PARTY AUTONOMY

There is no definition of the above term in many legal spaces. Many legal systems have
refused to define the exact parameters of this term. Although many systems allow to choose a
particular applicable law, few systems also emphasise the idea of having a deemed
relationship, i.e. demographic or geographical relationship with the other party.1 This
particular requirement within a geographical nexus is one of the numerous tools where other
systems gave out with respect to this requirement entirely. Party Autonomy is rounded as an
unfettered freedom to choose a definitive law which restricts a position of a party to exploit a
dominant position.

When in a court it is challenged that a contract in some manner is connected with several
jurisdictions, a resolution of the conflicts issue of applicable law is properly anterior to a
decision on the merits. Although this task is no less imperative when the problem involved is
one of interpretation, performance, or discharge, the question has arisen most often and
proved most troublesome in regard to the validity, in whole or part, of the contract. But, still
the courts look into checks which are established form and determines the validity in an
accordance:

 Lex loci contractus i.e., law of the place where the contract has been executed or
performed gives an answer that the particular principal event has been established at
this place necessary to make a binding obligation.
 Lex loci solutionis i.e., the law of the place where the contract was to be performed.
The basis of determination in this head determines that exactly where was this
contract supposed to conclude.
 The law of either side which is place of making and place of conclusion, whichever
upholds the contract.
 Proper Law i.e., Intention of the parties to applicate the provisions of the said
contract.

In the ongoing legal sphere considerable attention has been entrusted upon Proper Law which
perhaps is independent to judicial choice of law. Hence, the issue of choice of law where
local law has been made applicable is only limited to those cases where parties have
expressly mentioned that they are desirous to choose local law over other law, this answers to

1
Regulation 864/2007 Law applicable to Non-Contractual Obligations
the previous question that party autonomy upholds to its merit even up to the fulfilment of
parties to merely choosing municipal or local law.2

Theoretically, there appears to be no sound objections to permitting contracting parties to

select the law governing the validity of their contract on the conditions if - (1) the chosen law
has some meaningful connection with the contract, (2) the choice of law is freely arrived at
on a basis of equal bargaining power, and (3) compelling public policy considerations,
particularly as embodied in local protective statutes, do not dictate application of the law of
the forum. Lord-Denning remarked that it was one of those difficult cases where it was not
easy to apply the test of real connection with the contract. The important pointer to the
solution was that (1) “in a contract of charter-party, other things being equal, the law of the
ship should govern.”3 One important circumstance was that the contract was made in
Rotterdam by Dutch charterers for shipment at Rotterdam; that points out to Netherland Law.
Another important circumstance was that the contract was for carriage on high seas in an
English ship owned by English owner; that points out to English Law. 4 Put these two into
scales, one finds they are equally balanced in weight. There is nothing to choose. So, as a last
resort, one has to take the law of flag, which is English Law. It was also observed that what
was significant in the test was the connection sought between the transaction contemplated by
the contract and the system of law and thus more importance was to be attached to “what is to
be done under the contract — its substance — than to considerations of the form and
formalities of the contract or considerations of the lawyer's point as to inference to be drawn
from the terms of the contract”5.

2
Conflict of Laws: "Party Autonomy" in Contracts Columbia Law Review, vol. 57, no. 4, 1957, pp. 553–576.
JSTOR, www.jstor.org/stable/1119750.
3
Wengler W, 'The Significance of the Principle of Equality in the Conflict of Laws.' (1963) 28(4) Law &
Contemp Probs 822
4
Yetano T, 'The Constitutionalisation of Party Autonomy in European Family Law.' (2010) 6(1) J Priv Int'l L
157
5
Lee K, 'A Study on the Role of Party Autonomy in Commercial Arbitration.' (2009) 19(2) J Arb Stud 9