Course: Module:

LLM Programme International Commercial Law

Topic 3: Private International Law (Conflict of Laws)

Christopher McMahon

Choice of law

Having considered jurisdiction in the previous topic, we are now looking at the issue of
choice of law. Determining the choice of law that is applicable to any international
dispute is essentially the “second question” that must be determined in litigating
international disputes; the first question is determining the correct jurisdiction for the
dispute.

Choice of law refers to the body of law that will apply to an international dispute.

Our approach to studying this topic will be similar to that applied to the study of
jurisdiction. We will examine the common law rules regarding choice of law. We will
then study the applicable EU Regulations. Once again, it would appear that if an EU
Regulation (i.e. those Regulations that we are about to examine) applies, then common
law rules have no application if they render a different answer to the Regulation. 1
1
This would seem highly likely based on the decision in Owusu v Jackson. Admittedly this case
deals with jurisdiction, but it is difficult to see how the ECJ would apply a logic other than that in
Owusu, which was, after all, concerned with upholding the primacy of the Brussels
Regulation/Convention. This also appears true by virtue of Article 288 TFEU which provides for
the direct application of Regulations.

1
Proof of foreign law

Where a court in one country has to apply the laws of another, the common law position
is as follows. The law is “proved” to the court that is hearing the dispute by evidence
(usually in the form of an affidavit or expert oral evidence, if necessary). That solves the
first issue that might arise – namely the fact that Irish judges are not experts in Spanish
law.

See for example decision in Kutchera v Buckingham International Holdings Ltd, per
Walsh J:

“If an Irish court is called upon to apply any part of a foreign law the procedures
for doing so are already well settled. See the decisions of the former Supreme
Court of Justice in O'Callaghan v. O'Sullivan [19251 1 I.R. 90 and MacNamara v.
Owners of the Steamship ‘Hatteras’  [1933] I.R. 675. These cases quite clearly
establish that in Irish law foreign law must generally be proved by expert
evidence. The burden of proving foreign law lies upon the party who bases a claim
or a defence upon the foreign law, and if that party produces no evidence, or only
insufficient evidence of the foreign law, the court applies Irish law. These cases
also establish that if there is any conflicting evidence as to what is the foreign law,
or what is the correct interpretation of the foreign law, then it is a matter for the
Irish court to decide as between the conflicting expert testimonies.”

There is also an argument made for a more effective way of considering foreign law,
and avoiding excessive amounts of expert evidence especially for less complex cases.
(Andrew Dickinson, ‘Walking Solo – A New Path for the Conflict of Laws in England’
(2021) Oxford Business Law Blog
(https://www.law.ox.ac.uk/business-law-blog/blog/2021/01/walking-solo-new-
path-conflict-laws-england).)

Common Law rules of choice of law – agreement between the parties

2
Generally, at common law an agreement to apply a particular choice of law to a dispute
will be given effect by common law courts. See for example Kutchera v Buckingham
International Holdings Ltd2. It was said in that case:

“There is no dispute between the parties as to what is the proper law of the
contract. It is quite clearly Irish law because that is the express provision of the
contract according to the agreement of the parties. The proper law of the contract
in this case is Irish law and the parties have expressly agreed that their rights and
obligations under the contract are to be determined in accordance with Irish law,
and to be determined by an Irish court. So far as the proper law of the contract is
concerned there is therefore no question of having to try to discover whether the
contract has, or to what extent it has, a connection with this country. Irish law is
applicable because the parties have chosen it and, in the absence of strong evidence
to the contrary, of which there is none, the parties must be deemed to have
intended to refer to the domestic rules of Irish law… The contract therefore falls to
be construed and interpreted by no law save Irish law, and therefore there is no
question of the Irish courts being called upon to apply any foreign law in so far as
the construction or interpretation of the contract is concerned...

If an Irish court is called upon to apply any part of a foreign law the procedures for
doing so are already well settled. See the decisions of the former Supreme Court of
Justice in  O'Callaghan v. O'Sullivan  [19251 1 I.R. 90 and MacNamara v. Owners of
the Steamship "Hatteras"  [1933] I.R. 675. These cases quite clearly establish that in
Irish law foreign law must generally be proved by expert evidence. The burden of
proving foreign law lies upon the party who bases a claim or a defence upon the
foreign law, and if that party produces no evidence, or only insufficient evidence of
the foreign law, the court applies Irish law. These cases also establish that if there is
any conflicting evidence as to what is the foreign law, or what is the correct
interpretation of the foreign law, then it is a matter for the Irish court to decide as
between the conflicting expert testimonies. The possibility that some foreign law
may need to be applied in a case cannot be a justification for an Irish court refusing
to hear the case.

2
[1988] IR 61.

3
 The parties to the present contract clearly and expressly chose Irish law and it has
not been disputed by the parties in this court that Irish law is the applicable law or
the proper law of the contract. While Irish law is a foreign law to all the parties to
this contract it may not be particularly surprising that they have chosen it in view
of the diversity of laws to which they might have been subject.”

Also relevant is the Irish Supreme Court case of Fraser v Buckle.3 O’Flaherty J stated as
follows:

“A choice of law will normally be given effect to providing it is bona fide and legal
and not contrary to public policy.”4

Common law rules applicable where no agreement

Where there is no agreement, the case of Amin Rasheed Shipping Corp v Kuwait
Insurance Co5 is indicative of the approach that a common law court would take. That
case concerned an insurance contract whereby no choice of law was stipulated. So, the
court had to determine the choice of law applicable based on common law rules.

Donaldson M.R. stated in the Court of Appeal:

“In the instant appeal it is not suggested that there was any agreement between
the parties in express terms or that any such agreement can be inferred.
Accordingly the choice of proper law has to be determined upon accepted
principles governing the conflict of laws and, this being an English court, we have
to apply English principles. The test to be derived from the authorities can be
simply stated: the proper law of any contract is that system of law with which the
transaction has its closest and most real connection… By its nature the test
involves an exercise in judgment, a weighing of a multitude of different factors.
Indeed there is no limit to the number of factors which can be taken into account,
provided only that they have some bearing on ‘the transaction.’ The word is
3
[1996] 1 IR 1.
4
[1996] 1 IR 1 at p 7.
5
[1983] 1 W.L.R. 228. Please note that there is also a decision in the same case by the House of
Lords (in which they dismissed the appeal); see [1984] A.C. 50 for the House of Lords decision.

4
 important because it directs the court's attention to the contractual matrix and
excludes consideration of matters which, although important to one of the parties,
are extraneous to the transaction itself and may be unknown to the other party.”

May LJ, also in the Court of Appeal, wrote:

“Where the parties to a contract have not expressly stated the law which they
agree is to apply to it, by which, amongst other matters, its interpretation, its
validity and the mode of its performance is to be governed, and where their
intention cannot be inferred from the circumstances, the familiar test by which
then to ascertain its proper law is to decide with which system of law the
transaction to which the contract gives rise ‘has its closest and most real
connection’”

So, the Amin case is an example of the common law rules that are applicable to a
contractual dispute, when there is no agreement. Chaplin v Boys6, on the other hand, is
indicative of the common law approach to determining the choice of law when the
parties have not agreed the law that shall apply, in a tort setting. Generally, in such
cases, the applicable law will be the law of the state in which the tort took place. That
general position can, and was, derogated from in Chaplin v Boys.

Chaplin v Boys [1962] 2 All ER 1085.

Respondent injured in road accident caused by negligence of appellant. Both are soldiers
ordinarily resident in England but stationed in Malta. Respondent sues in England and issue is
whether English or Maltese law applies. Maltese law would only allow recovery of special
damages. Trial judge applies English law and CofA affirms. Appellant unsuccessfully appeals to
HL. HL holds that lex loci delicti is starting point for tort. This can be deviated from if some other
State has greater connection with event or the parties. Fact that parties are British subjects
justifies deviation.

Choice of law in contractual disputes – Rome I

6
[1962] 2 All ER 1085.

5
Within the EU, the rules of choice of law with respect to contractual disputes are set out
in Regulation 593/2008 on the law applicable to contractual obligations (the “Rome I
Regulation”). Prior to the Rome I Regulation, the rules were set out in the 1980 Rome
Convention on the law applicable to contractual obligations. The Rome Convention
applies to contracts concluded prior to 17 December 2009. Contracts concluded after
that date are governed by the Rome I Regulation.

Issues that are procedural are subject to the laws of the courts who are seised of
jurisdiction. So, procedural issues are excluded from the ambit of the Convention and
the Regulation.

Recital 6 provides:

“The proper functioning of the internal market creates a need, in order to improve
the predictability of the outcome of litigation, certainty as to the law applicable
and the free movement of judgments, for the conflict-of-law rules in the Member
States to designate the same national law irrespective of the country of the court
in which an action is brought.”

Recital 11 provides:

“The parties' freedom to choose the applicable law should be one of the
cornerstones of the system of conflict-of-law rules in matters of contractual
obligations.”

Recital 12 provides:

“An agreement between the parties to confer on one or more courts or tribunals of
a Member State exclusive jurisdiction to determine disputes under the contract
should be one of the factors to be taken into account in determining whether a
choice of law has been clearly demonstrated.”

Recital 16 provides:

“To contribute to the general objective of this Regulation, legal certainty in the
European judicial area, the conflict-of-law rules should be highly foreseeable. The

6
 courts should, however, retain a degree of discretion to determine the law that is
most closely connected to the situation.”

Recital 17 provides:

“As far as the applicable law in the absence of choice is concerned, the concept of
‘provision of services’ and ‘sale of goods’ should be interpreted in the same way as
when applying Article 5 of Regulation (EC) No 44/2001 in so far as sale of goods
and provision of services are covered by that Regulation.”

Scope of the Rome I Regulation:

Article 1(1) of the Rome I Regulation states: 

“This Regulation shall apply, in situations involving a conflict of laws, to

contractual obligations in civil and commercial matters.

It shall not apply, in particular, to revenue, customs or administrative matters.”

The term “contractual obligations” is likely to be required to be interpreted

autonomously.7

There are a list of exceptions to the scope of the Rome I Regulation set out in Article
1(2). The matters excluded from the scope of the Regulation include: questions relating
to the status or legal capacity of natural persons, certain family and matrimonial
disputes, obligations arising under bills of exchange, cheques and other stated financial
instruments, arbitration agreements and questions governed by the law of companies.

7
See Murray, Holloway et al at 21.006.

7
Rome I does not apply to rules of evidence or rules of procedure. 8 An example is best to
explain this provision. Assume that an Irish Court has jurisdiction to hear a particular
contractual dispute. Assume also that the provisions of the Rome I Regulation stipulate
that English law shall apply in determining the dispute. In this example, the Irish court
will resolve the dispute by applying English law to the contract; however when issues
such as evidence or procedure arise, they are resolved by Irish law (i.e. Irish rules of
evidence and Irish rules of court procedure).

Rome I and the uniform rules – freedom of choice of law

Rome I provides for the choice of law by the parties. Article 3 provides:

“1.   A contract shall be governed by the law chosen by the parties. The choice shall
be made expressly or clearly demonstrated by the terms of the contract or the
circumstances of the case. By their choice the parties can select the law applicable
to the whole or to part only of the contract.

2.   The parties may at any time agree to subject the contract to a law other than
that which previously governed it, whether as a result of an earlier choice made
under this Article or of other provisions of this Regulation. Any change in the law
to be applied that is made after the conclusion of the contract shall not prejudice
its formal validity under Article 11 or adversely affect the rights of third parties.

3.   Where all other elements relevant to the situation at the time of the choice are
located in a country other than the country whose law has been chosen, the choice
of the parties shall not prejudice the application of provisions of the law of that
other country which cannot be derogated from by agreement.

4.   Where all other elements relevant to the situation at the time of the choice are
located in one or more Member States, the parties' choice of applicable law other
than that of a Member State shall not prejudice the application of provisions of
Community law, where appropriate as implemented in the Member State of the
forum, which cannot be derogated from by agreement.

8
Article 1(3).

8
 5.   The existence and validity of the consent of the parties as to the choice of the
applicable law shall be determined in accordance with the provisions of
Articles 10, 11 and 13.”

Absence of agreement as to choice of law under Rome I

Where there is no agreement between the parties as to the applicable law, Article 4
applies. It provides:

“1.   To the extent that the law applicable to the contract has not been chosen in
accordance with Article 3 and without prejudice to Articles 5 to 8, the law
governing the contract shall be determined as follows:

(a) a contract for the sale of goods shall be governed by the law of the country
where the seller has his habitual residence;

(b) a contract for the provision of services shall be governed by the law of the
country where the service provider has his habitual residence;

(c) a contract relating to a right in rem in immovable property or to a tenancy of

immovable property shall be governed by the law of the country where the
property is situated;

(d) notwithstanding point (c), a tenancy of immovable property concluded for

temporary private use for a period of no more than six consecutive months
shall be governed by the law of the country where the landlord has his habitual
residence, provided that the tenant is a natural person and has his habitual
residence in the same country;

(e) a franchise contract shall be governed by the law of the country where the
franchisee has his habitual residence;

(f) a distribution contract shall be governed by the law of the country where the
distributor has his habitual residence;

9
 (g) a contract for the sale of goods by auction shall be governed by the law of the
country where the auction takes place, if such a place can be determined;

(h) a contract concluded within a multilateral system which brings together or

facilitates the bringing together of multiple third-party buying and selling
interests in financial instruments, as defined by Article 4(1), point (17) of
Directive 2004/39/EC, in accordance with non-discretionary rules and
governed by a single law, shall be governed by that law.

2.   Where the contract is not covered by paragraph 1 or where the elements of the
contract would be covered by more than one of points (a) to (h) of paragraph 1,
the contract shall be governed by the law of the country where the party required
to effect the characteristic performance of the contract has his habitual residence.”

Article 4 continues on to provide for several exceptions to these paragraphs:

“3.   Where it is clear from all the circumstances of the case that the contract is
manifestly more closely connected with a country other than that indicated in
paragraphs 1 or 2, the law of that other country shall apply.

4.   Where the law applicable cannot be determined pursuant to paragraphs 1 or 2,

the contract shall be governed by the law of the country with which it is most
closely connected.”

These provisions are described as representing “a residual measure of judicial

discretion where it is felt that particular circumstances do not sit comfortably with” the
rules in Article 4(1) and 4(2).9

Specific contracts under Rome I

Article 5, 6, 7 and 8 deal with contracts for carriage, consumer contracts, insurance
contracts and contracts of employment, respectively.

9
Murray, Holloway et al at para 21.009. See also recital 20.

10
Limitation on the applicable law under Rome I

The following limitations apply to the contractual law (whether derived from the choice
of the parties under Article 3, or by application of the rules in Article 4).

Article 9 provides for overriding mandatory provisions:

“1.   Overriding mandatory provisions are provisions the respect for which is

regarded as crucial by a country for safeguarding its public interests, such as its
political, social or economic organisation, to such an extent that they are
applicable to any situation falling within their scope, irrespective of the law
otherwise applicable to the contract under this Regulation.

2.   Nothing in this Regulation shall restrict the application of the overriding

mandatory provisions of the law of the forum.

3.   Effect may be given to the overriding mandatory provisions of the law of the
country where the obligations arising out of the contract have to be or have been
performed, in so far as those overriding mandatory provisions render the
performance of the contract unlawful. In considering whether to give effect to
those provisions, regard shall be had to their nature and purpose and to the
consequences of their application or non-application.”

Article 21 provides for a public policy exception:

“The application of a provision of the law of any country specified by this

Regulation may be refused only if such application is manifestly incompatible with
the public policy (ordre public) of the forum.”

Scope of the applicable law under Rome I

Article 12 provides:

“1.   The law applicable to a contract by virtue of this Regulation shall govern in

particular: (a) interpretation; (b) performance; (c) within the limits of the powers
conferred on the court by its procedural law, the consequences of a total or partial

11
 breach of obligations, including the assessment of damages in so far as it is
governed by rules of law; (d) the various ways of extinguishing obligations, and
prescription and limitation of actions; the consequences of nullity of the contract.

2.   In relation to the manner of performance and the steps to be taken in the event
of defective performance, regard shall be had to the law of the country in which
performance takes place.”

Choice of law in non-contractual obligations – Rome II

Within the EU, the choice of law applicable to disputes in non-contractual obligations is
governed by Regulation 864/2007 on the law applicable to non-contractual obligations,
also known as “the Rome II Regulation.” So, Rome II applies to, among other things,
disputes in tort.

Some of the recitals to Rome II explain, in a similar way to those recitals in Rome I, the
motivation and purpose of the Rome II Regulation.

Recital 6 provides:

“The proper functioning of the internal market creates a need, in order to improve
the predictability of the outcome of litigation, certainty as to the law applicable
and the free movement of judgments, for the conflict-of-law rules in the Member
States to designate the same national law irrespective of the country of the court
in which an action is brought.”

Recital 8 states:

“This Regulation should apply irrespective of the nature of the court or tribunal
seised.”

Recital 11 states:

“The concept of a non-contractual obligation varies from one Member State to

another. Therefore for the purposes of this Regulation non-contractual obligation
should be understood as an autonomous concept…”

12
Recital 18 reads as follows:

“The general rule in this Regulation should be the lex loci damni provided for in
Article 4(1). Article 4(2) should be seen as an exception to this general principle,
creating a special connection where the parties have their habitual residence in
the same country. Article 4(3) should be understood as an ‘escape clause’ from
Article 4(1) and (2), where it is clear from all the circumstances of the case that
the tort/delict is manifestly more closely connected with another country.”

Scope of the Rome II Regulation

Article 1 provides:

“This Regulation shall apply, in situations involving a conflict of laws, to non-

contractual obligations in civil and commercial matters. It shall not apply, in
particular, to revenue, customs or administrative matters or to the liability of the
State for acts and omissions in the exercise of State authority (acta iure imperii).”

There are a list of exceptions to the scope of the Rome II Regulation set out in Article
1(2). The matters excluded from the scope of the Regulation include: questions relating
to the status or legal capacity of natural persons, certain family and matrimonial
disputes, obligations arising under bills of exchange, cheques and other stated financial
instruments, arbitration agreements and questions governed by the law of companies.

Rome II and the general rule – where damage occurs

Article 4 provides:

“1. Unless otherwise provided for in this Regulation, the law applicable to a non-
contractual obligation arising out of a tort/delict shall be the law of the country in

13
 which the damage occurs irrespective of the country in which the event giving rise
to the damage occurred and irrespective of the country or countries in which the
indirect consequences of that event occur.

2. However, where the person claimed to be liable and the person sustaining
damage both have their habitual residence in the same country at the time when
the damage occurs, the law of that country shall apply.

3. Where it is clear from all the circumstances of the case that the tort/delict is
manifestly more closely connected with a country other than that indicated in
paragraphs 1 or 2, the law of that other country shall apply. A manifestly closer
connection with another country might be based in particular on a pre-existing
relationship between the parties, such as a contract, that is closely connected with
the tort/delict in question.”

Specific torts under Rome II

Articles 5 to 9 provide for a specific law to be applied with regard to several torts.
Specifically, the torts include those related to: product liability, unfair competition and
acts restricting free competition, environmental damage, infringement of intellectual
property rights and industrial action, respectively.

Article 10 concerns claims in unjust enrichment.

Freedom of choice of law under Rome II

Article 14(1) provides:

“The parties may agree to submit non-contractual obligations to the law of their
choice: (a) by an agreement entered into after the event giving rise to the damage
occurred; or (b) where all the parties are pursuing a commercial activity, also by
an agreement freely negotiated before the event giving rise to the damage
occurred.

14
 The choice shall be expressed or demonstrated with reasonable certainty by the
circumstances of the case and shall not prejudice the rights of third parties.”

Sub sections 2 and 3 provide that where “all the elements giving rise to the situation”
are located in a country other than the country whose laws are chosen, the parties’
choice of law shall not prejudice the application of any provision of the law in that other
country, nor shall it prejudice any provisions of EU law, where those provisions cannot
be derogated from.”

Scope of the applicable law under Rome II

Article 15 provides:

“The law applicable to non-contractual obligations under this Regulation shall

govern in particular: (a) the basis and extent of liability, including the
determination of persons who may be held liable for acts performed by them; (b)
the grounds for exemption from liability, any limitation of liability and any
division of liability; (c) the existence, the nature and the assessment of damage or
the remedy claimed; (d) within the limits of powers conferred on the court by its
procedural law, the measures which a court may take to prevent or terminate
injury or damage or to ensure the provision of compensation; (e) the question
whether a right to claim damages or a remedy may be transferred, including by
inheritance; (f) persons entitled to compensation for damage sustained
personally; (g) liability for the acts of another person; (h) the manner in which an
obligation may be extinguished and rules of prescription and limitation, including
rules relating to the commencement, interruption and suspension of a period of
prescription or limitation.”

Overriding mandatory provisions under Rome II

Article 16 states:

15
 “Nothing in this Regulation shall restrict the application of the provisions of the
law of the forum in a situation where they are mandatory irrespective of the law
otherwise applicable to the non-contractual obligation.”

Article 26 provides, in a similar way to Article 21 of Rome I, for a public policy override:

“The application of a provision of the law of any country specified by this

Regulation may be refused only if such application is manifestly incompatible with
the public policy (ordre public) of the forum.”

The public policy override in Rome I and Rome II

Remember, Articles 21 and 26 of Rome I and Rome II respectively, provide for an

override whereby the law of the state which has jurisdiction may override the law that
is applicable for resolving the dispute where the former contains public policy rules
which the latter clashes with.

Fentiman discusses the public policy override in the context of contractual and non-
contractual disputes at 5.22 onwards. He posits that this doctrine is to have “relatively
limited effect in international commercial disputes.”10

For an example of a rule of national law that was overruled by the court of the
applicable forum (i.e. the court which has jurisdiction) see Oppenheimer v Cattermole11
and also see Fraser v Buckle12.

Oppenheimer v Cattermole [1976] AC 249.

Issue of whether iniquitous Nazi citizenship law can be recognised or enforced by English
courts. The law depriving German Jew of his citizenship in 1941 is enforced. Grounds of public
policy may relate to law being penal, confiscatory, in breach of international law. Also considers
lack of judicial knowledge of purpose of legislation and the need for caution to avoid
embarrassing executive in conduct of international relations. Says that O accepts denial of
German citizenship by applying for British citizenship.

10
See Fentiman at 5.22.
11
[1976] AC 249.
12
[1996] 1 IR 1.

16
Fraser v Buckle [1996] 1 IR 1.

Defendants reside in Ireland and are descendants of intestate deceased in New Jersey.
Plaintiff researchers inform defendants of this entitlement. Plaintiffs enter into
agreements whereby defendants will reveal identity of deceased in exchange for one
third of inheritance. Contract is agreed to be subject to English law, plaintiffs conduct
probate in New Jersey at own expense, defendants do not pay out plaintiff’s share of
$750,000. Defendants say agreements are champertous and unenforceable in Irish law.
HC says that agreements are contrary to Irish public policy and are therefore
unenforceable and as a matter of fact, are unenforceable under English law. SC
dismisses appeal and holds that first court must consider validity of contract under
proper law, then whether it conflicts with Irish public policy. Court must consider
carefully fact that contract is enforceable under its proper law. Very clearly
unenforceable at English law. Agreements are champertous and unenforceable in
Ireland.

In Fraser v Buckle, it was held that a contract which was valid under the law that
governs it, but contrary to public policy in Ireland will be unenforceable. 13

Brexit and Conflict of Laws

The UK ceased to be a Member State of the EU on the 31 January 2020. EU rules

remained applicable in the UK, including the Rome I Regulation and the Rome II
Regulation until the end of the transition period on 31 December 2020. While there
have been more considerable changes regarding issues of jurisdiction, the position is
much less complicated for choice of law. The Rome I Regulation and the Rome II
Regulation have been retained in force in the UK and they have been adapted by the
Law Applicable to Contractual Obligations and Non-Contractual Obligations
(Amendment etc.) (EU Exit) Regulations 2019. These effectively allow choice of law
agreements to operate in the same way as before. The Rome I Regulation would
probably achieve a similar result to the application of English common law principles in
any event.

13
[1996] 1 IR 1 at p. 7.

17
Further reading:

Rome I and Rome II Regulations,

Murray, Holloway and Timson-Hunt: The Law and Practice of International Trade (12 th
edition) chapter 21,
Fentiman Chapter 5,
Chaplin v Boys [1962] 2 All ER 1085,
Amin Rasheed Shipping Corp v Kuwait Insurance Co [1983] 1 W.L.R. 228 (Court of Appeal)
and [1984] A.C. 50 (House of Lords),
Oppenheimer v Cattermole [1976] AC 249,
Fraser v Buckle [1996] 1 IR 1.

18