Hague principles on Choice of law in international commercial contracts. A quick and dirty comparison with Rome I.

I have delayed reporting on the Hague Principles on choice of law in international commercial contract for exam reasons. The principles (and accompanying commentary) have not taken the form of a classic Hague convention, rather, it is hoped that they inspire practice. Bottom-up harmonisation, in other words. For the EU, the Rome I Regulation evidently already harmonises choice of law hence the principles must not be followed where Rome I applies. However in particular given the principles’ ambition to be applied by arbitral tribunals, they may have some effect in the EU, too.

I asked my students to compare the Principles with the Rome I Regulation. Such quick and dirty scan, without wishing to be complete, reveals the following: (I take a bullet-point approach such one might follow in an exam setting. = refers to similarities; to differences

  • ≠ The Hague principles concern choice of law principles only. Rome I covers applicable law in the wider sense (it also determines applicable law if no choice of law has been made).
  • ≠: The Principles apply to courts and arbitral tribunals. General consensus is that arbitral panels subject to the laws of an EU Member State as the lex curia are not bound by Rome I.
  • ≠The Hague principles only apply B2B, not B2C. They deal with international ‘commercial’ contracts only. Famously Rome I includes and indeed pampers B2C contracts.
  • Purely domestic contracts are covered by Rome I, with choice of law being corrected to a considerable degree. ≠ Hague principles: these do not cover purely domestic contracts because they are not ‘international’.
  • = party autonomy and depecage are supported in both.
  • = universal character: Parties may choose any law, they or the contract need not have any material link with that law.
  • ≠ rules of law. Rome I probably allows choice of State law only (its recitals are inconclusive, as is its legislative history). Hague Principles: allows parties to opt for non-State law.
  • Tacit choice of law is effectively dealt with the same in both.
  • Scope of the chosen law: while more or less similar, one obvious ≠ is that the Hague Principles cover culpa in contrahendo. In the EU, this is subject to the Rome II Regulation.
  • Article 11 of the Hague Principles allow for a wider remit for courts and tribunals to apply overriding mandatory law that is not that of the forum.
  • Article 9(2): formal validity of the contract may be established by many a law that might have a bearing on it. Favor negoti, in other words: as in Rome I.

A fun exercise, all in all. I for one am curious how arbitral tribunals will approach the principles.

Geert.

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