Choice Of Law Clauses Research Articles

Some Reflections on “Sharīʿah Clauses” of Islamic Finance Contracts

This study delves into resolving financial disputes on Shar'ah contract clauses involving parties from different jurisdictions. There is a lack of explicit references to Shar'ah law in the choice of law clauses in financial contracts. The study emphasizes the complexity of applying Sharīʿah principles due to different interpretations. The jurisdictions lacking Shar'ah law expertise on Islamic finance disputes may set unfavorable precedents. The recommendations include strengthening local jurisdictions in Shar'ah-based legal systems by training judges and arbitrators. Encouraging Islamic Financial Institutions (IFIs) to adopt Shar'ah compliance procedures, collaboratively developing unified IB&F Law, offering mechanisms of comprehensive training of legal practitioners, promoting confidence in local courts, creating a collaboration platform, and developing a comprehensive handbook for adjudicators, etc. are recommended measures to enhance Shar'ah-based dispute resolution and maintain credibility, stability & growth of Islamic finance sector.

Empirical Research on the Alleged Invalidity of Arbitration Agreements: Success Rates and Applicable Law in Setting Aside and Enforcement Proceedings

This article is based on a data set of over 1,000 judicial decisions in setting aside, recognition and enforcement proceedings. Although sometimes cited as one of the most common grounds for setting aside an award or refusing its recognition and enforcement, the invalidity of the arbitration agreement was raised in less than one-fifth of those decisions. It was confirmed in under one-third of those cases. This article examines which arguments for invalidity were more successful than others and how courts have determined the law applicable to the (in)validity of the arbitration agreement. Notably, less than half of the courts in this data set have engaged in a meaningful conflict of laws analysis. Where they have done so, there does not appear to be a consensus on how the law applicable to the arbitration agreement should be determined and what significance a choice of law clause in the main contract has in this regard. Arbitration agreement, arbitral awards, setting aside, recognition and enforcement, applicable law, invalidity, New York Convention, UNCITRAL Model Law on International Commercial Arbitration, empirical research

Pengaturan Klausul Pilihan Hukum dan Pilihan Forum dalam Perjanjian Asuransi Kapal di Indonesia

The ship insurance agreement was prone to causing problems because the parties were in different jurisdictions, such as in the dispute over the PT. Purna Arthanugraha Insurance (PT. ASPAN) with PT. Indonesian Maritime Business Development (PT. Bumi Shipmanagement). The insurance policy agreement, in this case, was subject to and complied with English law, but the settlement of the case was filed in a court in Indonesia. This case became a legal problem in determining the choice of law arrangement and forum for resolving disputes. Based on these problems, this study aimed to analyze the regulation over the choice of law clause and the choice of forum in the ship insurance agreement. The approach used in this study was a case study approach and a statutory approach. The type of research used in this study was normative juridical, the data analysis technique used descriptive, interpretation, evaluation and argumentation techniques. The study results showed that the choice of law clause in the ship insurance agreement based on the agreement of the two parties referred to the applicable law in England, namely the Marine Insurance Act 1906. The setting of the forum choice clause in the ship insurance agreement was not regulated strictly and explicitly, so the dispute was submitted by one of the parties to the district court based on civil procedural law. Settlement of ship insurance agreement disputes through a lawsuit to the district court was not ideal because the district court's scope was limited to civil cases of a general nature.

Determining the applicable law to the arbitration agreement in the absence of a choice of law clause under Hong Kong Law: a call for renewed internationalism

Abstract The courts of Hong Kong have determined the governing law of the underlying contract to indicate an express, implied and no choice of the law applicable to the arbitration agreement. In determining the applicable law, the courts made no references to the New York Convention despite the fact that the provisions under Hong Kong arbitration law pursuant to which the foregoing determinations were made are based on provisions in the New York Convention and ought to be applied in conformity with the same. This article argues that the courts of Hong Kong ought to adopt the New York Convention’s conflict of laws rules in Article V(1)(a) to determine the governing law of arbitration agreements in pre- and post-award proceedings in order to enhance the alignment of Hong Kong law with the international body of arbitration law.

Choice of Law and Time Part II: Choice of Law Clauses and Changing Law

Choice of Law and Time Part II: Choice of Law Clauses and Changing Law

A COMPARATIVE ANALYSIS OF THE PROPOSED MANDATORY NATURE OF EMPLOYMENT LEGISLATION AND ITS INTERACTION WITH THE CHOICE OF LAW OF AN INTERNATIONAL CONTRACT

In an ever-changing world characterised by globalisation there has been a steep increase in employment contracts with an international character. This may lead to a conflict of laws whereby a forum court is confronted with the application of either the forum’s domestic laws or those of a foreign judicial system. In these cases we are confronted with the interaction between party autonomy and the limitations placed on the exercise thereof. The international legal community has yet to reach a consensus on the requirements of the exercise of party autonomy, and thus there are no ‘supra-national laws’ governing party autonomy.1 Only in extraordinary circumstances will the forum court divert from the proper law of the contract and in doing so veer from the principle of freedom to contract.2 This is illustrated in Louks v Standard Oil Company of New Jersey3 where Cardoza CJ stated so congruously in his obiter that ‘we are not so provincial as to say that every solution of a problem is wrong because we deal with it otherwise at home4.’ This article will endeavour to give an overview of the interaction between the proper law of a contract as chosen by the contracting parties in an international contract and the mandatory rules of a forum court that may be under consideration. This article will undertake a critical comparison and analysis of the methods and reasoning applied by the courts in the jurisdictions of New Zealand, the United Kingdom and South Africa in respect of the mandatory nature of employment legislation and its interaction with the choice of law of an international employment contract. This will be done in reference to a specific company, Cathay Pacific, its employment contracts and the court cases that flowed from the choice of law clause in the contracts between Cathay Pacific and its employees in both New Zealand and the United Kingdom. A discussion of the possible repercussions of such a clause in a South African legal context will follow.

Ousting choice of law in international contracts: lessons from aramco case

This article examines the landmark Aramco case from a different perspective. It is not focusing on the outcome of the award, as the Saudi government lost this case and consequently prevents any arbitration against the government. Alternatively, this article focuses on ousting Islamic law as the choice of law clause. It thoroughly examines the argument favouring the “internationalisation” of contracts to prevent the application of the host state’s law of developing states. The tribunal decision bears many lessons worth nothing.

Feeling fine! Harmonisation and inconsistency in EU supervisory authority administrative fines

GDPR has a stated goal of harmonisation in general, and of penalties in particular. This article demonstrates that under GDPR penalties, and especially fines, are inconsistently applied across EU member states, and that GDPR has left many of the most important topics relating to fines to member state legislation. The article starts by showing that the One-Stop Shop mechanism actually incentivises forum-shopping. Next, it is shown that the method of calculating fines is inconsistent and unsettled. Different language versions of GDPR lead to different conclusions as to how to calculate an undertaking’s revenue, and the meaning of an undertaking is neither entirely consistent within GDPR itself, nor across member states. The role of regulators is likewise unclear, and in some member states the regulators do not even have the power to impose an administrative fine under GDPR. The role of non-regulators, such as data subjects and representatives of classes of data subjects similarly lacks consistency across member states. Public bodies are another area of disharmony between member states: the scope of applicability of GDPR to public bodies is a matter for member state legislation, and the outcomes are in fact different across member states. Additional areas discussed include: the responsibility and liability of directors and officers of a company; the enforceability of a contract for insurances against GDPR fines; choice of law clauses as governing data being processed under GDPR; and issuance of warnings prior to imposition of fines. In all these areas, GDPR itself and member state law is inconsistent and is far from harmonised. Finally, the role of the economic model of the infringing party in calculation of the applicable fine is unsettled, and is left to member states, and is therefore similarly at odds with a goal of harmonisation.

Is There a Better Option than the Data Transfer Model to Protect Data Privacy?

The data transfer model and the accountability model, which are the dominant models for protecting the data privacy rights of citizens, have begun to present significant difficulties in regulating the online and increasingly transnational business environment. Global organisations take advantage of forum selection clauses and choice of law clauses and attention is diverted toward the data transfer model and the accountability model as a means of data privacy protection but it is impossible to have confidence that the data privacy rights of citizens are adequately protected given well known revelations regarding surveillance and the rise of technologies such as cloud computing. But forum selection and choice of law clauses no longer have the force they once seemed to have and this opens the possibility that extraterritorial jurisdiction may provide a supplementary conceptual basis for championing data privacy in the globalised context of the Internet. This article examines the current basis for extraterritorial application of data privacy laws and suggests a test for increasing their relevance.

Choice of Law in b2b Contracts: the Law of the Jungle

Abstract Is the law of the jungle the guiding principle with respect to choice of law clauses in international contracts between businesses (b2b contract)? Does a choice of law imply the rule of the strongest party? These and other questions are discussed in the light of 18 exploratory qualitative interviews with Dutch senior practising lawyers (advocaten). Lawyers were interviewed, since it is often presumed that they play an important role with respect to a choice of law in the pre-contractual phase. However, the perception of lawyers with respect to a choice of law is underresearched. The interview findings are discussed and compared to the data concerning a choice of law in the context of the debates about a common European contract law, regulatory competition, self-enforcing contracts and the legal origin theory. Finally, questions for future research are formulated. For instance, in the empirical research conducted sofar, no specific attention has been paid to small and medium sized businesses. Had they been considered, the outcome could have been different. The same may be said with respect to the different business sectors and the countries where the companies are established.

UNIDROIT Principles of International Commercial Contracts, An Article-by-Article Commentary

Since their first edition was published in 1994, the UNIDROIT Principles of International Commercial Contracts (UPICC) have become a success story. As an international Restatement of contract law, with 211 general principles and specific rules based on the principle of fair dealing in international trade, they reflect a common core of transnational contract law. At the same time, the UPICC constitute a neutral compromise across legal traditions, which the author rightly characterizes as a ‘global melange’ of national approaches to contract law from around the world. As a result of their well-balanced nature and because, as the author rightly states, the UPICC ‘are as easy to read as any well drafted contract’, they have been used by arbitrators, contract drafters and academics across the globe. That success is reflected, inter alia, in the vast collection of domestic court judgments and arbitral awards in which use has been made of the UPICC in one way or another, and the numerous bibliographical references on the UPICC collected, eg on the UNILEX database at www.unilex.info. Two of the most prominent arbitral proceedings in which the UPICC were used as the applicable legal regime were the Channel Tunnel and the Arthur Anderson arbitrations. In the first case, the tribunal referred to the UPICC because the choice of law clause in the contract provided that, in the absence of principles common to English and French law, the contract should be governed ‘by such general principles of international trade law as have been applied by national and international tribunals’. In the second case, the tribunal applied the UPICC due to the truly transnational nature of the subject matter of the dispute, the division of the world’s largest consulting firm from the world’s largest accounting firm. International arbitrators sometimes refer to the UPICC even in cases in which a domestic law is applicable to the contract in order to make their reasoning more persuasive from a comparative or transnational perspective for parties from different jurisdictions.

Global social media vs local values: Private international law should protect local consumer rights by using the public policy exception?

This article focuses on the relationship between forum selection clauses, choice of law clauses and data protection and privacy protection. In particular, it discusses the question whether and why jurisdiction and choice of law clauses used in the terms of social media providers should not be enforced against social media users located in a different jurisdiction. The article distinguishes between the contractual, private law analysis and the application of public policy as part of the private international law analysis. The contract law analysis is centred on doctrines such as unconscionability, which in turn examines issue such as fairness and overwhelming bargaining power of one party. By contrast, the public policy analysis in private international law focuses on fundamental rights, legality of contractual clauses according to the local law of the forum and the interests of justice. It is argued here that both aspects (contractual and public policy doctrines) are paramount for achieving not only justice between the parties of a dispute but also ensuring good administration of justice in the public interest.

Curbing the Runaway Arbitrator in Commercial Arbitration: Making Exceeding the Powers Count

Arbitration is in crisis. Under fire as an oppressive, claim-suppressing method of dispute resolution, imposed by businesses upon unsuspecting employees and consumers, arbitration is also becoming increasingly unpopular with its original designers – businesses in commercial disputes with other businesses. While academic commentators spill considerable ink assessing the propriety of businesses imposing pre-dispute arbitration agreements on consumers and employees, to date they have paid scant attention to the reasons underlying business flight from arbitration as a preferred method for resolving disputes with other businesses. Empirical research sheds some light on this issue – surveys reveal that in-house counsel believe that arbitration is no longer the dispute resolution mechanism of choice because of the risk of arbitrator compromise and the inability to appeal adverse arbitration awards to court. If arbitration is to revive as a primary dispute resolution mechanism for commercial disputes, parties must have some means for securing effective review of arbitral awards — an escape hatch for the runaway-arbitrator problem. This article proposes a new approach courts should use to evaluate arbitration agreements containing limitations on arbitrator remedial authority and choice of law. Because arbitration is a process that parties control and design, judicial review of arbitral awards must appropriately value party autonomy in process design while also ensuring that arbitration remains an efficient and economical dispute resolution mechanism. Existing federal and state arbitration acts all contain an “exceeding the powers” provision for reviewing arbitration awards. Under this provision, a losing party may challenge an adverse arbitration award on the basis that the arbitrator rendered an award inconsistent with the limitations the parties included in their agreement. Unfortunately, courts haphazardly and inconsistently apply this provision, rarely vacating an arbitration award even when the arbitrator ignored the parties’ limitations on her remedial authority or choice of law. Judicial failure to acknowledge parties’ contractual limitations may occur because the term “exceeding the powers” has no real definition. Using language adopted in other arbitration cases, this article proposes providing some definition to the term -- asserting that, in cases where an arbitrator ignores party limitations on remedies that are clearly and unmistakably articulated in the parties’ agreement, she has exceeded her powers. This proposal provides a mechanism for determining whether the parties actually intended to limit the arbitrator’s remedial authority while still honoring the traditional deference due arbitration awards. If the parties’ limits are clear and unmistakable, the next question is whether the limits should be enforced. Thus, the article also explores whether the unconscionability test courts use to evaluate party limits on judicial remedial authority could be applied to evaluate party agreements to constrain arbitrator remedial authority. The article also proposes that arbitration agreements containing choice of law clauses be evaluated in the same manner as choice of law provisions in traditional contracts, rather than under the heightened scrutiny test the courts currently use. Using this approach, a court would find that the arbitrator exceeded her powers if she ignored the parties’ choice of law, and that ignorance was apparent on the face of the award or through a review of the arbitrator’s opinion. This approach would provide consistency when courts review of these provisions and, at the same time, avoid placing an unnecessary burden on parties to prove that they really meant it when they adopted a choice of law provision. This structured approach to the exceeding the powers ground for challenging an arbitration award would acknowledge the essential role party autonomy plays in arbitration. The approach would ensure that parties receive their negotiated-for arbitration process. Arbitration is a party-designed process that parties will continue to use only if their negotiated limitations on arbitral authority, whether in the form of limits to remedial authority or choice of law, are enforced. Deference to arbitration awards, when unjustified, serves only to hasten party flight from a useful and efficient dispute resolution process.

Choice of law clauses in bilateral investment treaties

When considering settlement of investment disputes, choice of law clause is one of the most important clauses. However, when it comes to disputes between the state and the foreign investor, most of the BITs do not contain this clause. On the other hand, it can be quite often found in cases of a dispute between states (Parties). The author analyzes relevant provisions of bilateral investment treaties of the Republic of Serbia, BIT models and provisions of BITs concluded between other countries. The relationship of this clause to the clause of the choice of procedural mechanism is pointed out. The importance of the Vienna Convention on the Law of Treaties for interpretation of provisions of BITs is especially emphasized. The methodology used in this paper is typical of social (legal) sciences: descriptive method, positive-legal method and comparative legal analysis.

Arbitration Provision Clause as Eviscerate on Choice of Law

In this article, “Arbitration provision clause as Eviscerate on choice of law’ the Advocates of arbitration choose accessibility in terms of expenditure, less litigation and more rapid settlement of dispute between two parties. The courts have recognized not only agreements but also enforceability of such agreements resulting arbitral awards. Absent provisions the arbitrators are not bound by principle of substantive law as primary decision making criteria. The main point to highlight is structural tension between an arbitration provision and choice of law clause for which language plays dominance in arbitration agreements. In most parties prefer application of particular jurisdiction, substantive law for what law to apply to issues. In a case of Vimar Seguros vs Reaseguros S.A vs M/V sky reefer. In this case plaintiff unhappy with usage of Japanese language and he sued in the US Courts on ground that choice of law must be decided by arbitrator. Many courts prefer ability and knowledge of arbitrators; Uniform Arbitration Act. The practical implications of such structural tension are among jurisdictions for vested interest, on legal merits. There are specific reasons for choice of law clause in broader contract for arbitrators’ decision. Many of the underlying agreements are contracts of adhesion, so it is volition to consent to arbitration provision. Levin famous professor given important notes for how arbitrators approach a case based on fairness and substantive law in the interest of justice. According to him, parties negotiated their underlying contract to examine intention of parties for choice of law. Guidance for contractual parties and Attorneys to secure favorable provision for choice of law for fair decision and enforceability of agreements and awards.

The Word is not Enough – Arbitration, Choice of Forum and Choice of Law Clauses Under the CISG

Form requirements particularly for arbitration clauses are widely perceived as an obstacle for efficiently resolving disputes on an international level. The paper discusses recent suggestions that the freedom of form principle under Art. 11 CISG extends to arbitration, forum selection or choice of law clauses in international sales contracts and thus supersedes any and all formal requirements in this regard. The authors establish that said clauses indeed are generally within the CISG's scope of application and that, consequently, questions of contract conclusion, interpretation, and remedies for breach of these clauses are governed by the CISG. Freedom of form under the CISG, however, was neither intended to nor should it apply to arbitration, forum selection or choice of law clauses. This result is further confirmed by the interplay of the CISG with other international conventions, first and foremost the 1958 New York Convention, as well as a careful analysis of the so called most-favourable-law-approach. The recent aim to do away with form requirements for arbitration, forum selection or choice of law clauses can thus not be reached by taking a detour to the CISG, but only by directly abolishing or adjusting these form requirements.

The Word is not Enough – Arbitration, Choice of Forum and Choice of Law Clauses Under the CISG

Form requirements particularly for arbitration clauses are widely perceived as an obstacle for efficiently resolving disputes on an international level. The paper discusses recent suggestions that the freedom of form principle under Art. 11 CISG extends to arbitration, forum selection or choice of law clauses in international sales contracts and thus supersedes any and all formal requirements in this regard. The authors establish that said clauses indeed are generally within the CISG's scope of application and that, consequently, questions of contract conclusion, interpretation, and remedies for breach of these clauses are governed by the CISG. Freedom of form under the CISG, however, was neither intended to nor should it apply to arbitration, forum selection or choice of law clauses. This result is further confirmed by the interplay of the CISG with other international conventions, first and foremost the 1958 New York Convention, as well as a careful analysis of the so called most-favourable-law-approach. The recent aim to do away with form requirements for arbitration, forum selection or choice of law clauses can thus not be reached by taking a detour to the CISG, but only by directly abolishing or adjusting these form requirements.

Judicial Services for Global Commerce – Made in Germany?

International business disputes rarely go to court, but sometimes they do. By virtue of the internationally accepted principle of party autonomy, business partners involved in cross-border transactions are entitled to select their forum of choice for any dispute which may arise from their commercial relationship. Party autonomy entails the right to opt out of the nation state's court systems. In fact, arbitration clauses often refer disputes to a non-state institution for commercial arbitration such as the International Court of Arbitration of the ICC in Paris. In a choice of court agreement, however, parties may also choose between the different forums for dispute resolution provided by the nation states. In the era of economic globalization when the demand for cross-border dispute resolution services is growing, the provision of legal services for international commerce becomes big business. As a result, national business lawyers develop a natural interest in channeling international disputes to their domestic courts. A very effective way to broaden their market share is to submit as many contracts as possible to their own national law. Once a choice of law clause, English law for example, is agreed on, a corresponding choice of court agreement comes quasi naturally, since the courts of other nations have a lack of experience in applying foreign law. Thus, when international business transactions are negotiated, the involved lawyers engage in what is appropriately described as a ‘fight for the applicable law'.

International Sales Transactions - A Series of Simulated Negotiation and Drafting Exercises

This short paper describes a series of simulated negotiation and drafting exercises developed as a tool to teach various aspects of international sales transactions. Students get the opportunity to represent imaginary parties to such transactions and to negotiate on their behalf in front of the class solutions to various real-world problems which they are likely to meet in their future legal or business practice. The series covers the following aspects of international sales transactions: * Drafting an initial memorandum of agreement to cover the main components of the sales transaction; * Allocation of costs and risk in connection with the long shipment: the use of the ICC INCOTERMS; * The UN Convention on International Sales of Goods (CISG): the scope of application of the CISG; its substantive provisions; should one exclude it? Should one exclude some of its provisions? * Modes of payment in international commerce; Letters of Credit; * Allocation of performance risks: drafting a Force Majeure clause; * Settlement of Disputes: choosing between courts and arbitration; drafting exclusive jurisdiction clauses, arbitration and mediation clauses, and choice of law clauses. This type of exercises is very different from those students usually are required to submit in law school, where they are expected to analyze a legal problem and essentially write a judgment - thus implicitly suggesting that all problems should be solved by means of litigation. The premise of this exercise is that in international commerce, litigation is a bad option, due to the extensive costs, significant cultural problems and high level of uncertainty involved, and should only by used as a last resort. Instead, the transaction should be planned and structured in a way that minimizes the risk of a dispute, and when problems arise they should preferably be solved by negotiation.

Czech Republic v. CME Czech Republic BV

439Arbitration — Challenge to validity of Award — Application to declare invalid or set aside — Claim that one arbitrator excluded from deliberations — Claim of res judicata — Excess of mandate — Whether Award ought to be set asideJurisdiction — Parallel treaty proceedings — Whether res judicata arises — Where objection to res judicata waived — Whether objection to abuse of process sufficientApplicable law — Choice of law clause — Where one source of law applied — Whether Tribunal exceeded mandateProcedure — Deliberations — Whether arbitrator excluded — Whether obligation to continue deliberations when two arbitrators are in agreement