International commercial disputes

7.2. Applicable Law

7.3. Competent tribunal

7.4. International Commercial Arbitration

7.5. Execution of legal and arbitral decision

7.6. Choosing a regulation process

7.1. International commercial disputes

International commercial disputes covers a wide range of conflicts arising from private international commercial transactions. Or, in other words, they cover various conflicts involving counterparts from different countries.

So, due to its multinational essence, international commercial disputes need creation of a special resolution mechanisms. In the most cases ways of international commercial disputes resolution takes places according to the specific clause of the international commercial contract. Such a clause is governed by the parties of the contract and can be based on the law system of one of the counterparts, of any chosen third country, or any type of international law system. This depends on their willingness and consensual decision.

Moreover, the counterpart can make their choice between national judge and private judge, named arbitration.

7.2. Applicable Law

Applicable law is a specific concept of private international law and refers to the national law that governs a given question of law in an international context. A court hearing an action does not necessarily apply its national law to settle the dispute. The law that is actually applicable is determined by the rules of conflict of laws.

Within the applicable law clause their can be pointed that a certain national judge should litigate the conflict between the counterpart according to its national law or according to international law if it doesn't oppose the national one.

So, it is necessary to establish a strict definition of the applicable law in the contract because different law systems provide different rights, obligations, sanctions, etc.

Establishing the applicable law clause the counterpart should keep in mind a set of principles: the principle of the parties intention and the principle of international agreements.

1. The principle of the parties intention means that the counterparts are free in their choice while drafting the contract and they are free in their choice of applicable aw. They should keep an autonomy in their choice, but in the same time they are obliged to respect the rules related to the good behavioural and public order.

Usually the parties of the contract have three possibilities in the context of choosing applicable law:

- retain the law of the exporting country which is the most preferable choice for the seller, but, for example, in French and Belgian law their ruler defend the buyer much more than the seller:

- retain the law of the importing country which is preferred by the buyer excepted the cases mentioned above;

- retain the law of the third country which helps to neutralize legal nationalism and can be judged as a compromise. For the exporters it can be the most reasonable variant to choose a Swiss law as a third country applicable law. Also it can be recommended to choose a third country law which is similar to the law of your country.

In any case, it is necessary for both parties to be aware of the peculiarities of all possible variants dealt with applicable law choice. This will help to avoid most threats hidden in some national law systems for seller, or buyers, or foreign counterparts at all.

Sometimes it is possible that the applicable law has not been chosen and stated in the contract. This may happen when the counterpart have not made a choice by oversight or ignorance or if they had decided that due to the unsolved conflict during the attempt to establish the applicable law the choice of the law would be made by the arbitrator himself. In the last case the possible implications can arise due to possible delays caused by the arbitrator's attempts to find certain law to be applied on between seller's law, buyer's law, ;aw of the country of contract's execution, etc. Such choice could be determined by following factors: place of the contract formation; place of contract execution, place of payment, etc. Also the arbitrator can make his choice of he basis of a set of international agreements in the field signed by the countries of the counterparts.

2. The principle of international agreements supposes that there is a set of international rules agreed by a wide range of countries which are directed at the regulation of possible conflicts in the field of establishing applicable law in the context of international commercial contracts.

There should be mentioned that there is no any single international agreement resolving all the possible conflicts in this field. There two international conventions which have the widest spread in international commercial law, namely the Hague Convention and the Rome Convention (now replaced by the Rome Regulation I).

a) the Hague Convention's full name is Convention on the Law Applicable to International Sale of Goods. It was signed in the Hague (Netherlands) on the 15 of June, 1955. One of the most important clauses of the Convention is Article 3 which states that "In default of a law declared applicable by the parties under the conditions provided in the preceding Article, a sale shall be governed by the domestic law of the country in which the vendor has his habitual residence at the time when he receives the order. If the order is received by an establishment of the vendor, the sale shall be governed by the domestic law of the country in which the establishment is situated. Nevertheless, a sale shall be governed by the domestic law of the country in which the purchaser has his habitual residence, or in which he has the establishment that has given the order, if the order has been received in such country, whether by the vendor or by his representative, agent or commercial traveller. In case of a sale at an exchange or at a public auction, the sale shall be governed by the domestic law of the country in which the exchange is situated or the auction takes place".

For self-study: The Hague Convention – amended version

b) The Rome Convention's full name is The Convention on the Law Applicable to Contractual Obligations. It was signed on the 19th of July in Rome. Nowadays it is replaced by the Rome Regulation I - Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations. This Regulation is based on the main clauses of the Rome Convention. It governs the choice of applicable law in the European Union. The regulation applies to all EU member states except Denmark; while the United Kingdom originally opted-out for the regulation they subsequently decided to opt-in. The regulation sets out which law be used to interpret contracts with an international element (i.e. contracts agreed by parties in different countries). The regulation came into force on 17 December 2009 and applies to contracts concluded after that date. Its rules can be applied to international contracts in the scope of international civil and commercial law. According to the Regulation, "In the absence of choice, where the applicable law cannot be determined either on the basis of the fact that the contract can be categorised as one of the specified types or as being the law of the country of habitual residence of the party required to effect the characteristic performance of the contract, the contract should be governed by the law of the country with which it is most closely connected. In order to determine that country, account should be taken, inter alia, of whether the contract in question has a very close relationship with another contract or contracts".

For self-study: The Rome Regulation I – rest of the clauses.

Date: 2014-12-22; view: 1005