On theother hand, if the act is formally valid according toboth laws (lex causae and lex loci actus) mentioned inArticle 9, the parties will be able to employ the modesof proof provided for by either of those laws.

C. There is no provision dealing with the evidentialvalue of acts intended to have legal effeCt. Thepreliminary draft of 1972 contained a provisioncovering two questions derived, in Roman lawcountries, from the concept of evidential value; thequestion how far written document affordssufficient evidence of the obligations contained in itand the question of the modes of proof to add to orcontradict the contents of the document

- '

outsideand against the content' of such document,according to the old phraseology of the CodeNapoleon (Article 1341). Despite long discussion , noagreement could be reached between the delegationsand it was therefore decided to leave the question ofevidential value outside the scope of theConvention.

Article

Exclusion of renvoi

This Article excludes renvoi.

It is clear that there is no place for renvoi in the law ofcontract if the parties have chosen the law to be

applied to their contract. If they have made such achoice, it is clearly with the intention that theprovisions of substance in the chosen law shall beapplicable; their choice accordingly excludes anypossibility of renvoi to another law (52).

Renvoi is also excluded where the parties have notchosen the law to be applied. In this case the contractis governed, in accordance with Article 4 (1), by thelaw of the country with which it is most closelyconnected. Paragraph 2 introduces a presumption

that that country is the country where the party whois to effect the performance which is characteristic ofthe contract has his habitual residence. It would notbe reasonable for a court, despite this expresslocalization, to subject the contract to the law ofanother country by introducing renvoi solelybecause the rule of conflict of laws in the countrywhere the contract was localized contained otherconnecting factors. This is equally so where the lastparagraph of Article 4 applies and the court hasdecided the place of the contract with the aid of

indications which seem to it decisive.

More generally, the exclusion of renvoi is justified ininternational conventions regarding conflict of laws.If the Convention attempts as far as possible tolocalize the legal situation and to determine thecountry with which it is most closely connected, thelaw specified by the conflicts rule in the Conventionshould not be allowed to question this determinationof place. Such, moreover, has been the solutionadopted since 1951 in the conventions concluded atThe Hague.


Article

Onlre public

Article 16 contains a precise and restrictively wordedreservation in favour of public policy ('ordrepublic

First it is expressly stated that, in the abstract andtaken as a whole, public policy is not to affect the lawspecified by the Convention. Public policy is only tobe taken into account where a certain provision ofthe specified law, if applied in an actual case, wouldlead to consequences contrary to the public policyCordre public ) of the forum. It may therefore happenthat a foreign law, which might in the abstract be heldto be contrary to the public policy of the forumcould nevertheless be applied, if the actual result ofits being applied does not in itself offend the publicpolicy of the forum.

Secondly, the result must be 'manifestlyincompatible with the public policy of the forum.

This condition, which is to be found in all the HagueConventions since 1956 , requires the court to findspecial grounds for upholding an objection (53).

Article 16 provides that it is the public policy of theforum which must be offended by the application ofthe specified law. It goes without saying that thisexpression includes Community public policy, whichhas become an integral part of the public policy('ordre public ) of the Member States of theEuropean Community.

Article

No retrospective effect

Article 17 means that the Convention has noretrospective effect on contracts already in existence.It applies only to contracts concluded after it entersinto force, but the entry into force must considered separately for each State since theConvention will not enter into force simultaneouslyin all the contracting States (see Article 29). Ofcourse, there is no provision preventing a court of acontracting State with respect to which theConvention has not yet entered into force from

applying it in advance unter the concept of ratioscripta.

Article

U nif onn interpretation

This Article is based on a formula developed by theUnited Nations Commission on International TradeLaw.

The draft revision of the uniform law oninternational sales and the preliminary draft of theConvention on prescription and limitation of actionsin international sales contained the followingprovision: ' In the interpretation and application ofthis Convention regard shall be had to itsinternational character and to the necessity ofpromoting uniformity This provision, whosewording was slightly amended has beenincorporated in the United Nations Convention oncontracts for the international sale of goods(Article 7) signed in Vienna on 11 April 1980.

Article 18 operates as a reminder that in interpretingan international convention regard must be had to itsinternational character and that, consequently, acourt will not be free to assimilate the provisions ofthe Convention in so far as concerns theirinterpretation , to provisions of law which are purelydomestic. It seemed that one of the advantages of thisArticle might be to enable parties to rely in theiractions on decisions given in other countries.

It is within the spirit of this Article that a solutionmust be found to the problem of classification, forwhich, following the example of the Benelux uniformlaw, the French draft and numerous conventions ofThe Hague, the Convention has refrained fromformulating a special rule.

Article 18 will retain its importance even if a protocolsubjecting the interpretation of the Convention to theCourt of Justice of the European Communities isdrawn up pursuant to the Joint Declaration of theRepresentatives of the Governments made when theConvention was opened for signature on 19 June1980.

Article

States with more than one legal system

This Article is based on similar provisions containedin some of the Hague Conventions (see, for example,the Convention on the law applicable to matrimonialproperty regimes, Articles 17 and 18 and theConvention on the law applicable to agency, Articles19 and 20).

According to the first paragraph, where a State hasseveral territorial units each with its own rules of lawin respect of contractual obligations, each of thoseunits will be considered as a country for the purposesof the Convention. If, for example, in the case ofArticle 4, the party who is to effect the performancewhich is characteristic of the contract has his habitualresidence in Scotland, it is with Scottish law that thecontract will be deemed to be most closelyconnected.


Paragraph 2, which is of special concern to theUnited Kingdom , covers the case where the situationis connected with several territorial units in a singlecountry but not with another State. In such a casethere is a conflict of laws, but it is a purely domesticmatter for the State concerned which consequently isunder no obligation to resolve it by applying the rulesof the Convention.

Article 20

Precedence of Community law

This Article is intended to avoid the possibility ofconflict between this Convention and acts of theCommunity institutions, by according precedence tothe latter. The text is based on that of Article 52 (2) ofthe Convention of 27 September 1968 as revised bythe Accession Convention of 9 October 1978.

The Community provisions which will haveprecedence over the Convention are, as regards theirobject, those which, in relation to particular matterslay down rules of private international law withregard to contractual obligations. For example, theRegulation on conflict of laws with respect toemployment contracts will, when it has been finallyadopted, take precedence over the Convention.

The Governments of the Member States have,nevertheless, in a joint declaration, expressed the

wish that these Community instruments will beconsistent with the provisions of the Convention.

As regards the form which these instruments are totake, the Community provisions contemplated byArticle 20 are not only acts of the institutions of theEuropean Communities, that is to say principally theRegulations and the Directives as well as theConventions concluded by those Communities, butalso national laws harmonized in implementation ofsuch acts. A law or regulation adopted by a State inorder to make its legislation comply with a Directiveborrows, as it were, from the Directive itsCommunity force, thus justifying the precedenceaccorded to it over this Convention.

Finally, the precedence which Article 20 accords toCommunity law applies not only to Community lawin force at the date when this Convention enters into

force, but also to that adopted after the Conventionhas entered into force.

Article

Relationship with other Conventions

This Article, which has its equivalent in the HagueConventions on the law applicable to matrimonialproperty regimes (Article 20) and on the lawapplicable to agency (Article 22) means that thisConvention will not prejudice the application of anyother international agreement, present or future, towhich a Contracting State is or becomes party, forexample, to Conventions relating to carriage. Thisleaves open the possibility of a more far-reachinginternational unificatin with regard to all or part of

the ground covered by this Convention.

This provision does not of course eliminate allpossibility of difficulty arising from the combinedapplication of this Convention and anotherconcurrent Convention especially if the lattercontains a provision similar to that in Article 21. Butthe States which are parties to several Conventionsmust seek a solution to these difficulties ofapplication without jeopardizing the observance oftheir international obligations.

Moreover, Article 21 must be read in conjunctionwith Articles 24 and 25. The former specifies theconditions under which a contracting State maybecome a party to a multilateral Convention after thedate on which this Convention enters into force withrespect thereto. The latter deals with the case wherethe conclusion of other Conventions would prejudicethe unification achieved by this Convention.

Article

Reservations

This Article indicates the reservations which may bemade to the Convention, the reasons for which havebeen set out in this report as regards Articles 7 (1) and10 (1) (e). Following the practice generally applied, inparticular in the Hague Conventions, it lays down theprocedure by means of which these reservations canbe made or withdrawn.


FINAL PROVISIONS

TITLE III

Article

U Bilateral adoption by a CO8tractiDg State of a new

choice of law rule

Article 23 is an unusual text since it allows thecontracting States to make unilateral derogationsfrom the rules of the Convention. This weakening ofits mandatory force was thought desirable because ofthe very wide scope of the Convention and the verygeneral character of most of its rules. The case wasenvisaged where a State found it necessary forpolitical economic or social reasons to amend achoice of law rule and it was thought desirable to finda solution sufficiently flexible to enable States toratify the Convention without having to denounce itas soon as they were forced to disregard its rules on aparticular point.

The possibility of making unilateral derogationsfrom the Convention is, however, subject to certainconditions and restrictions.

First, derogation is only possible if it consists inadopting a new choice of law rule in regard to aparticular category of contract. For example, Article23 would not authorize a State to abandon thegeneral principle of the Convention. But it wouldenable it to adopt, under the conditions specified , aparticular choice oflaw rule different from that of theConvention with respect, for example, to contractsmade by travel agencies or to contracts forcorrespondence courses where the specialist natureof the contract could justify this derogation from thecommon rule. It is of course understood that thederogation procedure shall only be imposed on

States if the contract for which they wish to adopt anew choice of law rule falls within the scope of theConvention.

Secondly, such a derogation is subject to proceduralconditions. The State which wishes to derogate fromthe Convention must inform the other signatory

States through the Secretary-General of the Councilof the European Communities. The latter shall, if aState so requests, arrange for consultation betweenthe signatory States in order to reach unanimous

agreement. If, within a period of two years, no Statehas requested consultation or no agreement has beenable to be reached, the State may then amend its lawin the manner indicated.

The Group considered whether this procedureshould apply to situations where the contractingStates would wish to adopt a rule of the kind referred

. to in Article 7 of the Convention , i. e. a mandatoryrule which must be applied whatever the lawapplicable to the contract. It was considered that theStates should not be bound to submit themselves tothe Article 23 procedure before adopting such a rule.But to escape the application of Article 23 the rule inquestion must meet the criteria of Article 7 and beexplicable by the strong mandatory character of therule of substantive law which it lays down. It is notthe intention that the contracting States should able to avoid the conditions of Article 23 bydisguising under the form of a mandatory rule of theArticle 7 kind a rule of conflict dealing with matterswhose absolute mandatory nature is notestablished.

Articles 24 and

New Conventions

The procedure for consultation imposed underArticle 23 on a State intending to derogate from theConvention by amending its national law is alsoimposed on a State which wishes to derogate from theConvention on becoming a party to anotherConvention.

This system of ' freedom under supervision ' imposedon contracting States applies only to conventionswhose main object or whose principal aim or one ofwhose principal aims is to lay down rules of privateinternational law concerning any of the mattersgoverned by this Convention. Consequently theStates are free to accede to a Convention whichconsolidates the material law of such and such a

contract, with regard, for example, to transport andwhich contains, as an ancillary provision, a rule ofprivate international law. But, within the area thusdefined, the consultation procedure applies even to


Conventions which were open for signature beforethe entry into force of the present Convention.

Article 24 (2) further restricts the scope of theobligation imposed on the States by specifying thatthe procedure in the first paragraph need notapply:

1. if the object of the new Convention is to revise aformer Convention. The opposite solution wouldhave had the unfortunate effect of obstructing themodernization of existing Conventions;

2. if one or more contracting States or the EuropeanCommunities are already parties to the newConvention;

3. if the new Convention is concluded within theframework of the European Treaties particularlyin the case of a multilateral Convention to whichone of the Communities is already party. Theserules are in harmony with the precedence ofCommunity law provided for under Article 20.

Article 24 therefore establishes a clear distinctionbetween Conventions to which contracting Statesmay freely become parties and those to which theymay become parties only upon condition that theysubmit to consultation procedure.

For Conventions of the former class, Article 25provides for the case where the conclusion of suchagreements prejudiced the unification achieved bythis Convention. If a contracting State considers thatsuch is the case, it may request the Secretary-Generalof the Council of the European Communities to openconsultation procedure. The text of the Articleimplies that the Secretary-General of the Council

possesses a certain discretionary power. The JointDeclaration annexed to this Convention in factprovides that, even before the entry into force of thisConvention, the States will confer together if one ofthem wishes to become party to such aC9nvention.

For Conventions of the latter class, the consultationprocedure is the same as that of Article 23 except thatthe period of two years is here reduced to oneyear.

Article

Revision

This Article provides for a possible revision of theConvention, It is identical with Article 67 of theConvention of 27 September 1968.

Articles 27 to

Usual protocol clauses

Article 27 defines the territories of the Member Statesto which the Convention is to apply (cf. Article 60 ofthe revised Convention of 27 September 1968).Articles 28 and 29 deal with the opening for signatureof the Convention and its ratification. Article 28 doesnot make any statement on the methods by whicheach contracting State will incorporate the provisionsof the Convention into its national law. This is amatter which by international custom is left to thesovereign discretion of States. Each contracting Statemay therefore give effect to the Convention either bygiving it force of law directly or by including itsprovisions into its own national legislation in a formappropriate to that legislation. The most noteworthyprovision is that of Article 29 (1) which provides forentry into force after seven ratifications. It appearedthat to require ratification by all nine contractingStates might result in delaying entry into force for toolong a period.

Article 30 lays down a duration of 10 years,automatically renewable for five-year periods. ForStates which ratify the Convention after its entry intoforce, the period of 10 years or five years to be takeninto consideration is that which is running for thefirst States in respect of which the Conventionentered into force (Article 29 (I)). Article 30 (3)makes provision for denunciation in manner similarto the Hague Conventions (see for example Article 28Agency Convention). Such a denunciation will takeeffect on expiry of the period of 10 years or five yearsas the case may be (cf. Article 30 (3)). This Article hasno equivalent in the Convention of 27 September1968. The difference is explained by the fact that thisConvention , unlike that of 1968, is not directly basedon Article 220 of the Treaty of Rome. It is aConvention freely concluded between the States ofthe Community and not imposed by the Treaty.

Articles 31 and 33 entrust the management of theConvention (deposit of the Convention andnotification to the signatory States) to the Secretary-

General of the Council of the EuropeanCommunities.

No provision is made for third States to accede to theConvention. The question was discussed by theGroup but it was unable to reach agreement. In thesecircumstances, if a third State asked to accede to theConvention, there would have to be consultationamong the Member States.

On the other hand a solution was found to theposition vis-a- vis the Convention, of States whichmight subsequently become members of theEuropean Community.


The Group considered that the Convention itselfcould not deal with this question as it is a matterwhich falls within the scope of the AccessionConvention with new members. Accordingly itsimply drew up a joint declaration by the contractingStates expressing the view that new Member Statesshould be under an obligation also to accede to thisConvention.

Protocol relating to the Danish Statute on MaritimeLaw Article 169

The Danish Statute on Maritime Law is a uniformlaw common to the Scandinavian countries. Due tothe method applied in Scandinavian legalcooperation it is not based upon a Convention but aresult of the simultaneous introduction in theParliaments of identical bills.

Article 169 of the Statute embodies a number ofchoice of law rules. These rules are partly based upon

the bills of lading Convention 1924 as amended bythe 1968 Protocol (The Hague Visby rules). To theextent that that is the case, they are upheld as a resultof Article 21 of the present Convention, even after itsratification by Denmark.

The rule in Article 169, however, provides certainadditional choice of law rules with respect to theapplicable law in matters of contracts of carriage bysea. These could have been retained by Denmarkunder Article 21 if the Scandinavian countries hadcooperated by means of Conventions. It has beenaccepted that the fact that another method ofcooperation has been followed should not prevent

Denmark from retaining this result of Scandinaviancooperation in the field of uniform legislation. Therule in the Protocol permitting revision of Article 169without following the procedure prescribed in Article23 corresponds to the rule in Article 24 (2) of theConvention with respect to revision of otherConventions to which the States party to thisConvention are also party.


NOTES

relating to the report OD the ConventioD on the law applicable to contractualobligations

(I) Minutes of the meeting of 26 to 28 February 1969.

(2) Minutes of the meeting of 26 to 28 February 1969, pages 3, 4 and 9.(3) Commission document 12.665/XIV /68.(4) Minutes of the meeting of 26 to 28 February 1969.

(5) Minutes of the meeting of 20 to 22 October 1969.

(6) Minutes of the meeting of 2 and 3 February 1970.

(1) See the following Commission documents: 12.153.XIV.70 (questionnaireprepared by Professor Giuliano and replies of the rapporteurs); 6.975/XIV /70(questionnaire prepared by Mr Van Sasse van Ysselt and replies of therapporteurs); 15.393/XIV /70 (questionnaire prepared by Professor Lagarde andreplies of the rapporteurs).

(8) The meetings were held on the following dates: 28 September to 2 October 1970;16 to 20 November 1970; 15 to 19 February 1971; 15 to 19 March 1971; 28 June to2 July 1971; 4 to 8 October 1971; 29 November to 3 December 1971; 31 Januaryto 3 February 1972; 20 to 24 March 1972; 29 to 31 May 1972; 21 to 23 June1972.

(9) Minutes of the meeting of 21 to 23 June 1972, page 29 et seq.

(10) The meetings were held on the following dates: 22 to 23 September 1975; 17 to19 December 1975; 1 to 5 March 1976; 23 to 30 June 1976; 16 to 17 December1976; 21 to 23 February 1977; 3 to 6 May 1977; 27 to 28 June 1977; 19 to23 September 1977; 12 to 15 December 1977; 6 to 10 March 1978; 5 to 9 June1978; 25 to 28 September 1978; 6 to 10 November 1978; 15 to 16 January 1979;19 to 23 February 1979.

(11) The list of government experts who took part in the work of this ad hoc workingparty or in the work of the working party chaired by Mr Jenard is attached to thisreport.

(12) The work done on company law by the European Communities falls into threecategories. The first category consists of the Directives provided for by Article 54(3) (g) of the EEC Treaty. Four of these Directives are already in force. The first,issued on 9 March 1968 (OJ No L 65, 14. 3. 1968), concerns disclosure, the extentto which the company is bound by acts done on its behalf, and nullity, in relationto public limited companies. The second, issued on 13 December 1976 (OJ NoL 26, 31. I. 1977), concerns the formation of public limited companies and themaintenance and alteration of their capital. The third, issued on 9 October 1978(OJ No L 295, 20. 10. 1978), deals with company mergers, and the fourth, issuedon 25 July 1978 (OJ No L 222, 14. 8. 1978), relates to annual accounts. Four otherproposals for Directives made by the Commission are currently before theCouncil. They concern the structure of 'societes anonymes ' (OJ No C 131 , 13. 12.

1972), the admission of securities to quotation (OJ No C 131 , 13. 12. 1972),

consolidated accounts (OJ No C 121 6. 1976) and the minimum qualificationsof persons who carry out legal audits of company accounts (OJ No C 112, 13.

1978). The second category comprises the Conventions provided for by Article220 of the EEC Treaty. One of these concerns the mutual recognition ofcompanies and legal persons. It was signed at Brussels on 29 February 1968 (thetext was published in Supplement No 2 of 1969 to the Bulletin of the EuropeanCommunities). The draft of a second Convention will shortly be submitted to the


Council; it concerns international mergers. Finally, work has progressed with aview to creating a Statute for European companies. This culminated in theproposal for a Regulation on the Statute for European companies, dated 30 June1970 (OJ No C 124, 10. 10. 1970).

(13) For the text of the judgment, see: Rev. crit, 1911 , p. 395; Journal dr. into prive1912

, p.

1156. For comments, cf. Batiffol and Lagarde, Droit international prive(2 voL), sixth edition, Paris, 1974-1976, II , No 567-573, pp. 229-241.

(14) Kegel Internationales Privatrecbt: Ein Studienbuch third edition , Miinchen-Berlin, 1971 , ~ 18, pp. 253-257; Kegel Das IPR im Einfiihrungsgesetz zum BGBin Soergel/Siebert, Kommentar zum BGB (Band 7), 10th edition, 1970, MarginNotes 220-225; Reithmann Intt:mationales Vertragsrecht. Das internationalePrivatrecbt der Schuldvertrige third edition, Koln, 1980, margin notes 5 and 6Drobnig, American-German Private International Law second edition , NewYork, 1972, pp. 225-232.

(15) Morelli Elementi di diritto internazionale privato italiano, 10th edition, Napoli1971 , Nos 97-98, pp. 154-157; Vitta, Op. cit. , III. pp. 229-290.

(16) Rev. crit. 1938, p. 661.

(17) Frederic La vente en droit international prive in Recueil des Cours de rAc. deLa Haye Tome 93 (1958-1), pp. 30-48; Rigaux Droit international priveBruxelles, 1968, Nos 348-349; Vander Elst, Droit international prive. Reglesgenerales des conflits de lois dans les differentes matieres de droit priveBruxelles, 1977 , No 56, p. 100 et seq.

(18) The text of the judgement in the Alnati case (Nederlandse Jurisprudentie 1967

p. 3) is published in the French in Rev. crit. 1967 , p. 522. (Struycken note on theAlnati decision). For the views of legal writers: cf. : J. J. Th. Deelen

Rechtskeuze in het Nederlands internationaal contractenrecht, Amsterdam1965; W. L.G. Lemaire, Nederlands internationaal privaatrecht, 1968, p. 242 ss.

..

Jessurun d'Oliveira, Kotting, Bervoets en De Boer, Partij-invloed in hetInternationaal Privaatrecht, Amsterdam 1974.

(19) The principle of freedom of choice has been recognized in England since at least1796: Gienar V. Mieyer (1796), 2 Hy. Bl. 603.

(20) (1939) A.C. 277 , p. 290.

(20a) See, e. , the Employment Protection (Consolidation Act 1978, s. 153 (5) and theTrade Union and Labour Relations Act 1974, S. 30 (6)).

(20b) Unfair Contract Terms Act 1977 , S. 27 (2).

(2OC) Anton Private International Law pp. 187-192.

(2Od) This includes cases where the parties have attempted to make an express choicebut have not done so with sufficient Clarity.

(20e) Compagnie d'Armement Maritime SA V. Compagnie Tunisienne de NavigationSA (1971) A.C. 572 , at pp. 584, 587 to 591 , 596 to 600, 604 to 607.

(21) Lando, Contracts in International Encyclopedia of Comparative Law vol. IIIPrivate International Law (Lipstein , Chief editor), sections-51 and 54, pp. 28 to29; Philip, Dans! International Privat-og Procesret second editionCopenhagen, 1972, p. 291.

(22) C. Publications Serie A, Nos 20 to 21 , p. 122.

(23) International Law Reports vol. 27

, pp.

117 to 233, p. 165; Riv. dir. int. 1963,pp. 230 to 249, p. 244.

(24) For a summary of this award, including extensiye quotations, see: Lalive,

recent arbitrage suisse entre un organisme d'Etat et une societe privee etrangerein Annuaire suisse de dr. int. 1963, pp. 273 to 302 , especially pp. 284 to 288.

(25) Int. Legal Mat. 1979 , pp. 3 to 37 , at p. 11; Riv. dir. int. 1978, pp. 514to 517 , at518.


(26) The first Convention, dated 1 October 1976, was in force between the followingeight European countries: Belgium, Denmark, Finland, France, Italy, Norway,Sweden, Switzerland. The Republic of Niger also acceded to the convention. Forthe text of the second and third conventions, see: Associazione Italiana perl'Arbitrato , Conventions multilaterales et autres instruments en matiere

arbitrage, Roma, 1974, pp. 86 to 114. For the text of the fourth convention see:Coni de La Haye de droit international priv6, Recueil des conventions (/951-

J77), p. 252. For the state of ratifications and accessions to these Conventions at1 February 1976, see: Giuliano , Pocar and Treves Codice delle convenzioni di

diritto internazionale privato e processuale Milano, 1977, pp. 1404, 1466 et seq.1497 et seq.

(21) Kegel Das IPR cit. margin notes 269 to 273 and notes 1 and 3; Batiffol andLagarde, Droit international priv6 cit. II , No 592, p. 243 ~ judgment of the FrenchCour de Cassation of 18 November 1959 in Soc. Deckardt c. Etabl Moatti

Rev. crit. 1960, p. 83.

(28) Cf. Trib. Rotterdam, 2 April 1963, S ~ S 1963, 53; Kollewijn, De rechtskeuseachteraf Neth. Int. Law Rev. 1964 225; Lemaire Nederlands InternationaalPrivaatrecht, 1968 , 265.

(29) Riv. dir. into priv. proc. 1967

, pp.

126 et seq.

(30) V. Treves T. Sulla volonta delle paTti di cui aiI'm. 25 delle preleggi e suimomento del suo sorgere, in Riv. dir. into priv. proc. 1967, pp. 315 et seq.

(31) For a comparative survey cf. Rabel The Conflict of Laws. A comparative study,, second edition , Ann Arbor, 1960, Chapter 30, pp. 432 to 486.

(32) Batiffol and Lagarde. Droit international prive, cit., II , Nos 572 et scq. pp. 236

seq. and the essay of Batiffol Subjectivisme et objectivisme dans Ie droitinternational prive des contrats, reproduit dans choix d'articles rassembles parses amis, Paris 1976, pp. 249 to 263.

(33) Rev. crit. 1955, p. 330.

(34) According to German case law

, '

hypothetischer-Parteiwille' does not involveseeking the supposed intentions of the parties, but evaluating the interestsinvolved reasonably and equitably, on an objective basis, with a view todeterming the law applicable (BGH, 14 April 1953, in IPRspr., 1952-53, No 40,pp. 151 et seq.

).

According to another case, ' in making this evaluation of theinterests involved, the essential question is where the centre of gravity of thecontractual relationship is situated' (BGH, 14 July 1955 , in IPRspr., 1954--1955,No 67 , pp. 206 et seq.

).

The following may be consulted on this concept: KegelInternationales Privatrecht ct. ~ 18, pp. 257 et seq. Kegel Das IPR cit., Nos 240to 268, and the numerous references to judicial decisions given in the notes;Reithmann Internationales Vertragsrecht cit. , pp. 42 et seq.

(35) See Bonython V. Commonwealth of Australia (1951) A.C. 201 at p. 219;Tomkinson v. First Pennsylvania Banking and Trust Co. (1961) A.C. 1007 atpp. 1068 , 1081 and 1082; James Miller and Partners Ltd. V. Whitworth StreetEstates (Manchester) Ltd (1970) A.C. 583 at pp. 603, 605 and 606, 601 to 611;Compagnie d'Armement Maritime SA V. Compagnie Tunisienne de NavigationSA (1971) A.C. 572 at pp. 583, 587, 603; Coast Lines Ltd V. Hudig and Veder

Chartering NY, (1972) 2 Q. B. 34 at pp. 44, 46, 50.

(36) Mount Albert Borough Councilv. Australian Temperance and General MutualLife Assurance Society (1938) A.C. 224 at p. 240 per Lord Wright; The Assunzione(1974) P. 150 at pp. 175 and 179 per Singleton LJ.

(36a) Anton Private International Law pp. 192 to 197.

(31) See to this effect: Cour de Cassation, judgment of 28 March 1953 (n. 827), supra;Cour de Cassation (full court), judgment of 28 June 1966 (n. 1680), supra; Courde Cassation, judgment of 30 April 1969 (n. 1403), in Offlcina Musso C. SocieteSevplant (Riv. dir. into priv, proc. 1970, pp. 332 et seq. For comments: Morelli


Elementi di diritto internazionale privato cit. n. 97, p. 155; Vitta. Dir. intern.

privato (3 V) Torino 1972-1975 III , pp. 229 to 290.

(38) See especially Vischer Internationales Vertragsrecht Bern, 1962, especially pp.89 to 144. This work also contains a table of the decisions in which this connectionhas been upheld. See also the judgment of I April 1970 of the Court of Appeal ofAmsterdam, in NAP NVv. Christophery.

(39) This is the solution adopted by the Court of Limoges in its judgment of10 November 1970, and by the Tribunal de commerce of Paris in its judgment of4 December 1970 (Rev. crit. 1971 , pp. 703 et seq.

).

The same principle underliesthe judgment of the Supreme Court of the Netherlands of 6 April 1973 (N. I. 1973N. 371). See also Article 6 of the Hague Convention of 14 March 1978 on the lawapplicable to agency.

(40) For the judgments mentioned in the text see: Rev. crit. 1967 pp. 521 to 523; (1920)

2 K.B. 287; (1958) A.C. 301; (1963) 2 Q.B. 352 and more recently: R. Van Rooij, positie van publiekrechtelijke regels op bet tenein van bet internationaalprivaatrecht 1976, 236 et seq. L. Strikwerda Semipubliekrecht in bet

confJictenrecht, 1978, 76 et seq.

(4Oa) On this Article, see the reflections of Vi scher The antagonism between legalsecurity and search of justice in the field of contract, in Recueil de l' Academie deLa Haye, Tome 142 (1974 II) pp. 21 to 30; Lando op. cit. n. ~OO to 203 pp. 106 to110; Segre (T), II diritto comunitario della conconenza come leggeapplicazione necessaria in Riv. dir. into priv. et proc. 1979 pp. 75 to 79;

Drobnig, comments on Article 7 of the draft convention in European PrivateInternational Law of obligations edited by Lando Yon Hoffman-SiehrTiibingen 1975 , pp. 88 et seq.

(41 ) V. Delaporte, Recherches sur la forme des actesjuridiques en droit internationalprive. Thesis Paris I, 1974, duplicated, No 123 et seq.

(42) V. Delaporte, op. cit. No III.(43) The possibility of applying a common national law is expressly provided for by

Article 26 of the preliminary provisions to the Italian Civil Code. See also Article2315 of the French draft of 1967.

(44) The solution adopted has been influenced by that approved, though in a widersetting, by the Corte di Cassazione italiana, 30 Apri11969, Riv. dir. into priv. e pro.1970, 332 et seq. It is contrary to that given by the Cour de Cassation of France10 December 1974, Rev. crit. dr. inter. pro 1975 , 474, note A.P. The alternativesolution also prevails in the United Kingdom Van Grutten V. Digby (1862), 31

Beav. 561; cf. Cheshire and North P.IL. 10th edition, p. 220.

(45) Solution adopted in German (principal law), Article 11 E. ; in Italy

(subsidiary) Article 26 prel. pro. and in France (Cour de Cassation 26 May 1963,Rev. cnt. dr. into pro 1964, 513, note Loussouarn; 10 December 1974 see note 44above), and implicitly allowed by the Benelux Treaty (Article 19).

(46) Se references cited in the previous note.(47) See, for example, Article 13 (4) of the Benelux Treaty 1969 which has not entered

into force.

(48) For a comparative outline on this subject, see: Toubiana: Le domaine de la loi ducontrat en droit international prive (contrats internationaux et dirigisme

economique) Paris 1972 , spec. pp. 1 to 146; Lando: Contracts in International

Encyclopedia of Comparative Law, vol. III Private international law (Lipsteinchief editor) sections 199 to 231 pp. 106 to 125.

(49) See on this subject Article 4 of the Hague Convention of 1955 on the lawapplicable to international sales of corporeal movables.

(50) See the Benelux Treaty 1969 (Article 2) not entered into force, the preliminaryprovisions of the Italian Civil Code (Article 1), the law introducing the German


Civil Code (Article 7) and French judicial decisions. Rec. 16 January 1861Lizardi, D.P. 1861.1.193, S. 1861.1.305.

(51) See Article 20 (3) of the Benelux Treaty 1969 not entered into force and, inFrance, Casso 24 February 1959 (Isaac), D. 1959 J. 485; 12 February 1963 (Ruf1iniv. Sylvestre), Rev. crit. d.i.p. 1964, p. 121.

(52) Cf. Kegel IPR fourth edition, p. 173; Batiffol and Lagarde, sixth edition , p. 394;Article 2 of the Convention of 15 June 1955 on the law applicable to internationalsales of corporeal movables; Article 5 of the Con vention of 14 March 1978 on thelaw applicable to agency. Dicey and Morris, ninth edition pp. 723 to 724.

(53) See Acts and Documents of the Hague Conference, IXth Session vol. III WHls(1961) explanatory report, p. 170.


LIST OF P ARTICIP ANTS (1)

Work under the auspices of the Commission

ChairmanMr P. Jenard Director d'administration, Ministere des Affairesetrangeres et du Commerce exteneur, Brussels.

Work under the auspices of the Council

Chairman

Mr A. Brancaccio Ministero di Grazia e Giustizia, Rome.

BELGIUM

Mr M. Hanotiau Chef de service Ministere de la JusticeBrussels.

Professeur a la Faculte de droit a l' Universite deLiege.

Professeur, Universite libre de Bruxelles.

Mr P. Gothot

Mr R. Vander Eist

DENMARK

Mr A. Philip

Mr P. Blok

Mr H. C. Abildtrup

Professor, Justitsministeriet, Copenhagen.

Professor, J ustitsministeriet, Copenhagen.

Attache (Justitsminjsteriet), Danmarks fasteReprresentation, Brussels.

Attache (Justitsministeriet), Danmarks fasteReprresentation, Brussels.Fuldmregtig, Justitsministeriet, Copenhagen.

Mr N. Waage

Mr H. Wendler-Pedersen

GERMANY

Prof. Dr. Arndt

Dr. B. Klingsporn

0 LG Priisident i. R. , Sachverstiindiger, Bremen.

Ministerialrat, Bundesministerium der JustizBonn.

Regierungsdirektor Bundesministerium derJustiz, Bonn.

Regierungsrat, Bundesministerium fUr Wirt-schaft, Bonn.

Richter AG Bundesministerium der JustizBonn.

Mr E. Rebmann

Mr W. Hantke

Mr H. Konig

FRANCE

Mr H. Batiffol Doyen honoraire, Prof. a la Faculte de Droit aParis.

Professeur a I'Universite de Paris I.

Conseiller a la Cour d' Appel , Paris.

Mr P. Lagarde

Mr T. Cathala

IRELAND

The Hon. J. B. Walsh Senior Ordinary Judge of the Supreme Court ofIreland Law Reform Commission.

(I) Other specialist experts who do not appear on this list, have been consulted on the examinationof certain specific questions, and in particular concerning insurance , labour law , interpretationof the Convention by the Court of Justice of the European Communities.


Mr E. Hanley

Mr J. Brennan

Mr M. G. Gleeson

Mr L. Cahill

Mrs M. Gleeson

ITALY

Mr M. Giuliano

Mr L. Battaglini

Mr L. Giampaolino

Mr F. Di Filippis

Mr L. Rovelli

Mr De Renzis

Mr G. Fienga

LUXEMBOURG

Mr A. Huss

Mr A. Weitzel

Mr R. Heiderscheid

Mr C. Wampach

NETHERLANDS

Mr J. van Rijn van Alkemade

Mr R. van Rooy

Mr J. C. Schultsz

Mr J. G. Sauverplanne

Mr A. J. van Duyne-Strobosch

UNITED KINGDOM

The Hon. Lord P. Maxwell

Mr A. L. Diamond

Legal Adviser EEC Division, Department ofJustice, Dublin.

Assistant Legal Adviser, EEC Division,Department of Justice, Dublin.

Administrative Officer, Department of Justice,EEC Division , Dublin.

Administrative Officer, Department of Justice,EEC Division , Dublin.

Assistant Principal Officer Department ofTourism and Transport, Dublin.

Esperto, Professore all'Universita di Milano.

Magistrato di cassazione Ministero degli Affarl

Esteri Rome.

Vice-Capo di Gabinetto, Ministero del LavoroRome.

Magistrato administrativo, Ministerodell' Industria, del Commercia e del' Artigianato,Rome.

Magistrato Tribunale, Ministero di Grazia Giustizia, Rome.

Magistrato, Ministero dell' industria.

Ministero Industria.

Procureur General d'Etat Honoraire, Ministere

de la Justice, Luxembourg.

Conseiller a la Cour Superieure de Justice,Ministere de la Justice, Luxembourg.

President Honoraire de Tribunal, Luxembourg.

Conseiller a la Cour Superieure de Justice,Ministere de la Justice, Luxembourg.

Raadadviseur, Ministerie von Justitie

, '

s Graven-hage.

Administrateur, Ministerie van Justitie, ' s Gra-venhage.

Hoogleraar, Ministerie van Justitie

, '

s Graven-hage.

Hoogleraar Fakulteit van Rechtsgeleerdheid

Utrecht.

Administrateur, Ministerie van Justitie, ' s Gra-venhage.

Judge, Court of Session, Edinburgh.

Director, Institute of Advanced Legal Studies,London.


Mr K. M. Newmann Lord Office,Chancellor

Mr P. M. North

Mr A. Akbar

Under-Secretary ,London.

Law Commissioner, Law Commission, London.

Senior Legal Assistant, Law CommissionLondon.

HAGUE CONFERENCE

Mr M. H. van Hoogstraaten Secretary-General of the Hague Conference onPrivate International law, 's Gravenhagen.

BENELUX COMMISSION

Mrs M. Weser Professeur, Membre de la Commission Beneluxpur l'unification du droit, Brussels.

COMMISSION OF THE EUROPEAN COMMUNITIESDirectorate- General of Internal Market and Industrial affairs (DG III)

Mr W. Hauschild Head of division.

Mr G. Di Marco Principal administrator.Mr O. Czerny Principal administrative assistant.

Legal Service

Mr P. Leleux

Mr A. McClellan

Mr J. Seche

Legal adviser.

Legal adviser.

Legal adviser.

Directorate General of Employment and Social affairs (DG V)

Mr H. Ollenhauer Head of division.

Mr K. M. Schilz Principal administrator.

Directorate General of Financial Institutions and Taxation (DG XV)

Mr G. Imbert Director.

Mr H. Schlude Administrator.

COMMISSION EXPERTS

TransportMr F. Berlingieri

Mr E. Selvig

Professor at the University of Genoa.

Professor of the Univerity of Oslo.

Employment contracts

Mr G. Schnorr Professor at the University of Innsbruck.

GENERAL SECRETARIAT OF THE COUNCIL OF THE EUROPEAN COMMUNITIES

Mr R. Fornasier

Mr V. Scordamaglia

Mr O. Petersen

Mr J. F. Faure

Director, Legal Service.

Head of division, DG Internal Market.

Administrator, DG Internal Market.

Administrator, DG Internal Market.