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Applicable Law
ct
a
r
t
C on

Everyone reads a contract from the
perspective of his/her own experience
...


§

This is why you need the common background
of an applicable law
...
2-1

§
§
§

§

§ The applicable law can be
§ made up of 6 applicable Laws

??

1
...
The law that governs the parties’ responsibilities to each other
3
...
Any mandatory public policies which may apply to the obligations
under the contract

5
...
The law of the place of enforcement of any court or arbitral
decision

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3-1

Applicable laws in your company’s contracts
List the following:
• Your company ’s personal law
...

• The law applicable to the dispute resolution
provision that usually applies to your company ’s
contracts
...
3-2

Action Point

9
...
How many of these
contracts clearly stipulated an applicable law?
• No
...
4-1

Selecting the applicable law:
It is very important that you select one!

LAW

The instinctive selection is one’s own country law - but
the other party will want the same
...
as well as the accessibility & depth of the law,
… and advantages & disadvantages to your company
The best applicable law is the one which
favours performance by both sides
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5-1

Selecting the applicable law
At the final stages of the contract negotiations, you
raise the question of what should be the applicable
law
...
What do you
reply?

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5-1 (Cont’d)

Selecting the applicable law (Cont
...
What do you
reply?

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...


?

…the same applies - to a
lesser extent -for
Singapore law, Swiss law,
Swedish law, French law and
others

?
?

US law (especially California
& new York) is often
selected when one of the
parties is American
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?? ?
?
?
?
?
?

Egyptian law
is widely used
in the middle
East

In Latin America, a law of
one of the parties is often
used - or Spanish law
M8:U9:9
...
6-1

Typical applicable law
Which should the applicable law be in the joint
venture agreement between TechnoMediaCorp and
Singapore Tech?

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6-2

Typical applicable law for your company
Give an example of selection of an applicable law by
your company, indicating the type of contract and
who was the coordinator and its nationality
...

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7-1

National & state laws
 United States Uniform Commercial Code
 England, Sale of Goods Act
 French Civil Code

International Principles

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UNIDROIT (Unification of Private International Law)
Principles of International Commercial Contracts:
 useful checklist
 can serve as model for legislators
...
7-2

Action Point

9
...
As to applicable law,
Brazilia Entreprises proposes:
« Applicable law will be either Brazilian or Nigerian law
as determined in case of dispute by the
Respondent
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7-3

Typical issues addressed by the
applicable law
Battle of the forms:
when is a contract formed?
Duty to achieve a specific result vs
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8-1

Settling Disputes: Methods
The are two groups of methods:
1
...
Non-adjudicative methods:

t
c
a
r
t
n
Co

§

§

 Expertise
 Mediation/conciliation
 Negotiation
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Arbitration is normally selected through an arbitration
clause in the contract
Arbitration can be supervised (by an institution with a
secretariat such as the International Court of
Arbitration or the ICC) or

ITC

ad hoc where the parties set the procedures,
sometimes using the UNCITRAL Model Rules of
Arbitration

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 Reference can be made to a centre of expertise or the
parties may select the expert themselves
 The recommendation may or may not be binding

Mediation & conciliation: A person facilitates the
resolution of the dispute
...
9-3

Non-adjudicative resolution methods (II)
Negotiation: The parties exchange views aimed at
reaching an agreement amongst themselves

The negotiation can be facilitated or unfacilitated

INTERNET

The Internet can sometimes be used
(e
...
, www
...
com)
ITC

W
W
W NET

B
B2 E-Commerce
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9-1

Dispute resolution methods

List the dispute resolution methods studied in the
coursebook
...
If any method was ever used,
indicate the problems or benefits one might
anticipate
...
9-5

Advantages and disadvantages of
the various methods (I)
Litigation & arbitration lead to a final judgement or
award
Litigation is final in the country where the judgement
is rendered as well as in any country which has signed a
treaty for reciprocal enforcement of foreign
judgements
Arbitration is enforced around the world
through the New York Convention as
well as various regional and
bilateral treaties
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Between litigation & arbitration there is a general
preference for arbitration because:






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Wider possibility of enforcement
It is not required to select a court of one of the two parties
Arbitral proceedings are faster
Greater confidentiality
Lower cost
The parties can select the language they wish
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9-8

When to state the dispute
resolution methods in the
contract?
For litigation, the place needs to be indicated
Arbitration should be stated through an
arbitration clause
Mediation/ conciliation, expertise &
negotiation can be incorporated in the
contract but are frequently sought only when
a dispute has arisen
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10-1

Contract dispute resolution clause
In a contract, would you accept the following clause:
« In case of disputes, the parties will attempt
to amicably settle them through negotiations
...
Place
of arbitration is Geneva
...
10-2

What to think about when
selecting arbitration (I):
Do you have a realistic chance of enforcing the award?
What is the record of enforcing arbitral awards in the
jurisdiction in question?
What does a foreign party have to go trough to
enforce the award locally?
Does the award have to be enforced “by the tribunal
itself” ?
Does the award have to be translated into a local
language?
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11-2

§
§

What to think about when
selecting arbitration (III):

What about interest?
What kind of bankruptcy legislation is in place?
What about judicial remedies against and
enforcement decision?
Taxes?
Is there a need to have the contract passed as
a law?
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12-1

Drafting the Arbitration Clause:
Choice 2: What type of institutional arbitration?
Use an institution which is credible
& which has the right experience
Each institution would normally
have a recommended arbitration clause
Parties generally chose a place of arbitration that
is neutral and which is a signatory of the New
York Convention
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”

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12-1

Arbitration clauses

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M8:U9:Conclusion-1

Module 8 - Overall conclusion (II)

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