Bargaining inequality: ways to overcome it in international commercial law and in private international law

Abstract

The basic tenet of contract law is freedom of contract, including the freedom to negotiate and the autonomy of the will of the parties. However, practice and doctrine show that many international commercial contracts are formed in conditions of actual inequality of counterparties. The present work is the first comprehensive study of the problem of cross-border bargaining inequality among professional merchants. The aim of the study is to systematize and critically evaluate the effectiveness of legal conditions formulated in the unified acts of international commercial law and private international law to overcome inequality of counterparties at the pre-contractual stage. The study is based on logical, formal-legal and comparative-legal methods. The results and conclusions may be formulated as follows: (1) The set of legal means to resolve the problem of unequal position of the contracting parties is represented by a complex of complementary spheres of unified normative regulation - substantive norms and conflict-of-law norms. (2) Universal conventional legal regulation of the pre-contractual stage has not been developed. (3) Recommendatory acts of substantive unification of commercial law enshrine developed models of regulation of the parties’ conduct in cross-border negotiations. The main legal means to balance the position of the counterparties is the institution of the pre-contractual liability based on the principle of good faith. (4) Both in European law and in Russian law, the conflict-of-law issue is resolved through a combination of non-contractual qualification of the pre-contractual relations and the complex nature of regulation involving the consecutive use of contractual and tort-based connecting factors. (4) Where there is inequality, conflict-of-laws must provide for an equitable solution to situations where the choice of law applicable to each of the contracting parties is not truly free, including permitting a deviation from the principle of autonomy of will. (5) In the absence of parties’ choice of applicable law, the list of criteria for establishing the closest connection between the pre-contractual legal relation and the competent legal order should be expanded: the court should be able to consider the law of the future contractual obligations’ place of performance and the law governing other related contracts.