ASSIGNMENT

RESEARCH PAPER ON CONFLICT OF

LAWS IN INTERNATIONAL TRADE
SUBJECT:
INTERNATIONAL TRADE LAW

SUBMITTED BY:
PRATHIT
SAREEN
(03325503520)
YASH SHARMA
(05025503520)

SEMESTER:8TH

BATCH:

2020-2025

JEMTEC SCHOOL OF LAW

 GREATER NOIDA GAUTAM BUDDHA NAGAR, U.P.-
201308, INDIA 2023
ABSTRACT:
In the increasingly interconnected world of international trade, the resolution of legal disputes
often involves navigating a complex web of conflicting laws and jurisdictions. This paper
examines the concept of conflict of laws in the context of international trade, exploring its
underlying principles, challenges, and potential solutions. Drawing on legal scholarship, case
studies, and practical examples, the paper delves into various aspects of conflict of laws,
including choice of law, jurisdictional issues, and the recognition and enforcement of foreign
judgments. By analyzing key legal frameworks and international conventions, as well as
recent developments in jurisprudence, this paper seeks to provide a comprehensive
understanding of the complexities involved in resolving cross-border disputes in the realm of
international trade. Furthermore, it discusses the role of alternative dispute resolution
mechanisms and the growing importance of harmonization efforts in addressing the
challenges posed by conflicting legal regimes. Ultimately, this paper aims to shed light on the
multifaceted nature of conflict of laws in international trade and to offer insights into
effective strategies for managing legal risks in a globalized economy.
KEYWORDS: Conflict of Laws, International Trade, Choice of Law, Jurisdiction,
Recognition and Enforcement, Legal Complexity, Harmonization, Alternative Dispute
Resolution

RESEARCH BACKGROUND
The background for the research in relation to this topic was the subject of conflict of laws
and its application to international trade and transactions as well as from a Malaysian context.
Most of the material for the research was sourced from the internet and comprised articles
written by legal practitioners and legal scholars on the specific areas researched. These were
precise areas pertaining to the subject matter written such as the conflict of laws in relation to
bills of lading, the conflict of laws in relation to the law of the WTO, the conflict of laws in
relation to international commercial arbitration etc..

AIMS AND OBJECTIVES OF THE RESEARCH

This, ‘The Implications of Conflict of Laws Upon International Trade and Transactions and
As Observed From A Malaysian Context – An Overview’ would predominantly be
approached from the perspective of doctrinal study wherein the definition of conflict of laws
would first be addressed at the outset. Hence, the very essence of conflict of laws would first
be explored in detail and once a sound basis for this has been established, only thereafter
would the discussion proceed further to explore its implications upon international trade and
transactions from various economic and trade perspectives and after having done the same,
the discussion will focus upon the conflict of laws as observed from a Malaysian context.
Discussions on the implications of conflict of laws upon international trade and transactions
will be addressed when discussing its relevance and application in relation to the CISG,
WTO, Alternative Dispute Resolution, Intellectual Property, Bills of Lading as a type of
shipping document utilized in international trade amongst other areas of the law deemed
relevant for discussion and analysis. When broaching the subject matter from a Malaysian
perspective, the above-stated areas would be covered with the exception of the CISG. The
topic of discussion aims to identify the many areas of the law concerning international trade
and transactions and from the Malaysian context where conflict of laws is apparent, the
manner in which these conflicts arise, whether these conflicts are capable of resolution and if
not, the manner of dealing with these conflicts of laws issues. The fact of conflict of laws
itself may perhaps be viewed to connote some degree of controversy in the sense that there is
a certain degree of uncertainty involved in the process of evaluating the implications of such
conflicts in the laws.

STRUCTURE AND STYLE OF THE TOPIC OF DISCUSSION

The discussion will include an introduction to the selected topic, its main theoretical
framework, definition of core concepts and clear research hypothesis, coherent presentation
of results in line with academic standards and naturally, a conclusion. The discussion will
comply with the formatting requirements, compulsory style / structure of the dissertation and
the required content in the stipulated sequence. It is proposed that with regards to the style of
preparing the discussion, whilst adhering to the proposed format, the discussion would be
prepared in a systematic manner wherein the law and ideas would be neatly introduced and
discussed. There would be a smooth flow of the same wherein the ideas although distinct,
would be linked wherever this would be possible and thereby evidencing familiarity and
connectivity which would have the potential of engaging the interest of the readers. Upon
presenting each idea or area of the law and discussing the same, it is aimed that analysis of
each area would be embarked upon. This, it is opined, would be a more interesting and
engaging style of writing and presenting the information clearly, concisely and coherently.
Whilst it is aimed to write in a simple and easily comprehensible style, where the subject
matter appears to be technical in nature, requiring detailed analysis, it is proposed that the
intention would be to convey the level of difficulty without over simplifying so as to retain
appreciation of the essence of the technical difficulty. To simplify the task of presenting the
material, chapter headings and sub-headings will be used. It is proposed that a creative style
of writing will be used as the idea is for the topic of discussion to be informative as well as
very importantly interesting and thought provoking.

METHODOLOGY
The general approach would be such that some basic explanation and introduction to the topic
would be necessary at the outset. Hence, an explanation of the meaning of conflict of laws
and as to when this may arise would seem to be fundamental as an introduction to the topic as
the bulk of discussion would be naturally focused upon this meaning and definition in the
first place. In preparing this introduction, current material would be researched from the
internet by using key words to specifically search for the relevant information. There would
naturally have been articles written by academic scholars, students, academicians, practicing
solicitors etc. which may be obtained from online journals or via a search conducted on
Google. Part of the material provided by the lecturers during lectures on the specific modules
may also be used to the extent where this is relevant.
LITERATURE REVIEW
It is incumbent that the topic of discussion also include the theoretical background of the
issues researched, definition of the core concepts as well as where applicable, evidence of
existing research carried out to date in a similar area. In this part of the topic of discussion,
the books and materials used to conduct the research would be listed down. Hence, this
would afford an opportunity to list materials that had provided the background on the topic
researched or which contained research carried out previously which is sought to be used in
the topic of discussion. It would also allow exhibition on the manner in which the research
connects to previous academic studies and perhaps draw a comparison of the difference in the
methods employed by other researchers. The various forms of literature sourced in the
preparation of this topic of discussion are as follow:
1) Articles by legal practitioners and academic scholars which had been sourced through
Google on the internet;
2) Articles on the subject matter researched, sourced from online journals;
3) General information on the subject matter as well as definitions sourced from the Web;
4) Case law and analysis
In the course of researching the material used for the preparation of this topic of discussion, it
was discovered that there were articles written by authors on each subject matter singularly
and that there were no articles sighted which had tackled the subject matter comprehensively
in the precise manner of this thesis thereby conveying a comprehensive analysis of the topic.
Hence, it is surmised that the value of the topic of discussion is seen from this perspective as
a first attempt to tackle various related subject matter on the topic comprehensively in a
consolidated manner.
In essence what may be established is the fact that choice of law is at the heart of or central to
the debate pertaining to conflict of laws (which in some jurisdictions is referred to as private
international law).In attempts to put the horse before the cart i.e. following the proper order
of explanation leading up to attempting to define the conflict of laws, having stressed the
importance of choice of law, it thus becomes incumbent to first analyze the doctrine of the
“proper law” or “applicable law of the contract”. It may be stated confidently that it is
implicit in any contract that a particular system of law or structure of rules or principles
would govern its various aspects.To English common law and to legal systems predominantly
premised upon English law, the expression customarily used is “the proper law of the
contract”.However, in a vast number of other jurisdictions, the expressions “governing law”
or “applicable law” are seen to be more commonly used.The formal expression “the proper
law of the contract” had been defined by Lord Wilberforce in the Amin Rasheed Corporation
case, as being “the law which governs the contract and the parties’ obligations under it; the
law which determines normally its validity and legality, its construction and effect, and the
conditions of its discharge.” In a nutshell, the proper law may be stated to encompass the
predominant although not necessarily all the legal issues that may arise under a contract;
these aspects being the validity and interpretation of the contract, the rights and obligations of
the parties to it and the consequences arising from a breach of the contract.The author R.
Brown in his written work entitled “Choice of Law Provisions in Concessions and Related
Contracts” had the following to state with reference to the relationship between the notion of
“proper law” and contract when he stated, “A contract is the creature of its proper law, and it
is a reference by the parties to a system of law which is to give life to the contract.”Hence, by
this expression it may be noted that a system of law is expressed to breathe life into the
autonomous agreement between the parties, being the contract itself.

CONFLICT OF LAWS ARSING FROM THE OVERLAP

BETWEEN RTAs AND WTO
This chapter essentially aims to address the matter of the application and implication of
conflict of laws in view of the materialization of the Regional Trade Agreements which have
emerged surrounding the deadlock of the DOHA Round negotiations, hence resulting in
greater significance of the situation of conflict in the sense of the clash of laws and areas of
jurisdiction between WTO tribunals and RTAs.It is interesting to note that in view of the
nature of these agreements which have implications and significance from both the regional
as well as the multilateral perspectives, it becomes incumbent for the conflicts arising from
the overlap of these agreements to be addressed accordingly.The issue of conflicts of laws
arises when addressing the RTAs and WTO as a result of the fact that the WTO treaty
negotiators had not foreseen the possibility of probable conflicts of jurisdictions with
RTAs.The difficulty faced is in essence the fact that there is no rule of precedence in
existence giving effect to one set of norms over the other and hence necessitating some
possible suggestions as to the manner in which to appropriately adjudicate in situations where
these conflicts arise.

RTAs DEFINED
Basically, an RTA may be described to be a Free Trade Area (FTA) or a Customs Union.Some
examples of regional RTAs are: NAFTA or MERCOSUR.In recent times, there has been a
trend of global RTAs seen to be entered into between trading entities of distinct continents, to
cite examples: EU-Mexico and EU-Chile.The present discussion will centre upon the
conflicts arising between the members of an RTA which are similarly members of the WTO

WHEN DO CONFLICTS OF LAW ARISE?

The issue of conflict from the perspective of international law, according to scholars such as
Kelsen or Jenks, based upon a rather rigid explanation, would arise ‘if a party to two treaties,
cannot simultaneously comply with its obligations under both treaties.’This is in accordance
to the definition of the WTO Panel on the definition of conflict.The WTO Panel in the matter
of Indonesia-Autos was of the view that a conflict may be perceived to have arisen when two
norms were “mutually exclusive”. Another example of a conflict situation identified by the
WTO Panel may be witnessed in the comments of the WTO Panel in the matter pertaining to
EC-Bananas III wherein the WTO Panel had clearly and perceptively illustrated that a
conflict would arise in a situation where “a rule in one agreement prohibits what a rule in
another agreement explicitly permits.”This case poses as a fine example of a situation of a
direct conflict of the rules as opposed to an overlap and hence would require and answer to
the tune of which rule would take primacy or precedence and the relevant justification for
this.

UNITED NATIONS PERSPECTIVE

The United Nations Convention on Contracts for the Sale of Goods (known as CISG in
abbreviated form) or alternatively the Vienna Convention is a treaty created to unify
international sales law with as many as currently 80 countries (as of September 2013)
having been ratified as signatories to the Convention (a clearly significant portion of the
world), hence, rendering the stated Convention as a highly successful instrument of
uniform international sales law.The Convention was created by the United Nations
Commission on International Trade Law (UNCITRAL) and it had been signed in Vienna
in 1980.The Convention came into existence as a multilateral treaty on 1 January 1988. A
unique and appealing feature of the CISG is the fact that it enables exporters to deter
choice of law matters in the sense that the CISG exemplifies “accepted substantive rules
upon which contracting parties, courts and arbitrators may rely.”The legislative success of
the CISG is partly attributed to its liberal stance of according to Contracting States the
choice or prerogative of being exempted from adherence to particular specified articles.
THE CONFLICT OF LAWS WITHIN THE CISG It is rather ironic to note that although
the very heart or purpose of the CISG was aimed at deterring elements of complications
and ambiguity resulting from a conflict of laws, nevertheless and yet, these rules of
conflict of laws are incumbent in the part played in relation to disputes and matters which
the Convention applies to and is concerned with.
The conflict of laws becomes relevant for assessment and consideration within the CISG
in instances where the CISG excludes a contract or issue from its ambit hence compelling
the adjudicating party to embark upon customary conflicts of laws analysis to establish
and identify the governing substantive law.These conflict of laws rules which may be
referred to are seen to be accessible from the domestic as well as international arena.In
the absence of a contract between the parties, it is customary for the courts to apply the
law of the seller’s place of business, however, in a situation where a domestic purchaser
initiates suit in a local tribunal against an overseas selling party, a tribunal may very well
favour application of the domestic law against that of the foreign seller.To illustrate this
point, an example is cited wherein a contract is seen to be devoid of an effective choice of
law clause and a U.S. buyer were to initiate a suit in a U.S, court against a foreign seller
for damages originating from a breach of implied warranty, a U.S. court may possibly
find that the sales transaction bears acceptable connection to the forum and upon this
basis apply the Uniform Commercial Code to matters not falling within the purview of
the Convention.Further, there may be elements of for example, public policy involved
which may have the effect of influencing a tribunal’s choice of law analysis in favour of
the law of the forum which in this particular instance is that of the buyer’s law.Hence, this
type of uncertainty in applying the conflict rules may have the effect of startling the
foreign seller who may find that unfamiliar laws govern his rights and liabilities.Even in a
situation where a tribunal dictates that a contract and the issues concerned therein are
within the substantive ambit of the CISG, the matter may still be nevertheless concerned
with conflict of laws issues as explicitly evidenced by Article 7(2) which stipulates the
following: “questions concerning matters governed by this Convention which are not
expressly settled in it are to be settled in conformity with the general principles on which
it is based or, in the absence of such principles, in conformity with the law applicable by
virtue of the rules of private international law.”
Hence, from the statements above it is evident that although the aspirations of the
Convention towards achieving a uniform body of autonomous applicable international
sales law seems clearly apparent, nevertheless in realizing certain limitations in those
aspirations, there has been suggestion of the manner in which the gaps in the Convention
are to be addressed i.e. by reference to conflict of laws norms and rules. This has not been
stated impliedly but expressly and thus giving clear recognition to the role, significance
and importance of such rules to fill in the acknowledged gaps in the Convention and thus
supplementing its role. It is thus implicit that a sort of compromise is achieved between
the autonomous role of the Convention and the express sanction to resort to general
principles and conflict of laws analysis where the gaps require adjudication. Upon
dissecting the wording of Article 7(2) of the Convention, it is apparent that the incumbent
task entailed when a dispute is brought forth for adjudication requires a sequence of
analysis in a particular order: At the outset, it is crucial to establish those matters falling
squarely within the ambit or governance of the CISG but yet are not clearly settled within
its jurisdiction; following this, where a matter of this nature exists, it becomes incumbent
to embark upon ‘gap filling’ within the Convention itself by falling back upon “the
general principles upon which it is based”; in the third instance, only in the event that an
adjudicating party is unable to find such general principles, it would then be in order to
embark upon an analysis of the conflict of laws to establish the right law in resolution of
the matter. From the above analysis, it would seem that the Convention falls short of full
autonomy and in this sense its flexibility is also seen to be correspondingly curtailed in
the sense of evolving and adapting to the ever increasing complex demands of trade and
commerce in the international arena, thus depleting its rate of success.To illustrate some
of the shortcomings of the CISG, one looks to the validity exception wherein the
Convention is unconcerned with the issue of validity and hence compelling this matter to
be addressed and adjudicated upon by domestic law, taking account of rules of conflict of
laws, also known as private international law.This in turn results in non-standard
treatment of matters pertaining to validity when addressed under domestic law conflicts
and hence the ensuing uncertainty with regards to the expectations of international trading
parties.The order in which the Convention ranks priority when gap filling with regards to
the application of rules in spheres outside the ambit of the Convention, is to place greatest
significance in the first place to domestic rules and only subsequently the contractual
autonomy of the parties’.Hence, it may be observed that when adjudicating on the matter
of validity, the greater importance placed upon domestic rules overrides the autonomy of
the parties.It would thus seem that owing to the roots of the CISG wherein it had been
formed at a period during which cross-border trade and commerce were merely at the
stage of infancy, it could not have been possible at that stage to envisage the rapid and
complex development of international commerce at the point at which globalization has
advanced it in the present day. It is perhaps safe and fair to state that the drafters had
probably been confronted with a magnanimous task of having had the burden of
formulating a uniform body of sales law for international purpose and acceptance by
Member States and although for the most part aimed at autonomy from an international
perspective, there would logically and necessarily have been intention on the part of the
drafters to allow the adjudicators at a domestic front to adjudicate upon matters that
would as a matters of necessity fall within the purview of Member State domestic
autonomy, such matters that would fall under such manner of adjudication are
unsurprisingly the potentially controversial parts of a contract that would be influenced by
elements such as public policy, type of legal system etc. of a particular Member State and
hence these matters would consequently entail analysis of conflict of laws for effective
settlement. The result at times may seem surprising or even confounding but that is thus
anticipated whenever an analysis of conflict of laws becomes incumbent.

THE CONFLICT OF LAWS AND THE DIFFICULTY IN

IDENTIFYING THE STATUTE OF MANDATORY
APPLICATION – WHETHER DOMESTIC LAW OR
INTERNATIONAL CONVENTION PREVAILS
The principle or theory of conflict of laws naturally dictates that a particular legislation
would not be applicable nor relevant to a dispute with the exception in situations where it
is part of the lex causae adjudicating the particular dispute or in a situation where it forms
part of the lex fori wherein it relates to an aspect of procedure.Detraction from this
entrenched principle is only seen where there is in existence a superseding or
circumventing mandatory piece of legislation applicable to any conflict heard within the
confines of the forum independent of the lex causae.The characteristic feature of a
mandatory rule is such that where it is part of the law of the forum, it would be applicable
owing to interpretation as governing all matters within its ambit. The matter of addressing
the conflict of laws principles in the resolution of disputes arises particularly where both
the domestic law as well as the international convention is silent on the matter of the
ambit of application of the conflict of laws.Hence, in such a situation, there is seen to be
no mandatory rule compelling application. Where a particular domestic law is seen to be
silent on the scope of application of conflict of laws theory, certain academic scholars are
of the opinion that the domestic law ought to be deciphered from the perspective of a
rebuttable presumption against the application of foreign law. The exception to this is
seen from the views of scholars such as Dicey and Morris who quite logically state that
the presumption against the application of foreign law may be rebutted with ease in
matters pertaining to the application of maritime law, the reason or justification for this
being explained that legislation concerned with international transport would naturally be
reflective of public policy considerations which is the basis of the unified aspect of laws
pertaining to international transport and logistics which are normally designed to achieve
certainty and facilitate commercial enterprise.In this regard, to lend credence to the
importance of the public policy element where the consolidation and unification of
international laws are concerned, these scholars cite as examples, English law in the form
of the Carriage of Goods Act 1971 which has in effect incorporated the Hague-Visby
Rules into English aw, to impress the importance of legislation relating to international
obligations (of which maritime law is included) as being more inclined to be treated as
superseding in nature and application. Having stated this however, it is implicit to note
based upon the illustrations postulated by Dicey and Morris that these scenarios relate to
legislation which had directly included or encompassed international conventions into
English laws and further, another obvious or conspicuous feature is the fact that these
conventions contain clauses which specifically state the circumstances where the
convention would be applicable.In ambiguous situations where it is unclear as to whether
domestic law or foreign law is applicable, there are scholarly views which are inclined to
favour the application of the ‘Mischief Rule’ wherein interpretation of the statute would
be undertaken based upon its intention and surrounding circumstances and by doing so,
attempting to fill in the gaps in the law left by the legislating body if in the first place
focus had been made to these matters.Thus, from the discussion above, it is apparent that
there are more intrinsic difficulties apparent in the precepts of the application of the
conflict of laws on the matter of rights of suit under bills of lading as from a micro
perspective, when the matter involves an inter jurisdictional or international transaction
and there are a set of domestic laws in place governing certain aspects of international
trade, then naturally issues of conflict may arise when deciding whether foreign laws or
those which have been incorporated by ratifying international Conventions would take
precedence over domestic laws governing the same subject matter when both forms of
legislation are silent on the matter as to which legislation would take precedence in
applicability. Even where the legislations are clear on the scope and ambit of applicability,
there are further innate issues to resolve such as whether the applicability would be in
relation to the substance or the form of the matter in dispute. In light of these unresolved
matters, there is scholarly though to suggest that in order to fill in the gaps perhaps
inadvertently left by the lawmakers, lacking foresight at the time of formulating such
laws, it would be in order to resort to the ‘Mischief Rule’ for the sake of interpretation
wherein regard and consideration may be had for the intention of the law and the
circumstances surrounding it in efforts to resolve matters of conflict of laws. It is
postulated that this would be the natural and logical way forward in these matters as the
application of such rules of interpretation have the sanction of the law and lawmakers as
catering for these types of scenarios hence implicitly recognizing that the laws cannot
always be clear and encompassing in all situations.

CONCLUSION
Conflicts of law in international trade refer to situations where the laws of different
jurisdictions come into conflict with each other, creating legal uncertainty or
inconsistency regarding the rights and obligations of parties involved in cross-border
transactions. These conflicts can arise in various aspects of international trade, including
contracts, intellectual property rights, jurisdictional issues, and dispute resolution.
Here are some common areas where conflicts of law may occur in international trade:
Contractual Agreements: International trade often involves contracts between parties from
different countries. These contracts may specify the governing law and jurisdiction for
resolving disputes. However, conflicts can arise if the chosen law is different from the law
that would otherwise apply based on the location of the parties or the subject matter of the
contract.
Intellectual Property Rights: Intellectual property laws vary significantly from one
country to another. When dealing with patents, trademarks, copyrights, or trade secrets in
international trade, conflicts of law can arise regarding the scope of protection,
enforcement mechanisms, and the validity of intellectual property rights across different
jurisdictions.
Jurisdictional Issues: Determining which country's courts have the authority to hear a
dispute can be complex in international trade. Conflicts may arise when parties disagree
on the proper jurisdiction or when courts from different countries claim jurisdiction over
the same dispute. This is particularly relevant in cases involving online transactions or
multinational corporations with operations in multiple countries.
Choice of Law: Parties involved in international trade often have the freedom to choose
the governing law of their contracts. However, conflicts can arise if the chosen law
conflicts with mandatory laws of another jurisdiction or if the parties did not clearly
specify the applicable law in their agreements.
International Arbitration and Alternative Dispute Resolution (ADR): Many international
contracts include arbitration clauses to resolve disputes outside the court system.
However, conflicts can arise regarding the enforceability of arbitration agreements, the
selection of arbitrators, and the recognition and enforcement of arbitral awards across
different jurisdictions.
To address conflicts of law in international trade, parties often engage in careful drafting
of contracts, including choice of law and jurisdiction clauses, and may seek legal advice
to navigate the complexities of cross-border transactions. Additionally, international
conventions and treaties, such as the United Nations Convention on Contracts for the
International Sale of Goods (CISG) and the New York Convention on the Recognition
and Enforcement of Foreign Arbitral Awards, provide frameworks for resolving conflicts
and promoting uniformity in international trade law.