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Choice of Law in International Contracts: Considerations and Implications

Learn about the importance of choosing the appropriate law in international contracts and the potential implications it may have. We discuss the European Union's regulations, the USA's requirements, and other relevant issues in commercial agency, distribution, and franchise law.

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Choice of Law in International Contracts: Considerations and Implications

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  1. Please visit our website (www.vantill.nl). 2013 Annual Meeting IDI 14 June 2013 Munich Jaap van Till Van Till Advocaten De Lairessestraat 131-135 1075 HJ Amsterdam j.vantill@vantill.nl

  2. Choice of Law In general, almost all legal systems allow the parties to an international contract to choose the applicable law

  3. Choice of Law European Union The law chosen does not need to be connected to the contract EC Regulation 593/2008 of 17 June 2008 on the law applicable to contractual obligations (Rome I)

  4. Choice of Law USA Other legal systems, such for example in the USA, do, however, require a connection to the contract

  5. We need to consider carefully before making a choice

  6. CommercialAgency • Compensation or indemnity system (France/England – other EU Member States) • Ingmar vs. Eaton (ECJ of 9 November 2000) • OLG Stuttgart, 29 December 2011 and • OLG München, 17 May 2006

  7. Further issues in the field of commercial agency which might be relevant: German HGB, §92c (1): “If the activity of commercial agent under his contract with the principal is not to be carried out within the territory of the EU or EFTA, then all provisions of this chapter may be varied by agreement.”

  8. Choice of Law Danish law 272 of 1990, Art. 1 (3): “Where Danish law shall apply to cases where the commercial agent’s activities shall not take place in a country which is a Member of the EU or EFTA, the parties can derogate from all provisions of this Act.”

  9. Choice of Law Danish law 272 of 1990, Art. 1 (3): “However, the rules on indemnity under this Act cannot be derogated from in cases where mandatory rules on termination and indemnity apply in the country where the commercial agent’s activities shall be carried out or where the commercial agent is resident.”

  10. Choice of Law The choice of the law applicable generally implies that the (mandatory) rules of the chosen law will apply instead of those of the law which would apply in absence of a choice ............. unless national legislators have given “internationally mandatory” status to rules of their National State. (For example: Art. 1 (2) of the Danish law (272) gives such a status to the national rules of indemnity)

  11. Distribution • Specific distributor friendly legislations in some countries (Belgium, Costa Rica, Honduras, Lebanon, Paraguay) • General contract law and case law

  12. Franchise Law • Disclosure laws • Registration requirements • Liability issues

  13. Internationally Mandatory Rules • Competition law! • Consumer Protection laws • EU: • Community law which cannot be derogated from (Art 3 (4) of Rome I)

  14. Choice of Law Ingmar vs. Eaton > OLG München 17 May 2006 > OLG Stuttgart 29 December 2011 ?

  15. Choice of Law Art. 3 (4) of Rome I: “Where all other elements relevant to this situation at the time of the choice are located in one or more Member States, the parties’ choice of applicable law other than that of a Member State shall not prejudice the application of provisions of Community law, where appropriate as implemented in the Member State of the forum, which cannot be derogated from by agreement.”

  16. In general, almost all legal systems allow the parties to an international contract to choose the applicable law

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