I. Topic One: Introduction to Conflict of Laws
T HE F OUR C LASSIC A PPROACHES
1.S INGLE C ONCEPTS OR P RINCIPLES –T HE F IRST A PPROACH
?The Statuists: from the 13th to the 18th C, the statuists tried to find a solution to conflicts arising from the
multiplicity of small states and their local laws. The simplistic theory was used.
?Napoleon, Mancini and the law of the citizen: Influenced by the personal law theory of the statuists, the French Civil Code invoked the law of the citizen for questions of status and capacity. Because the C.C. was considered superior, all French citizens should benefit from it, wherever they were. Mancini advanced the lex patriae theory further in the second half of the 19th C. The law of the ship’s flag, as a concept, is very similar to the concept of the law of the citizen of Napoleon and Mancini.
?Savigny: suggested that there could be a common theory of conflicts for all nations. It was necessary to classify legal relationships, not laws, and not by their object, but rather by their place (or “seat”) The seat was determined by
4 factors or contacts: (1) the domicile of the parties; (2) the geographic location of the object or thing in dispute; (3)
the place of performance of a juridical act, or (4) the forum.
?Story, Territoriality and vested Rights: based his writings on …comity,? the principle that one state should
recognize the legitimate laws of another so that the laws of the first state will also be recognized when appropriate.
Appropriateness was usually found in the recognition of the laws of a particular territory. Law of the flag can be described as an off-shoot of the territoriality theory.
?Lex Fori – Cook & Ehrenzweig: Local law (lex fori) provides virtually the only justice in conflicts cases.
?The Proper Law: the …proper law of the contract? was used by Westlake who defined it as “the law of the country with which the contract has its most real connection.” See more at p.10. Also …most significant relationship??The American Conflicts Revolution: American courts do not necessarily follow any particular contemporary conflicts theory but often apply one theory, or part of it, on one occasion and another theory (when seemingly
convenient) in other circumstances. Currie was instrumental in developing the distinction between true and false conflicts. In false conflicts, only one state had a genuine interest in having its law applied. This state was usually the forum. In true conflicts, where both states had such a genuine interest, Currie advocated application of the lex fori in all cases, refusing to weigh the competing interests if the laws concerned, on the ground that such a task belonged to Congress, and not the courts. The American Conflicts revolution has led the world in development of choice of law rules in both contract and tort.
? Problems with the American approach at p. 17 (TEXT)
? National in Theory
? National in Practice
? No stimulus to look outward
?How to evaluate …interests?
? Is equity the criterion
? Problems with the legal system
? Cri de coeur
? American Public Social Services
? Distributive vs. corrective (American) justice
? Conclusion – American conflicts theory: One may conclude that the American system of conflicts of law is very advanced, is the subject of intense legal writing and thinking, but in many respects is very peculiar to the US. The social and legal system in America is corrective rather than distributive in approach. And it is the private insurance industry which is expected to provide the benefits to society after suit, rather than the government, which in most other industrialized countries provides social services to the whole population without suit through social programmes. The American system thus favours litigation rather than government distribution of benefits and this, in turn, causes a different approach to problem-solving in the conflict of laws. Inequalities in compensation are thus generated by the system. Because of these inequalities, many of the various forms of American conflict of law theory look to equity to solve conflict problems, rather than seeking the properly applicable law.
2.M ULTIPLE N UMBERED R ULES (“P RIVATE C ONFLICT C ODES)–T HE S ECOND A PPROACH
?Dicey & Morris: present conflicts of law rules as decided by English courts and occasionally disagree with the decisions and present alternatives.
?McLeod: proposes 205 rules: The first 4 refer to generalities and to jurisdiction, but the remainder consist of specific and detailed rules for very particular questions. Accepts that issues such as domicile, residence and situs are really only connecting factors.
?The First Restatement (1934):
?The Restatement Second (1969): Similar to Savigny?s legal relationship but the relationship is the government?s or the state?s whose interests are such that the law of that state should apply: “a court, except for constitutional
restrictions and a directive of its own state, will choose the law which best reflects the relevant needs, policies and interests of the interested states on the question, providing the law so chosen also reflects the principles of certainty, predictability and uniformity, as well as providing ease of determination and application.” This provides the most authoritative solution to conflicts of laws in the U.S.
3.G ENERAL T EXTS,C OMMENTARIES AND E SSAYS –T HE T HIRD A PPROACH
? P.25
4.T HE M ODERN A PPROACH –N ATIONAL L EGISLATION AND I NTERNATIONAL C ONVENTIONS –T HE F OURTH
A PPROACH
? If the most important recent theoretical finding in conflict of laws has been the most significant relationship or closest and most real connection theory, the most important recent approach to resolving conflicts has been
international conventions and national legislation on conflict of laws.
?National Laws: p.28
?The Hague Convention: provide great authority and influence, attaining at times the stature of customary
international law.
?Rome Convention (1980): see p.30.
? Applies uniform choice-of-law rules to contracts with very few exclusions
? applies to contract conflicts in 12 states and overrides their domestic laws
? applies to conflicts between different legal systems in a single state because …country? is defined in a.19 as one of several territorial unites in a single state
? Applies to conflicts involving the laws of states not party to the Convention, whenever those laws are subject of consideration under the Convention. Thus, it will apply to Canadian contracts when they come before the courts of the signatories of the Rome Convention.
? applies to commercial as well as to consumer and employment contracts and contracts between non-merchants.
? A.18 reinforces the international character of the rules and the desirability of achieving uniformity in their
interpretation and application.
? The Rome Convention has effect outside the EU, and any European Nation may adopt it, as Finland has done.
?The New national maritime conflict laws: p.32
?The new doctrine: p.32
? Conclusions: General advances in the state of conflicts law will not come from the courts, which are weighed down with diverse and heavy work loads. Although doctrinal writings of the past have been replaced in large part by national legislation and international conventions, the profs must continue to refine and publish their theories.
II. Topic Two: General Conflict of Laws Theory
? But even the 4th approach, national conflict laws and international conflict conventions, is not a complete answer. The courts, practitioners and academics require a consistent method and order to apply those laws and conventions when solving a particular conflicts problem. What is called for is a consistent and uniform methodology.
I.S OME G ENERAL PRINCIPLES OF C ONFLICT OF L AWS
1.Substance & Ancillaries v. Formalities (as opposed to substance v. procedure) (p.47 TEXT)
? Traditionally, matters which were substantive were subject to their own law, even if it was a foreign law. Matter which were deemed procedural were subject to the law of the forum (lex fori). Most authorities start out with the procedural/lex fori rule, but then present so many exceptions and have such difficulty in distinguishing substance from procedure that little remains of the doctrine.
? This should be replaced by distinguishing between substance and ancillaries, and formalities of the forum court.
Furthermore, it is preferable to determine the proper law of each relationship or of each ancillary.
?Substance: the legal relationships (contracts and torts/delicts) which have a proper law of their own and which proper law is usually not the forum.
?Ancillaries: the time limitations, cross-defences, rules of evidence, presumptions, burdens of proof, order of proof, etc., which affect or quality the legal relationship. They were classically deemed procedural (and thus of the forum) but, in reality, ancillaries have a proper law of their own, which is usually identical to the proper law of the contract or tort/delict to which they are connected.
?Formalities of the forum court: are of the forum only and are administrative: the method of drawing up and serving the writ, when, where and how the court sits, how the trial is conducted, who questions the witnesses, whether there is a trial by jury, how foreign law is proven, etc.
a) Substance and Procedure – The Unrealistic Distinction
? The classic substance/procedure dichotomy of the conflict laws was to declare that matters of procedure are
governed by the domestic law of the forum. Despite the absolutism of their dicta, the authorities always follow with a general plea of the difficulty in making the substance/procedure distinctions. i.e. “The difficulty in
applying this Rule lies in discriminating between rules of procedure and rules of evidence.” And thereafter
follows a long discussion of exceptions with respect to witnesses, presumptions, estoppel, set-off and counter-
claim, priorities, statutes of limitations, etc.
?Lord Wilberforce in Miliangos: expresses best the ambivalence of the current UK position on substance and procedure. The dichotomy is accepted but it must be circumvented if it causes injustice. The HoL was able to
order the payment of a debt in Swiss francs, as claimed by the creditor, rather than in pounds sterling, which a
strict application of UK procedural rules would have mandated, because the proper law of the contract was Swiss, as were the money of account and the money of payment: “though English law (lex fori) prevails as regards
procedural matters, it must surely be wrong in principle to allow procedure to affect, detrimentally, the substance of the creditor?s rights.
?First Restatement: all formalities are governed by the law of the forum. Ancillaries are declared to be subject to the same treatment. Despite the averment of the First Restatement, however, ancillaries do have a proper law of their own.
?Second Restatement: Breaks the mould and does not attempt to distinguish substance from procedure. Rather, it properly describes procedure as the law with which the forum state has the most significant relationship. s.122: “A court usually applies its own local law rules prescribing how litigation shall be conducted even when it applies the local law r ules of another state.” Thus sections of ch.6 which designate the law of the forum as the applicable law in all cases deal with formalities rather than procedure: see examples at p. 52. However, certain procedural rules in Ch.6 a contain exceptions which a llow the court to apply a foreign law under given circumstances: “when the substantial rights and duties of the parties would be affected by the determination of the issue (s.125), where another state has “the dominant interest in the question”, and where “the primary purpose of the relevant rules of the state of the otherwise applicable law is to affect decision of the issue rather than to regulate the conduct of the trial.”
?Conclusion: the Restatement Second does not invoke the procedure/substance dicho tomy but invokes the …local law of the forum? which determines the question …unless the substantial rights and duties of the parties would be affected? by the determination of the issue by the law of the forum. This is admirable.
?National Laws: see p.53ff. Many national laws invoke procedure and substance in varying degrees.
?Quebec: a.3132: procedure is governed by the law of the court seized of the matter. Fortunately, the role of procedure would seem to be limited because certain issues, which normally might be considered
procedural, have been given a proper law of their own. See a.3130 (evidence), 3131 (prescription) and 3133
(arbitration).
?Rome Convention 1980: Excludes evidence and procedure from its ambit (a.1(2)(h)). It does, nevertheless,
include provisions on specific issues traditionally considered procedural. (see p.60) Each is governed by its own proper law. The conflicts rule concerning modes of proof is more flexible: any mode of proof is admissible if
acceptable either in the lex fori o r the law under which the contract is properly and formally valid, …provided that such mode of proof can be administered by the forum.” A reading of the Rome Convention demonstrates that the substance/procedure distinction is no longer of major importance.
b) Ancillaries – A Proper Law of their Own
? Formalities of the forum court are decided by the lex fori, including the preparation of writs and written
pleadings and forms and their service in the jurisdiction. Decisions, too, are taken by the forum court in respect of other matters, but the forum court does not necessarily apply the lex fori. Thus, ancillaries (time limitations,
presumptions, cross-defences, BoP, etc.) which were traditionally deemed procedural, have a proper law of their own, which may be the foreign law or the lex fori, but usually the law of the subject matter to which they are
ancillary.
?Cross-defences: despite the generalization of many authorities, are not necessarily procedural and are not
necessarily subject to the lex fori.
?Time Limitations: are not necessarily subject to the lex fori, rather, they are rights, each of which has a proper law of its own, usually attached to the right which it prescribes. While the proper law may be a foreign law or
may be the lex fori, it is better to start with the generalization that time limits are not of the forum.
?Burden of Proof rules: have proper laws of their own and are not necessarily subject to the lex fori, even if
rebuttable.
?Damages: damages, including interest (rate and date from which it runs) and currency were historically left to the forum as being procedural. Subsequently, remoteness and heads of damage were deemed substantive and the calculation of damages was deemed procedural.
? See also Burden of Proof, order of Proof (substantive), conduct of the trial (lex fori) and formalities of the forum court (lex fori), parol evidence rule (proper law of the contract), and statute of frauds (proper law of the contract) at p.64-5.
c) Formalities of the Forum Court
? Include the method whereby a writ is drawn up and served; when, where and how a court sits; whether a civil jury trial may be held; who questions witnesses; etc (p.65). Formalities of the court follow the lex fori and are
unconnected to any right or accessory right.
?The Australian Law Reform Commission referred to this as the “mechanisms of litigation.”
?The Arrests of Ships Convention (1952) reflects a proper understanding of “procedure” as consisting of the
formalities of the forum court.
? The 3 limit ation of shipowners? liability conventions generally deal with the substance versus formality
distinction, as well as the classic substance vs. procedure dichotomy.
? In conclusion, the substance/procedure distinction must be discarded for 3 principal reasons: 1) because it is difficult to make; 2) because the distinction usually results in a “forum bias”; and 3) because matter procedural are not necessarily of the lex fori. A better distinction is between substance and ancillaries, and formalities of the court.
? In every case, it would be better is the proper law of each legal relationship (contract or tort/delict) and of each ancillary should be determined individually, by the employment of a consistent methodology. In this way, the forum court may well decide to recognize a foreign law as the proper law in respect of torts (i.e. ship collisions) or contracts (i.e. marine insurance, charterparties, bills of lading) as well as such ancillary matters as time limitations, presumptions and cross defences (set-off, recoupment, compensation and counterclaim), burden of proof and order of proof. All of which ancillaries may or may not have the same proper law as the principal proper law. The forum court should only apply the lex fori if it is the proper law of the legal relationship or ancillary, or in the case of a genuine formality of the forum court system.
2.Renvoi Rejected (p.73 TEXT)
? Renvoi is the application of the conflict rules of one state by the court of another state, in order to solve a conflict problem. Renvoi is a procedure which seems worthwhile in only a very few cases, where its application is so very arbitrary that its place in the conflict of laws is questioned. Renvoi is specifically excluded by the Rome Convention 1980.
?Single renvoi: t he referral by the forum court to the conflict rules of a foreign state (but not the foreign state?s renvoi rules). Thus the forum court applies the domestic law specified by the foreign conflict rules. If there is a reference back to the forum?s domestic law, this is known as …remission.? If there is a reference on to the domestic law of a third state, this is known as …transmission.?
?Double Renvoi: is the referral by the forum court to the conflict rules (including the renvoi rules) of a foreign state.
Thus the forum court applies the law specified by the foreign conflict rules including the foreign renvoi rules. In the case of double renvoi and remission, it is possible that the forum court will send the case back again, resulting in an endless game of judicial ping-pong. Similarly, once transmission has taken place in the case of double renvoi and the recipient (third) state invokes its conflict rules, the renvoi may go onwards or back again and endless judicial orbiting could ensue.
?History of Renvoi: see p.74
?Purpose: Renvoi was developed to counteract the territorial theory (of J.Story), the citizenship theory (Napoleon and Mancini) and law of the flag in maritime law. These 19th C. theories often resulted in incongruous solutions to conflict problems, with the result that, in many cases, renvoi was chosen as the solution, albeit artificial. Renvoi was adopted by modern theories to overcome occasional absurdities and incongruities of result. However, with the more realistic …closest and most real connection? (…most significant relationship?) test in the forefront, renvoi is no longer necessary. For example, an early American decision, The Coastwise, used renvoi when the …most significant relationship? test would have reached the same conclusion by a more convincing route.
? Renvoi, it was argued, would achieve uniformity in conflicts cases, regardless of where a judgement was rendered. In other words, the application of the conflict rules of a foreign state with an interest in the conflict was supposed to result in the same solution that the foreign court would have provided. True uniformity of decisions, however, is difficult to achieve in this manner because renvoi, by its nature, is applied indiscriminately (à la pièce) for a short-term solution.
?Renvoi was often used as a crutch to obtain an …equitable? or …convenient? result, before the development of the most significant relationship test. Proper, uniform and consistent conflict of law rules, theory and methodology should be applied in order to obtain the just and proper result, not renvoi, which is an indiscriminate and uncontrollable conflict of law tool. Renvoi is an antiquated escape hatch, no longer necessary under modern private international law theory, national conflict statutes and international conflict conventions (all of which, incidentally, usually have escape hatches exceptions based on the closest and most real connection).
? Renvoi is accepted less and less today. It is nevertheless interesting to see how renvoi has been treated by authorities. ?First restatement: did not permit renvoi except in cases of foreign law involving title to land or divorce.
?Second Restatement: rejects renvoi but with 2 exceptions: 1) when the forum?s conflict rules aim to …reach the same result? as would be reached in the other state?s court; or 2) when the forum has no …substantial relationship? to the issues, and when the local law rule would be chosen by all interested states. In other words, renvoi is permitted when there is no real conflict of laws. It would have been better to have rejected renvoi altogether and to have applied the most substantial relationship rule.
?English Authorities: have usually accepted renvoi, only to qualify their acceptance by explanations, criticisms and restrictions. Thus, Dicey & Morris, and Cheshire & North conclude that English courts have rejected it, except in very limited cases (i.e. essential validity of wills and intestate successions, certain claims regarding moveables and foreign immoveables and some questions of family law).
?French Authorities: an accepted doctrine according to Pierre Mayer, especially prevalent in matters of succession and divorce. Renvoi is justified on the basis of 1) delegation; 2) subsidiary rules; and 3) coordination. The exceptions provided, however, seem to contradict his whole general theory of renvoi, because they fail to contribute to uniformity of result, which is his aim.
?Batiffol & Lagarde: accept renvoi as being workable in practice in some cases, although recognizing the theoretical objections to the concept and opposing its general application. They justify it as achieving the goal of international coordination of conflicts rules, and offer 2 solutions to the problem which arises when the conflicts rules to the
desig nated country refer back to the law of the previous country (the …ping-pong? problem). They reject renvoi in areas where the party autonomy principle applies, such as contracts and matrimonial regimes. However, this theory does not seem workable since they propose no uniform, consistent or logical application.
? See others: at p.79ff
? UNCITRAL Model Law 1985: p.80
? The 1955 Hague Convention on Renvoi: p.81
? Rome Convention: p.81
? The Convention on Nuclear Ships (p.81)
? National Laws: p.82ff
? CCQ: rejects renvoi at 3080.
? Renvoi is the reference by the court of one state to the conflict of law rules of another state. It should not be confused with the specific choice by the parties of the conflict of law rules to be applied to a contract. The Rome Convention 1980, for example, at art.15 does not exclude the choice of conflict rules by the parties to a contract. Choice of law rules, however, should not be assumed to be part of a general reference in a contract to a state?s laws. The choice of conflict rules in a contract should be express and should exclude renvoi to avoid all the problems that renvoi entails. See example at p.86.
?Renvoi and Maritime Law:
? One suggested application of renvoi to maritime law is in the sale of ships, when the ship lie within the jurisdiction of another state. Three authorities have opined in respect to title to moveables that it could be important for the forum, through renvoi, to ensure that the result it reaches will accord with what would be obtained by a court
in the foreign state. What the authorities should have held is that the proper law of the registration of title is the law of the place of the ship?s registry, but that the proper law of the agreement to transfer the title may be some other law. This will satisfy the seeming necessity to reconcile the laws of the 2 jurisdictions. They might also have suggested that this is a case of forum non conveniens and the forum state should stay the action, sending it to the place of the proper law for decision.
?Maritime Law Decisions on Renvoi:
? See cases at 88ff.
? The decisions illustrate that renvoi, when used, has for its intention the avoidance of an unpleasant result, but is carried out without any basic and consistent application or methodology.
?Conclusions:
? Renvoi has never been a fully understood or developed principle. It has had diverse (but rare) uses and many exceptions. It has been the subject of many definitions and as a principle has no uniform body of doctrine,
reported cases or legislation.
? Renvoi is therefore a rare exception which cannot be applied with any legal consistency.
? Renvoi has been used to counter incongruities arising from the application of the 19th C territorial rules, the nationalistic …citizen theory? of Napoleon and Mancini a nd the prime maritime conflict rule of the past – the law of the flag. It is on occasion used today to avoid the oppressive pressures of the lex fori.
?Renvoi is no longer necessary when the most significant relationship test is used to assist in determining the proper law. Renvoi is quite unnecessary in a consistent methodology, used to reach the properly applicable law.
? Most cases which have been solved by renvoi would have been better solved by the closest and most real connection test or by forum non conveniens.
? Reference in a contract to the law and conflict of law rules of a particular state is not renvoi, and is valid unless the public order/policy or mandatory rules of the otherwise proper law are not being evaded.
? Renvoi should not be used as a means to apply what the forum court may deem to be an equitable solution.
Equity should not be the principal role of renvoi or even of conflicts of law. Justice can be obtained in a conflicts case through proper conflict rules applied in a consistent methodology. The judicious use of forum non conveniens is a part of that methodology and will usually avoid the need to invoke renvoi.
? Renvoi is a short-term conflict rule which abandons the whole rational philosophy of private international law.
It is a virtually uncontrollable, indiscriminate, solution to a single problem which in turn places any rational system of conflict of laws at risk, if it does not abandon it completely.
?Therefore, renvoi has no place in the conflicts of law.
3.Public Order/Policy (p.99 TEXT)
?Domestic public order: concept of civilian jurisdictions and consists of high standards of morality and social conduct in a civilized society. It is rarely precisely defined, rather, it is usually invoked in general terms in a basic article of a state?s civil code.
?Domestic public policy: concept of common law jurisdictions and consists of fundamental principles of natural justice found in a state?s constitution, bill of rights, laws, regulations, precedents and accepted custom. Public poli cy is usually deemed less inclusive than public order, but in practice plays a similar role.
?Public order (ordre public) has been translated on occasion as …public policy.? This has unified the law between the common law and the civil law, at the expense of accuracy.
? domestic public order/policy of the forum is different from international public order/policy of the forum. For example, a bigamous marriage would not be permitted under the domestic public order of most Western countries.
Nevertheless, once the second marriage has been validly (formally and materially) carried out in some Eastern
country, the Western state would not consider the second marriage contrary to international public order/policy. This is because, in the conflict of laws, it is t he forum?s international public order/policy which is applied and, under that public order, the foreign bigamous marriage, which is valid under the law of the foreign state, is not offensive.
?Mandatory rules: compulsory rules of law found in applicable international conventions or national statutes, which cannot be contracted out of. They are usually found in a business or commercial context and sometimes override an express choice of some other law by the parties to a contract.
? Mandatory rules have virtually the same authority in domestic law as public o/p, but have a different and lesser role in the conflict of laws, as in the Rome Convention. Mandatory rules might also be defined as binding rules of law imposed by legislation or international convention. Mandatory rules (overriding statutes) have very
appropriately been described as …crystallized rules of public policy.”
?Obligatory forum court statutes: mandatory national statutes (or international conventions) which oblige a particular court, whenever hearing any case on the subject referred to in that statute, to apply that statute (i.e. UK Merchant Shipping Act 1979: makes the Convention apply whenever any shipowners? limitation proceedings are taken in an English court in respect to an incident arising anywhere in the world). Thus, the UK Admiralty Court must apply the 1976 Convention when limitation proceedings are brought before it, even in the case of a Canadian and a US ship colliding in Canadian or US waters, although neither country has adopted the 1976 Convention.
? What distinguishes obligatory forum court statutes from public order or mandatory rules is that obligatory forum court statutes are obligatorily applied by the forum court, whenever they come before that court, rather than because of any connecting factor with the forum. Most authorities have not distinguished obligatory forum court statutes from public order or mandatory rules.
? Most authorities have not distinguished obligatory forum statutes from public order or mandatory rules.
? Obligatory forum court statutes should have no place in any system of international law. Fortunately, they are rare and can be overcome in those jurisdictions which have adopted the principle of forum non conveniens.
?Civilian Public Order in the Conflict of Laws (p.103)
?CC: a.6 provides the principal stipulation as to ordre public in French domestic law: No one may, by private
agreement, contravene the laws of public order and good morals.
? To Mayer, internal French public order consists of basic standards of morality and justice, while in Pr.
International law, public order was extended to the protection of principles of …natural law?, the preservation of the political and social foundations of French civilization, and the safeguarding of certain legislative policies.
?Batiffol & Lagarde: Distinguish between domestic public order, consisting of laws which parties may not
derogate by contract, and international public order, which opposes the application in France of a foreign and
repugnant law that would otherwise apply under French conflicts rules. They consider that public order authorizes France courts to disregard foreign laws deemed incompatible with order public, even when such laws are rendered applicable by treaties.
? According to Loussouarn & Bourel, see public order in pr. International law as a mechanism controlling the application of the otherwise applicable foreign law, quite distinct from domestic public policy. International
public order embraces both Western notions of morality and justice, and also certain moral, social and economic purposes flowing from French legislative policies, and directed at furthering vital interests of French civilization.
Public order defends the French national legal system and French civilization against what are deemed to be
intolerable foreign laws and practices.
? The distinction of the Rome Convention between mandatory rules of the forum (a.7(2)) and mandatory rules of
a closely connected law (a.7(1)) was strongly influenced by French writers.
? Quebec: domestic public order @ a.8: no person may renounce the exercise of his civil rights, except to the
extent consistent with public order. See also a.3081 and 3155(5).
? See also PQ and Louisiana @ p.106.
?Common Law Public Policy in the Conflict of Laws
?English Law: Scarman, J. in Re Fuld?s Estate states: “Whether the point be described in the language of public policy, discretion, or the conscience of the court, an English Court will refuse to apply a law which outrages its sense of justice or decency. But before it exercise such power it must consider the relevant foreign law as a whole.
Dicey & Morris write that English courts will not enforce a foreign law which would be inconsistent with the
fundamental public policy of English law. Cheshire & North emphasise that the meaning of public policy is, and should be, narrower in international than in domestic law. To them public policy may be invoked in England as a basis for refusing to recognize a foreign law (I) where its enforcement would offend some moral, social or
economic principle sacrosanct in English eyes; or (ii) would offend some feature of internal policy. While in the former case, the foreign law will be unenforceable in all actions, in the latter situation, the law will be
unenforceable only if the governing law is English.
?The UK Law Commission?s report on Choice of Law in Tort and Delict 1990, a s.4(1) recognizes that
international public policy of the forum differs from domestic public policy of the forum.
?Canadian common law authorities: see p.110.
?Australian Authorities: see p.111.
? International Public Order/Policy of the Forum and Domestic Public Order/Policy of the Proper Law ? International Public Order/Policy of the Forum: The original concept of public order/policy was originally tied to the law of the forum in both common law and civil law jurisdictions. The doctrine as a device whereby courts ensured that its local ideas of justice, morality and civilized society prevailed over alien laws. The modern
concept of publi c order/policy of the forum in conflict of laws, however, is the forum?s international public
order/policy. This more limited concept, unlike the older one, does not require foreign laws to be ignored or
struck down merely because they differ from local rules or ideas.
? Domestic Public Order/Policy of the Proper Law: If one recognizes a foreign law as the proper law, then
logically one must also recognize the public order/policy of that foreign proper law as being part and parcel of
that law. This was, nevertheless, a difficult concept for some courts to stomach and, in consequence, domestic
public order/policy of the foreign proper law was often introduced into the system only to prevent some illegality under the foreign law of the place of performance of a contract. In such cases, the foreign law so upheld was
frequently not deemed public order policy, but referred to as merely a law intended to protect some economic,
social or administrative interest or purpose of the foreign state. Having the forum court take account of foreign legalities as part of the forum?s international public order/policy thus resulted in the partial, if indirect and
unacknowledged, recognition of foreign public order/policy in some contract conflict cases in traditional common law.
? see 2 cases at p.114.
?A truly …international? (i.e. universal) public policy of a foreign state may therefore be upheld at common law because of its similarity to the local public order/policy of the forum (see Lamenda at p.114). On the other hand, a purely domestic foreign public policy will seldom, if ever, be recognized.
? The decision in Man (Sugar) v. Haryanto (No.2) is unfortunate as it refuses to acknowledge that where the
foreign law is the proper law, the foreign public policy –however …purely domestic? it may be – is part and parcel of the foreign law and as such entitled to recognition and enforcement, unless it directly confronts with the
forum?s international public order/policy.
? Recognition of out-of-state fundamental policy – US: p.115.
? Recognition of the domestic public policy of the proper law is part and parcel of American government interest analysis. Principles laid down in Barnes Group (p.115) show an effort by some US courts to recognize the …fundamental policy? of the more …interested? US state, when confronted with a …serious? conflict between laws of 2 or more American states. The traditional concept of public policy, however, is submerged under the interest-analysis vocabulary of the Restatement Second. Moreover, it is unclear whether these rules apply to international as opposed to interstate conflicts.
? The Rome Convention 1980 and Public Order/Policy
? It permits refusal of the rule of law of any country but only if its application is manifestly incompatible with the public o/p of the forum (a.16). See p.117 for more info.
? Public Policy in the Conflict of Laws – US
? The concept of public policy in American conflict law has been so enmeshed with interest analysis, with domestic public policy and at best with conflicts between US states, that it is dealt with as a theory apart from the theory and practice of civilian and other CL jurisdictions.
?The traditional American understanding has been expounded by Story: “There is one exception to the rule as to the universal validity of contracts, which is, that no nation is bound to recognize or enforce any contracts which are injurious to its own interests, or to those of its own subjects.” Story associated his public policy doctrine with 3 types of cases: 1) contracts which are in evasion or fraud of the laws of a particular country; 2) contracts against good morals or religion or public rights; 3) contracts opposed to the national policy and institutions.
? See also Cardozo J. in Loucks v. Standard Oil: The courts are not free to enforce a foreign right at the pleasure of the judges, to suit the individual notion of expediency or fairness. They do not close their doors unless help would violate some fundamental principle of justice, some prevalent conception of good morals, some deep-rooted tradition of the common weal.
? Cardozo was concerned that the narrow American concepts of justice at that time would be used to thwart broad foreign rights and principles, but his view was deemed too liberal in Mertz v. Mertz where it was held that public policy could only be found in the constitution, statutes and judicial decisions or, in other words, the positive law of the forum.
? There has been a slow movement in American Jurisprudence towards a better understanding of public policy and away from associating it with the internal public policy of states. (see cases at p.119)
?Restatement second: Along with the principle of …most significant relationship?, is found the principle of interests and policies. S.6 specifically inv okes …policies of the forum, policies of other interested states and the relative interests of these states and policies underlying the particular field of law. S.187(2) limits the law that the parties may agree to apply in a contract when the chosen law is contrary to a “fundamental policy” of a state which has a “materially greater interest.” Similarly, s.90 and 117 invoke public policy of the forum in respect to jurisdiction and recognition of foreign judgements.
? As noted in the Restatement Second and in Kilberg v. Northeast Airlines, there is a relationship between the application of public policy and governmental interest analysis.
? The tendency of American courts to subsume the classic concept of public policy under the umbrella of interest analysis is largely attributable to the fact that so many American conflicts cases involve interstate rather than international situations. Governmental or state interests appear not only to include, but to extend well beyond, public policy considerations in the traditional sense. Interest analysis, in other words, seems to have absorbed public policy in American conflict of laws theory, although some authorities see public policy as interfering with interest analysis.
? Equity (favour of justice for the weaker party) is a major factor of public policy.
? Despite the pervasive influence of interest analysis on public policy in the US, it should be remembered that the American courts will, on occasion, apply public policy in the classic sense, although it is usually domestic public policy rather than international public policy.
? Mandatory Rules:
? Just as the definition of public o/p has broadened in the present century, so has the concept of mandatory rules taken on importance.
? The Hague Rules 1924, the Visby Rules 1968, the Hamburg rules 1978, the Multimodal Convention 1980 and the Terminal Operators Convention 1991 establish regulations defining the rights and responsibilities, immunities and liabilities of international carriers of goods. These sets of rules are examples of mandatory rules, being intended to be compulsory norms governing international carriage of goods by the nations of the world.
? Acceptance of mandatory rules in the conflict of laws may be seen in the Rome Convention 1980, establishing standards governing the interpretation and enforcement of contracts involving at least one party in a EC country.
? CCQ invokes the mandatory rules of the forum by implication at a.3076. It then expressly mentions foreign mandatory rules in a.3111 on the content of juridical acts (contracts). There are also provisions designed to prohibit evasion of the mandatory rules of the law of the consumer?s place of residence in respect of consumer contracts (a.3117) and of the worker?s habitual place of work in re spect of employment contracts (a.3118).
? The courts have been slow to recognize the compulsory character of some sets of international mandatory rules, out of a strong respect for party autonomy in contract, coupled with a failure to grasp the utility of compulsory common standards and rules in international shipping. See Vita Food Products at p.125.
? Even if one will not accept the mandatory nature of international conventions such as the Hague Rules, they should at least be accepted as a very strong contact in the choice of the proper law of the k. International
mandatory rules provide a strong indication as to the proper law of the contract in a conflicts case. In other words, the very international and obligatory character of the Hague Rules at the time the parties contracted, militated in favour of their great significance as a contact in identifying the proper law of an international shipment from a jurisdiction that had adopted them.
? Mandatory rules are part of the applicable foreign proper law, and should be applied whenever a court decides that foreign law is the proper law. To date, unfortunately, courts in the UK, France and Canada have been reticent to apply foreign mandatory rules, even when they form part of the putative proper law.
? A.7(1) of the Rome Convention permits contracting states to apply the mandatory rules of the law of another country with which the situation has a close connection. A.3079 of the CCQ is to the same effect. It is to be hoped that states will recognize the important role played by mandatory rules on controlling international commerce and that, in due course, mandatory rules will be recognized in the courts and legislatures of the world.
? The Rome Convention 1980 and Mandatory Rules
? Under the Rome Convention, the …law applicable? to a contract, as determined principally by a.3 and 4, includes the mandatory rules of that law, although there is no precise wording to that effect in the Convention.
? Various provisions of the Rome Convention do, however, explicitly recognize mandatory rules of certain types, safeguarding them against evasive choice of law clauses and, in some cases, even against the law applicable absent any choice. See specific examples at p.128.
? Although the basic choice of law rules of the Convention at a.3 provides that the contract is governed by the law expressly or impliedly chosen by the parties, a.3(3) ensures that local mandatory rules cannot be contracted out by simply choosing a foreign law to govern a contract where all the elements of the contract apart from that choice are connected with the domestic law. For example, the UK unfair Contract Terms Act 1977 cannot be contracted out of by merely choosing another system of law, if all other contacts are with the UK. A.3(3) is thus an evasion/fraude à la loi provision which overrides express choice of foreign law when a mandatory rule of the sole connected law is applicable. See other special rules at p.129.
? a.7(1) contemplates the mandatory rules of a third country and not of the forum or of the applicable law. It has 3 conditions for its application: 1) there must be a close connections of the situation with the state to which the mandatory law belongs; 2) the law must be mandatory no matter what law is applied to the contract; and 3) the court is still not obliged to apply the mandatory rules, but shall give consideration to their nature and purpose and to the consequences of their application and non-application. Thus, the evasion/fraude à la loi character of a.7(1) prevents evasion of mandatory rules of a third state which has a close connection to the contract. However, reservations to this provision may prevent English courts from applying the principle of evasion which already existed (implicitly if not explicitly) in the CL.
? A.7(2) guarantees that the forum?s applicable mandatory rules may be applied regardless of the law otherwise applicable.
? Obligatory Forum Court Statutes
? These are a particular form of mandatory rules of the forum. They are statutes (or international conventions)
which declare themselves to be compulsory whenever proceedings instituted under the statute are taken in a
particular court. It matters not how closely connected the case may be to any other jurisdiction; the statute applies merely because the proceedings are taken in the court concerned.
? Thus, under the UK Merchant Shipping Act, the Convention imposes itself on all limitation proceedings taken in a UK court, no matter where the ship collision may have arisen.
? It matters not how closely connected the case may be to any other jurisdiction; the statute applies merely
because the proceedings are taken in the court concerned.
? This type of statutory lex fori could potentially short-circuit the normal operation of private international law, arbitrarily overriding all other competing laws, even if these latter have much stronger contacts with the
circumstances in question. Such statutes may have been intended to contribute indirectly to the harmonization of international admiralty law, but the means is questionable.
? The only method whereby a court may avoid the imposition of such a statute would be to invoke forum non
conveniens. Legislatures should not adopt obligatory forum court statutes.
? Conclusions
? The forum applies its international definition of public order/policy, not its domestic notion, in respect of
conflict of laws
? the domestic public o/p of the putative foreign proper law should be applied as part of the proper law.
? Mandatory rules of the putative foreign proper law should also be recognized, while legislators should avoid
creating obligatory forum court statutes.
? The place of public o/p and mandatory rules in the solution of a conflict of law problem is best found in a
consistent methodology to solve all conflicts problems.
4.Evasion/Fraude à la loi (p.139 TEXT)
? Evasion of the law/fraude à la loi is the intentional and improper manipulation of contacts (connecting factors) in order (i) to avoid invalidity under the principle of public o/p; (ii) to avoid a mandatorily applicable law; or (iii) to avoid the most appropriate forum.
? Avoidance of the law is the antithesis of evasion/fraude à la loi. Avoidance is the acceptable arrangement of
connecting factors for a legitimate purpose in an agreement, usually between 2 equally bargaining parties, in order to select an applicable law or jurisdiction.
? Evasion of the law/fraude à la loi can be invoked in 3 main branches of conflict of laws: (i) choice of law, (ii) choice of jurisdiction; and (iii) recognition of foreign judgments.
? Evasion/fraude may be the act of one person (in a contract of adhesion or standard form contract such as a bill of lading) or of 2 persons (when both parties to a divorce travel to another jurisdiction to avoid the applicable imperative law), or of two parties against a third party (in the case of the shipper and carrier so contracting that the normal law of estoppel benefiting a third party consignee of a bill of lading is not applicable).
? Evasion/fraude always involves (i) the international public o/p of the forum, or (ii) the domestic public o/p of the properly applicable law, or (iii) a mandatory rule of the properly applicable law; or (iv) the appropriate jurisdiction.
? evasion/fraude may occur at the time of the contract or after it (as in the case of forum shopping).
? E/F must be INTENTIONAL and IMPROPER
? Evasion is improperly doing indirectly, what one may not do directly, and is an essential part of any rational
conflicts theory.
? Civil Law –Fraude à la loi
? Three elements: There must be a conscious manipulation of conflict rules by a modification of a connecting
factor. There must be a subjective intention to improperly circumvent the law and there must be a law that is
evaded. See example at p.142.
? Fraude has roots in the Latin principle: fraus omnia corrumpit: fraud corrupts all.
? The sanction is nullity of the resulting contract or juridical act, or of an offending clause, at least as regards the party responsible for the evasion.
? One justification for enforcing such sanctions is the respect for, and adherence to, domestic civil law. In the
example above, if all the contractual links of a transaction are with France and the parties are nevertheless able to incorporate a foreign law by reference, despite MANDATORY French provisions, the imperative nature of
French law is undermined.
? Traditionally, French courts do not invoke fraude in the case of evasion of a mandatory foreign law. This is not realistic: suppose a BoL which is issued in France (where the Hague/Visby Rules are mandatory) contains a
clause to the effect that a lower limit on liability (than permitted by the Rules) will apply. The BoL is then
intentionally brought for enforcement in the courts of a foreign state to which the Rules do not apply. IT should be evident to the forum court that to uphold the BoL would be in effect to assist in the evasion of the mandatory
foreign law (the law of France, the place of issuance of the BoL and of the shipment – in effect the properly
applicable law). Fortunately, this is changing. The trend is strongest where one foreign law has been avoided in favour of another foreign law.
?The Rome Convention has come into force in France: it?s a.3(3), 7(1) and 16 will prevent the evasion of foreign mandatory rules and international public order of the forum in at least the most flagrant cases.
? Forum shopping is often looked upon with disfavour in the civil law and has been described as trying to obtain indirectly what may not be obtained directly. One response to forum shopping is non-recognition of the resulting foreign judgement, which a tacit recognition that forum shopping is a branch of fraude. However, where parties of equal negotiating strength agree to a clause calling for suit in another jurisdiction as a judicial convention to both, and not to evade a law mandatorily applicable to either party, then this avoidance should not be considered fraude.
? a.3079 CCQ invokes mandatory rules of another country and thus provides a basis for refusal of an express
choice of law on the grounds of fraude. The use of 3079 in case of fraude would depend on whether preventing the law of another state from being evaded through the Quebec courts would qualify as …legitimate and manifestly
preponderant interests? of that state, in the circumstances of th e case. Evasion is specifically prohibited in
consumer (a.3117) and employment contracts (3118) and non-marine insurance (a. 3119).
? Common Law – Evasion
? Either the doctrine of evasion of the law is said not to exist under the traditional common law or it receives little attention. This is understandable considering the subjective basis of evasion: there must be an intention to
manipulate a connecting factor in order to obtain an improper result. CL contracts, however, have an objective basis. To decide whether a contract is valid in the CL, one looks objectively at the actual words of the contract, not subjectively at their motives at the time of contracting. Other reasons for the minor role of evasion in the CL: There is a tradition of CL judges to construe statutes strictly and enforce those obligations which come within the letter of the statute. The CL also insists that exceptions to pr. International law rules should also be made as
seldom as possible, that out of fidelity to the rule of law, judges should limit their influence on the development of law. Furthermore, the CL insists that acts and intentions (not motives) should be the elements of legal liability and that the evasion doctrine is, in any event, contrary to the English ideal of the connection between liberty and law.
In particular, evasion of the law, in its widest application, requires the recognition of foreign mandatory rules and of international public o/p. The English courts have been reluctant to recognize these in the past, especially
foreign penal and revenue laws.
? Despite the foregoing, the evasion doctrine exists in the CL, but unfortunately, its application by the courts is rare and lacks consistency.
? US: it has been said that there is no general doctrine of evasion in the US, although examples of evasion abound.
?Knauth noted that “our courts regard evasive clauses as null and void.” Rabel has said that public policy fulfils the role of the doctrine of evasion. Some American authorities recognize the doctrine of evasion but only in
respect of American law.
? Avoidance and evasion differentiated in dictum of Holmes J. in Bullen v. Wisconsin.
? The Restatement Second leaves open the door very slightly to the doctrine of evasion at a.187(2)(b). The forum is thus left with th e task of determining what would be a …fundamental policy? and a …materially greater interest.? While s.187(2)(b) does not expressly mention evasion, it does provide the forum with the means of substituting another law for a law which would be contrary to a fundamental policy. S.187(2)(a) requires the state of the
parties? expressly chosen law to have a substantial relationship to the parties or the transaction. In other words, the express choice cannot evade a law most closely connected to the appropriate governmental interest. One may also add that it is difficult to evade the law under governmental interest analysis, because of the right of the court to intervene and impose what it believes is the …fundamental policy? of the appropriate government as to t he proper law.
? Evasion in the US is also closely connected to unconscionability and equity which pervade US interest analysis.
Thus, in Bremen and Zapata, the US Supreme Court ruled that forum selection clauses may not be unreasonable and unjust, nor may they result in fraud or overreaching.
? England: Prior to the Contracts Act, it was generally agreed that the doctrine of evasion did not exist. While evasion may not have been expressly invoked, results equivalent to those produced by the doctrine did arise, notably through the effect of English public policy: “English courts will refuse to enforce any contract which they result as contrary to English public policy. They will refuse to do so even though the contract is governed by a foreign law under which it is lawful.
?Evasion of an English mandatory rule could even cause an English court to refuse to apply the foreign law expressly chosen by the parties, if the closest connection was with English law.
?Evasion and foreign public policy: AN English court would not directly refuse to uphold a contract because it violated the public policy of a foreign state. It must be English public policy which has been offended.
Nevertheless, English public policy was invoked to prevent the enforcement in England of contracts the
performance of which would have directly violated the laws of friendly foreign states, even where English law had been chosen or was arguable the proper law of the contract.
? In more recent times, some English courts have even recognized foreign mandatory rules.
? Results equivalent to those obtainable through the application of an evasion doctrine were also made possible through the English courts? acceptance of Vita Foods. In that case, Lord Wright expounded the important
principle that contracting parties are free to choose the governing law, as long as the intention expressed is bona fide and the law chosen is not against public policy. A number of authorities have found that bona fide should mean that there must not have been evasion of a mandatory law.
?One English author, JJ Fawcett, just prior to England?s adherence to the Rome Convention, recognized the problem caused by evasion of the law and referred to the …ad hoc? approach of the then English law. He noted that English practice was to rely on statutes to prevent evasion (i.e. the Unfair Contract Terms Act 1977 and the
Carriage of Goods by Sea Act 1971), and he called for some principle to deal with cases of evasion where there is unfairness and in cases where the national interests is affected. He called for the adoption of the continental
concept of mandatory rules as the best way to take account of unfairness and of the national interest in marriage and contract cases of evasion. Fawcett approvingly noted a.3(3), 5,6, 7 (which support the doctrine of evasion) of the Rome Convention but he did not criticize the English Reservation with respect to a.7(1). He thus gave support for the principle that: “The application of a foreign law would be subject to the proviso that this is with out
prejudice to the application of rules of English law which are mandatory, i.e. rules of such socio-economic
importance that they should apply regardless of the wishes or actions of the parties. In this way, evasion of the law can be prevented in those cases in which it is objectionable, but disregarded in those cases in which it is not.”
? Canada: doctrine of evasion has been deemed acceptable in Canada, while at least six Canadian judgments have accepted the …bona fide and legal? requirements of the En glish CL for an express choice of law, as in Vita Foods: Proper law must not have been chosen to evade a mandatory provision of the law with which the contract has its closest and most real connection. The consequences of the jurisprudence is that at least with respect to contracts, the evasion doctrine, as it existed in contract law up to 1990 is being applied in Canadian CL courts.
Canada is not a party to the Rome Convention 1980. “No court should give effect to a choice of law clause if the parties intended it to apply solely to avoid the mandatory provisions of the system of law with which the
transaction had its most substantial and real connection. The onus is on the person seeking to uphold the choice.
? Australia: see p.152ff
? Examples of Evasion/Fraud and Avoidance – Maritime Law
? Taking steps so that one law is applicable rather than another can be proper or improper, acceptable or
unacceptable, much like tax avoidance, which it within the law, and tax evasion, which is not. Evasion/fraude is the term best used to describe improper circumvention of the law and avoidance is the term for acceptable
circumvention.
? Contracts: Refusal to recognize to a particular juridical act because of evasion/fraude is a valid and important constituent part of conflicts theory and practice. Most conflicts theory also recognize the right of the parties to expressly choose the proper law of the k. But, the parties? intention must be (i) bona fide; (ii) the law chosen must not be contrary to public policy; (iii) nor contrary to an applicable mandatory law.
? Charterparties: see p.155
? Bills of Lading: Most BoL clauses which invoke a carriage of goods by sea law other than the mandatory
applicable Hague or Hague/Visby Rules of the place of shipment, are an evasion/fraude, of the package/kilo limitation of the carrier, unless a higher limit of responsibility of the carrier is invoke. The rationale is that the Rules are mandatory, while the BoL is a standard form contract, not entered into freely. Rather, it is prepared and signed only by one party and is usually issued after the ship sails.
? Sale of a Ship: p.156
? Marine Insurance Policies: Some marine insurance clauses promote evasion of the law because they stipulate a law with little relation to the assured object or the risk, thus circumventing the properly applicable law of the contract. Such clauses are usually unnecessarily favourable to the insurer and strongly unfavourable to the assured.
Although an insurance policy is a standard form contract, it is not always drawn up by the insurer alone, except in life and non-commercial insurance. In Commercial and marine insurance, the assured is represented by brokers or experienced staff, so that the contract is note necessarily unfavourable to the assured. Evasion in such cases cannot be invoked, unless it was carried out by both parties to the detriment of a third party. The restatement Second limits the choice of the law by the parties only in the cases of life, fire, surety or casualty insurance
contracts. An underwriter may strongly argue that the choice of a certain jurisdiction was not evasion because of the acknowledged expertise and skill of the market there, with its brokers, agents, attorneys and courts, which benefit all parties.
? Floating Law Clauses: p.157: Allow one party to a contract (i.e. an insurance contract) to choose the applicable law after the event.
? Hire of Seamen: p.158
? Flags of Convenience: p.158: used to be seen as avoidance, now is evasion because the flag state has neither control over, nor a genuine link with the shipowner. The result is that there is considerable flag shopping (the choosing of flag states which favour the shipowner in questions of crew pay, crew comfort and safety, taxes, and ship safety).
? Lifting the corporate veil: Evidence that flags of convenience are deemed to be evasion of the law is seen in the modern attitudes of the courts which …lift? the corporate veil (to determine the true control or genuine link) or …pierce? the corporate veil (to find the shareholder s responsible for the liabilities of the company).
? Amiables Compositeurs: p.160
?Choice of jurisdiction (“Courts of Convenience)
? Jurisdiction clauses in charterparties: not evasion: p.160
? Jurisdiction clauses in towage contracts: p. 160
? Jurisdiction clauses in bills of lading: A jurisdiction clause in a BoL which calls for suit in a place which has no real connection to the place of the contract or the ports of loading or discharge is usually an evasion of the jurisdiction, particularly when favourable to the carrier who has drawn up the BoL. Such clauses are especially questionable when the jurisdiction is one which would not normally apply to the properly applicable law of the contract. In The Morvikem, the HoL held that a clause in a BoL invoking Netherlands law in a shipment from England to the Netherlands Antilles was void as relieving the carrier of responsibility, contrary to a.3(8) of the Schedule to the UK Carriage of Goods by Sea Act 1971, the UK version of the Hague/Visby Rules. The jurisdiction provision of the same clause, calling for suit in the Netherlands was also void for the same reasons.
?Lloyd?s Standard Form: p: 162
? Arbitration clauses: p.162
? Forum shopping – maritime liens: p.163.
? Forum shopping – limitation: p.163: forum shopping in order to obtain a higher limitation fund is common practice and should be opposed. See Swibon: “Applying the Korean limitation will discourage claimant from forum shopping. Perhaps if claimants had believed there was no advantage to filing a claim here, this case would be in Korean courts, clearly the optimum forum from the standpoint of judicial economy.”
? Floating jurisdiction clauses: p.164
? Passenger tickets: p.164: Forum selection clauses in US ship passenger tickets are not evasion of the law unless it can be shown that they are unreasonable and unjust, or they result from fraud or overreaching, or that their enforcement would contravene a strong public policy of the forum.
? Recognition of foreign judgments and jurisdiction
? Evasion/fraude can also be invoked to prevent a foreign judgement from being recognized: a) when the
judgement was based on a law chosen as a result of an evident case of fraude/evasion; b) when the judgement was rendered as the result of a choice of jurisdiction arrived at through evasion/fraude.
? See French examples at p.166
? The Rome Convention 1980 – Mandatory Rules and Public Order
? The Rome Convention applies to the whole gamut of mandatory rules and public order with few exceptions and nuances, so that evasion/fraude is impliedly and even expressly prohibited in many cases.
? Mandatory Rules are dealt with in a peculiar fashion in three general articles: a.3(3), 7(1) and 7(2), as well as in three more particular provisions: (a.5(2), 6(1) and 9(6)).
? a.3(3) is an exception to the freedom of choice of law provisions of 3(1). It effectively prohibits the parties to a contract from choosing the law of one country. Instead, it imposes the mandatory rules of another
country where all the other elements at the time of the choice are connected with that country, Mandatory rules are defined under a.3(3) as rules which may not be contracted out of. i.e. the UK Unfair Contract Terms Act 1977 cannot be contracted out of by merely choosing another system of law, if all other contacts in the situation are
with the UK. A.3(3) is thus an evasion/fraude provision, which overrides an express choice of law when a local mandatory rule of the sole connected law is applicable.
? a7(1) allows the Court, in its discretion to give effect to a mandatory rule of a third, closely connected country (a country which is neither the forum state nor the country of the putative proper law), even where there are elements connecting the contract with one or both of those countries. This has been reserved by the UK,
Germany, Luxembourg and Ireland. Three conditions: 1) there must be a close connections of the situation with the state to which the mandatory law belongs; 2) the law must be mandatory no matter what law is applied to the contract; and 3) the court is still not obliged to apply the mandatory rules, but shall give consideration to their
nature and purpose and to the consequences of their application and non-application. Thus, this prevents evasion of international mandatory rules of a third state.
? a.7(2) upholds the mandatory application of the rules of the forum, regardless of the law otherwise applicable. These include obligatory forum court statutes such as the UK version of the Limitation of Liability for Maritime Claims Convention 1976.
?a. 5(2): specifically makes applicable certain mandatory consumer laws of the consumer?s habitual residence, despite a contrary express choice of law in a consumer contract. This is an anti evasion/fraude measure.
? a.6(1): has as its purpose the protection of employees in their contracts against express choice clauses in employment contracts.
? a9(6): protects against evasion of the mandatory rules of the situs of IM property.
? a. 16 is the public o/p provision inherent in any system of conflict of laws. It permits refusal of the law of any country but only if its application is manifestly incompatible with the public o/p of the forum.
Evasion/fraude can be counteracted by invoking public o/p of the forum (intended here, of course, is the
international public order/p of the forum)/
? a.21: means that Rome Convention does not affect the operation and mandatory force of the Hague Rules, the Hague/Visby Rules, the Hamburg Rules and the Multimodal Convention in their application to the
carriage of goods by sea.
? The Rome Convention, by its provisions on mandatory rules and public policy, enshrines the principle of evasion/fraude because these provisions require the recognition of the mandatory rules of the properly
applicable law and the international public o/p of the forum.
? Conclusion
? Evasion/Fraude is an exception to the otherwise valid choice of the proper law and may also be invoked in cases of choice of jurisdiction and recognition of foreign judgments.
? Evasion/Fraude is the intentional manipulation of connecting factors in order to improperly circumvent the
mandatorily applicable law of a juridical act or to sidestep applicable public policy or to elude the most
appropriate jurisdiction. It can also result in a forum court justifiably refusing to recognize a foreign judgement as having been reached improperly.
? E/F depends on the facts in each case. Manipulation of connecting factors equivalent to evasion is most likely to occur wherever there are unequal bargaining positions, as in contracts of adhesion (ship passenger tickets) or in standard form contracts (bills of lading, insurance contracts). In general, it can be said that choice of law clauses and forum selection clauses may lead to E/F if they were not freely bargained for and if they create additional
expense for one party or deny one party a remedy or defence it would normally have.
? Avoidance is the acceptable arrangement of connecting factors for a legitimate purpose in an agreement, usually between 2 equal bargaining parties, in order to select an applicable law or jurisdiction.
? Whether there has been E/F should be considered whenever the proper law is being determined in a conflict of law problem and in every case of recognition of a foreign judgement.
II.A M ETHODOLOGY
? Even the fourth approach, national conflict laws and international conflict conventions, is not a complete answer. The courts, practitioners and academics require a consistent method and order to apply those laws and conventions when solving a particular conflicts problem.
? Innovations of the Methodology:
? rejection of single rules or single themes or multiple, all-embracing rules
? Rejection if the distinction based on procedure and substance: only formalities of the court are of the lex fori. On the other hand, foreign remedies, time limitations, presumptions, etc. can and may be recognized as soon as their proper law has been established
? Rejection of the distinction based on right and remedy
? Rejection of renvoi
? International public order/p and mandatory rules are defined
? Public o/p and mandatory rules are connected to, and form part of, the theory of evasion/fraude.
? One must understand the alternative consequences of the choice of law faced in each conflict situation
? Express choice of law in contract must be bona fide and legal; otherwise, one turns to the most significant relationship or the closest and most real connection as the next step. Implied choice is ignored.
? Public o/p is distinguished from interest analysis and equity. The Canadian and English tort rules of actionable and not justifiable and double actionability, respectively, are shown to be merely excessive public policy.
? Depecage is used, but usually to divide the problem into many parts rather than 2. A ship collision could result in the necessity of discovering the proper law of seven or eight contracts or torts or ancillaries resulting from the collision.
? The properly applicable law of the tort or the contract or of the ancillary is sought, in every case, through the methodology.
The use of Forum Non Conveniens is emphasized as a possible final step in the methodology.
III.Q UICK P ROCESSING OF A C HOICE OF L AW P ROBLEM
1.Describe the facts of the conflict problem
2.Categorize the conflict:
a)Is it a question of:
i)choice of law
ii)choice of jurisdiction
iii)recognition of a foreign judgement
iv) a multiple of the above
b)Is it a question of:
i)contract
ii)tort (delict)
iii)an ancillary question
iv)multiple of the above
c)What laws of what States are involved?
3.Decide if the forum court has apparent (or initial) jurisdiction over the subject matter and whether that subject matter
is within the court?s territorial authority
4.Apply the forum?s conflict rules (which, it is hoped, follow this methodology), including applicable international
conflict of law conventions such as the Rome Convention 1980. Specific conflict rules of the forum should also be applied (i.e. s.275 of the Canada Shipping Act which calls for the application of the law of the ship?s port of registry to matters relating to the ship and crew, absent a specific provision in the statute).
5.In no case is renvoi contemplated or permitted, following a.15 of the Rome Convention 1980.
6.Look at the general content of the foreign law and the law of the forum. Understand the alternative applicable laws
and the different consequences if applied to the facts at hand. This is an American contribution to the theory of conflict of laws and is intended to eliminate false conflicts.
7.Obligatory forum court statutes. Apply any applicable choice of law directive found in the statutes of the forum when
these statutes are obligatory in the forum court, as the U.K. version of the 1976 Limitation of Liability for Maritime Claims Convention. Thus, the UK statute imposes itself on any limitation proceeding whatsoever, taken before an appropriate UK court. If these directives are applicable, then the rest of the methodology need not be followed except in respect to forum non conveniens. If the application of the obligatory forum court law results in an absurdity or incongruity, then the court should invoke forum non conveniens (i.e. suit taken in the UK to limit liability between 2 US ships colliding in US waters).
8.Apply the law of the forum in respect to formalities of the court.
9.Look for connecting factors. See 7 in Lauritzen v. Larsen and the eighth in Hellenic Lines v. Rhoditis. In looking at
flags of convenience, one is entitled to look at the place of business of the actual ship operating company and with respect to questions of conflict of law, one is entitled to …lift? the corporate veil, to discover the genuine contact.
10.The general rule is that the properly applicable law of the contract or tort is the law with which the contract or tort has
its closest and most real connection (or most significant relationship), based on the connecting factors.
11.Exceptions:
1)If the contract specifies an express choice of law, that choice, if bona fide1 and legal2, will overcome the
closest and most real connection. If there is no express choice or such choice is not bona fide and legal, one
passes directly to the law of the closest and most real connection. One does not first look at …implied choice?
whose constituent parts are merely contacts to be treated along with the other contacts.
2)In contract and tort, where the international public order/public policy of the forum or the domestic public
order/policy of the putative proper law has been contravened.
3)In contract or tort, where a mandatory rule of the applicable law has been contravened (i.e. the Hague/Visby
Rules, a.10)
4)In contract, where there has been an evasion of the law (fraude à la loi) of public/order policy (as in 2) or of a
mandatory rule (as in 3).
12.Choose the properly applicable law: the law which has the most significant relationship or the closest and most real
connection in light of the above.
13.Solve any accessory questions by applying the whole methodology again (i.e. to such accessories as time limitations,
presumptions, cross-defences, BoP).
14.Solve additional principal questions in the same manner. Thus, more than conventional dépa?age is accepted; one
divides in more than 2. Thus this is really severability or true dépa?age. For example, in a collision at sea there is not one properly applicable law, but many, and each properly applicable law must be determined by the methodology.
The possible applicable laws in a collision of 2 ships at sea are: a) the law of responsibility between the ships; b) the law of damages, including pure economic loss; c) the law of contract between passengers on one ship and that ship; d) the law between the cargo on one ship and that ship; e) the law applicable between cargo and passengers on one ship and the other ship; f) the law of the right to limit liability of each shipowner; g) the law of the calculation of the limitation fund of each ship and h) the law of the distributing and marshaling of the fund.
15.Decide if the forum court, in light of the law chosen, has jurisdiction or if there is forum non conveniens. If the forum
court is not comfortable applying foreign law, then it is better to stay the suit conditionally, preserving the rights of the claimant, attained by the suit pending resolution of the claim by commencement of suit within a certain reasonable delay in the more convenient forum. FNC clears up the problems of incongruities, such as the “obligatory forum court statutes” which declares that a court of a particular state must apply that particular statute.
1 A choice freely made between
2 relatively equal parties to the k.
2 a choice of law which is essentially and formally valid under its proper law.
III. Topic Three: History and Definition of Maritime Law
The General Maritime Law (p.91-105 CSBK)
? The lex mar itima is a ius commune exists today in the US, the UK, Canada and many of the world?s shipping nations as the “general maritime law.” It has 2 sources: 1) the lex maritima, which developed as part of the lex
mercatoria and evolved primarily from the Roles of Oléron of the 12th C. There are traces of its existence, however, as back as the Rhodian law of the 8th or 9th C B.C. The attachment, maritime liens and general average are examples of the lex maritima, which continues to exist even today. 2) the common forms, terms and practices of the shipping industry, particularly with respect to carriage of goods by sea under bills of lading and the hire of ships and their services under charterparties, are international examples of accepted general maritime law.
?Maritime arbitration in the 20th C is developing a ius commune to be found in a respectable number of reported arbitration awards.
?American conflict of laws theory, in its latest …teleological? manifestations, has also turned to what has been called a theory of ius commune to solve tort conflicts.
? The ius commune or jus commune is a law common to a whole jurisdiction or more than one jurisdiction. It is composed of broad, general principles and is usually unwritten at first and then often codified.
? Th e lex mercatoria is a ius commune, is as the lex maritima, which latter is known as the …general maritime law? today. A ius commune applies in a particular state, unless there is a specific statute limiting it.
? The general maritime law is a ius commune, is part of the lex mercatoria and is composed of the maritime customs, codes, conventions and practices from earliest times to the present, which have had no international boundaries and which exist in any particular jurisdiction unless limited or excluded by a particular statute.
? The Origins of the Lex Maritima: p.92 CSBK: Roles of Oleron, Consola del Mare, and Laws of Wisbuy. See also role of CVL at p.93.
? Early Maritime Law was not characterized by conflicts because until at least the end of the 16th C in Europe, there was considerable homogeneity in maritime law. Thus, European courts did not have to choose between different systems of substantive law when hearing a dispute that had links to more than one state. See more at p.93-94. As for conflicts between the laws of nations, the tradition of the CL courts was to refuse to hear foreign cases or at least to refuse to apply foreign law. This practice thus rejected both conflicts and the ius commune.
? Lex Maritima (The General maritime Law) – UK:
? Admiralty law is founded in (1) the Civil Law, (i) as embodied in the Law Merchant, especially in the Law of Oleron, (ii) as introduced by subsequent clerical judges, mainly in procedure; (2) in subsequent written and
customary rules, adopted in view of the developments of commerce.
? Another distinguishing characteristic of English maritime law is that it is based on jurisdiction: p.94: once a
courts? jurisdiction is established in the UK, the substantive law is found in the general maritime law.
? Canada
? Maritime law is under federal jurisdiction: p.95
? Canadian Maritime law defined at s.2 of the Federal Court Act: p.95. See also Buenos Aires Maru at p.95.
? SCC extended definition: see p.95-6. General Maritime law is acknowledged in Canada in all matter of
navigation and shipping. Its role has been expanded by the SCC.
? US (p.96)
? The Attachment & other features: p.97.
? Arbitration and modern Lex Mercatoria
? Debate over lex mercatoria exists in international commercial arbitration (p.101).
? Amiables compositeurs: p.101.
? UK vs. US Arbitration. P.103: A lex mercatoria is being created in international arbitration in the US and on the continent. In the UK, it is being resisted but perhaps it is too late.
? Ius Commune in the Conflict of Laws: p.103.
? See conclusion at p.104
? Schiffaharts Leonhardt v. A Bottacchi (p.104 CSBK)
? The intention of the framers of the Constitution was to place the entire subject of maritime law, its substantive as well as its procedural features, under national control because of its intimate relation to navigation and to interstate and foreign commerce (from Panama Railroad v. Johnson).
?Federal courts are empowered to apply maritime procedure and law as it existed at the time of the Constitution?s adoption, with such modifications as changing needs and circumstances require, subject to congressional alterations of that law.
IV. Topic Four: Law of the Person
https://www.doczj.com/doc/88867501.html,w of the Flag (p.179 TXT)
?Traditionally, the ship?s flag has been used as the sole and definitive indicat or of the applicable maritime law. In the 19th C, it was acceptable and usually practical to apply the law of the flag to the relations involving the master, crew, ship, and third parties. The agreement for hire of the crew would follow the law of the ship?s flag, as would most contracts entered into by the master for supplies, repairs, etc. (see Lloyd v. Guibert). Modern legislation may even impose the law of the flag as the applicable law in a particular case (i.e. a.9 of the Greek Code of Private maritime Law).
?Problems: what in the case of ships wearing a flag of convenience, or in cases of double flagging, or in collisions on the High Seas between ships of different flags?
?Ship?s flag is still important today, but only a one of many indicators or co ntacts necessary to determine the
governing law.
?Early History – Before the law of the flag:
? Early maritime law was not characterized by conflicts because of the homogeneity in European maritime law until the end of the 16th C. Thus, European courts did not have to choose between different systems of substantive law when hearing a dispute that had links to more than one state. The main source of legal uniformity in maritime matters was an oral lex maritima, which came to be accepted by European merchants between the 9th and 12th C.
The Lex Maritima was a branch of a wider customary mercantile law, the lex mercatoria. The influence of lex
maritima increased when it was codified and customs thereby became formalized. Three codes exerted the most influence: the Roles of Oleron (12th C; accepted in Northern and eastern Europe from Scandinavia to the Atlantic coast of Spain), the Consolato del Mare (Mediterranean affairs), and the Visby Rules (based on the Roles of
Oleron; controlled trade in the Baltic) (see p.182).
? In the 15th C, the uniformity of European maritime law began to erode due to nationalism. The coalescence of nation-states in Europe was accompanied by a desire for national laws, which would take into account the needs of each country. The existence of different national laws, however, ensured that conflicts would arise, which were solved by the 16th C on the basis of what became known as the territorial theory.
? The sovereigns of Europe, having succeeded in the creation of nation-states where smaller political units had formerly existed, were naturally interested in controlling all matters within their dominions. As a result, contracts were governed by the law of the place where they were entered into, while torts or delicts were subject to the law of the place of the wrongful act.
? The territorial theory even affected the general maritime law, because the territorial sea was considered part of a sovereign?s domain and thus subject to his laws. Thus, the subjects of the sovereign are not the onl y persons
amenable to this jurisdiction. It extends to strangers navigating within it. They are considered temporary citizens and members of the same political body. This territorial theory was upheld by Story J. in Pope v. Nickerson and Marshall C.J. in S chooner Exchange v. M?Faddon.
?Nationalism also spawned the theory of the law of the ship?s flag – the ship being considered an extension of the national territory. And another terms was coined when the law of the ship?s flag was upheld under the …floatin g island? theory. Acts committed and contracts entered into on board ship were deemed to have taken place in the jurisdiction of the nation to which the ship owed allegiance. Both the territorial principle and the floating island theory result from an insi stence on a state?s territorial sovereignty; floating island status cannot, however, coexist with another state?s unrestricted claim to regulate all matters occurring within its territory.
?The law of the ship?s flag is not unlike the Napoleonic concept o f citizenship and the law. In the CC, French
citizens were granted the benefits and application of the civil law not only in France, but wherever they happened to be as well: a.3(3): The laws in respect to the status and capacity of persons apply to French citizens, even
resident in foreign countries.
? The law of the flag, like the principle of portable French law for French citizens, can be the cause of difficult conflicts of law when it confronts the territorial sovereignty of other nations.
? Examples of law of the flag directives:
?Canada: s.275 Canada Shipping Act: Where in any matter relating to a ship or to a person belonging to a ship there appears to be a conflict of laws, if there is in this part any provision on the subject that is hereby
expressly made to extend to that ship, the case shall be governed by that provision, but if there is no such
provision, the case shall be governed by the law of the port at which the ship is registered. (p.185),
? UK (p.186),
? France (p.185)
? Greece (p.185) etc.
? See also International Conventions at p.187, many of which stipulate the law of the flag in respect to choice of law.
?Authorities:
?Dicey and Morris: the ship?s flag will govern only as a last resort, should it not be otherwise possible to disc ern the proper law of the contract. Also advocate the American approach where the law of the flag is applied to maritime torts involving only one ship which are committed in the territorial waters of another state, provided that everything takes place within the ship itself, without having any effects on the littoral state or persons external to the ship.
?Cheshire & North: Apply the English double actionability rule to torts aboard a single ship on the High Seas.
The foreign law under that rule is the la w of the ship?s flag.
?First Restatement: a.45: “Except as limited by public international law, international agreement or constitutional provision, a state has jurisdiction over all vessels flying its flag.” The First Restatement was based on the lex loci contractus, the law of the place of contracting, and thus the territorial theory which accorded with the vested rights doctrine. By s.358, performance of a contract and all related matters were subject to the law of the place of performance. Intention of the parties was not a real consideration. On the other hand, the law of the flag was used very frequently for maritime torts. By s.405, torts committed in territorial waters and affecting only the internal economy or discipline of the ship were subject to the law of the flag. If the tort was committed on board ship on the High Seas, s.406 stipulated that “the law of the state whose flag the vessel flies” determined the liability. The same principle applied, pursuant to s.408, to determine the “liability f or an alleged tort in the navigation of a vessel on the high seas outside the territorial waters of any state.” For torts by collision committed on the High Seas, s.410 also referred to the law of the flag. If the ships involved in the collision few the same flag, the law of the flag would govern. If different flags, the lex fori would apply. By s.127, the validity of a marriage on board a vessel on the High Seas would be governed by the law of the flag. S.426 also provided that a nation could make punishable an act done upon a vessel flying its flag or within its border seas and subject to its jurisdiction.
? Second Restatement: Far wiser, making only an implicit reference to the law of the flag at s.56. see p.193
? Third Restatement: invokes law of the flag at s.501, 502(2) (see p.194)
? French Authorities: law of the flag accepted as necessary to achieve consistency because ships travel to places over which no state has sovereignty, and crews are often composed of many nationalities. An example it the case of delicts committed in one state?s internal or territorial waters, and where the act is confined to the ship itself. Of course, the state in whose waters the delict took place would also assume jurisdiction and apply its laws if the delict affected the state itself or one of its citizens. Delicts committed on the High Seas are also subject to the law of the flag. Other aspects
governed by the law of the flag are contracts made on the High Seas, the status of the ship, charterparties, and questions conc erning the crew. Labour disputes involving crewmembers are governed by the law of the ship?s flag. A collision on the High Seas between ships of different flags is to be determined, not by the law of the flag, but by the lex fori. One authority does suggest that a matter not directly related to the ship, such as a contract to transport goods, is best governed by a law other than the law of the flag.
? Lauritzen v. Larsen (1953)
?The flag is only one contact of seven: “perhaps the most venerable and unive rsal rule of maritime law relevant to our problem is that which gives cardinal importance to the law of the flag. Each state under international law may determine for itself the conditions on which it will grant its nationality to a merchant ship, thereby accepting
responsibility for it and acquiring authority over it. Nationality is evidenced to the world by the ship?s papers and its flag. The US has firmly and successfully maintained that the regularity and validity of a registration can be questioned only by the registering state. The court has said that the law of the flag supersedes the territorial principle, even for purposes of criminal jurisdiction of personnel of a merchant ship, because it is deemed to be a part of the territory of that sovereignty whose flag it flies, and not to lose that character when in navigable waters within the territorial limits of another sovereignty. On this principle, we concede a territorial government involved only concurrent jurisdiction of offences aboard our ships. Some authorities reject, as a rather mischievous fiction, the doctrine that a ship is
constructively a floating part of the flag-state, but apply the law of the flag on the pragmatic basis that there must be some law on shipboard, that it cannot change at every change of waters, and no experience shows a better rule than that of the state that owns her.
?Decisions and Examples of the law of the flag
? The decisions are discordant and inconsistent amongst themselves, so that there is no consistent national, let
alone international, theory of the law of the flag.
?Ship discipline: Wildenhus?s Case: law of the flag governs the internal discipline and administration of a ship.
i.e. all matters of discipline and all things done on board which affected only the vessel or those belonging to her.
The exception was matters affecting the peace or dignity of the country, or the tranquillity of the port. In Patton-Tully v. Turner, the court held that a ship?s internal management and discipline were to be governed by the law of the flag. See William Brooks (p.198) which applied Liberian law (the law of the flag) despite the multitude of
American contacts.
?Marriage on the High sea: traditionally applied the law of the ship?s flag.
?Charterparties: p.199: Coast Lines: other things being equal, the law of the ship should govern.
?Contracts entered into in distant ports: p.201: law of the flag is no longer the sole or most important contact.
?Tort and delicts on the high seas: p.201: law of the flag often rules, but better solution is to look at all contacts ?Torts and delicts on the high seas on a ship of a bijuridical state: p.202
?Crime on ships in port or in territorial waters: has not been applied consistently: flag is but one factor to take into account: p.204.
?Single ship allision on the high seas: p.205: split between substantive and procedural issues
?Two ship collision – ships of the same flag: p.206: the principal contact is the common flag, provided that
neither is a flag of convenience.
?Two ship collision – different flags but both states parties to the Collision Convention 1910: law of the
flags apply pursuant to the Convention.
?Two ship collision – ships of different flags (High Seas): p.207
?Rome Convention: Law of the flag is contrary to a.4(1) where, in the absence of express or implied choice, a contract is governed by the law of the country with which it is most closely connected.
?England: if 2 or more ships are involved in a tort on the High Seas, the English court would apply English maritime law. The law of the flag constitutes the lex loci only in cases of torts on a board a ship on the High Seas and torts occurring on board a ship while in foreign territorial waters.
?Netherlands: p.211
?China: p.212
?Problems:
?Unregistered ships: Where the ship is unregistered, the flag flown is a useful contact. See examples at p.212.
? Flags of convenience (flag shopping): a flag shown by a ship registered in one state, with which the ship has few or no connections, while in reality the ship is owned in, or operated from, another state. A flag of
convenience usually exists for economic reasons: shipowners often seek to avoid high taxes, maintenance costs, certain international conventions and the obligation to hire certain nationals. There must be control by the flag state: see p.214 for examples. There must also be a genuine link but that?s not certain (see p.215).
?Bareboat chartering – Flagging out: see p.216: the law of the flag, in a case where the bareboat charter is
registered, is the law of the state where the bareboat charter is registered, and not the law of the state where the ship is registered.
?Ad hoc, bareboat chartering out: p.217
?The Italian double registry system: p.218
?2 flags in board: where a ship flies 2 flags, it has been treated as outside the protection of the law of either
nationality it is claiming. See p.219 for examples
?Federal or bijuridical state: the flag or registry as sole criterion is unsatisfactory.
?Lifting and piercing the Corporate veil: Two juridical devices which serve as solutions to many of the problems arising from flags of convenience are the lifting of the corporate veil (to look at the shareholdings for some legal purpose such as …contacts? in the conflicts of law) and the piercing of the corpo rate veil (where the rights and
liabilities of the corporation are also of the shareholders). See examples starting at p.219. Courts have often deemed the ship not connected to the state of its flag but connected rather to the state of the persons actually controlling and owning the ship. At the very least the domicile or nationality of those persons is a strong contact that may be
considered when fixing the properly applicable law. See Rainbow Line v. M/V Tequila (p.221). Registration remains prima facie e vidence of a ship?s nationality and that there would seem to be presumption that a ship belongs to the
country in which she is registered. Thus, in the US, the ship?s flag as a contact has often been discarded by the courts when the flag is merely one of convenience. Note contrary case at p.222 (when mention is explicit).
? Conclusions:
?Law of the flag is the maritime equivalent of the land principles or …territoriality? and …nationality.? Law of the flag is particularly unsuitable as a rule today because of flags of convenience which render the flag an especially questionable contact. Much better is the concept of closest and most real connection.
? Flag shopping (the sue of flags of convenience and double registries under bareboat charters) has tolled the
death knell of the law of the flag as a single solution to conflicts of law. The law of the flag can only be one
indicator or contact among many, and rarely if ever, the sole consideration in determining the proper law of the contract or of the tort. Even the place of business of the owners of a ship, in most one-ship operating companies, must be looked at whilst lifting or even piercing the corporate veil.
? Nor is it a question of the law of the flag being determinative when all other factors cancel themselves out.
Rather, one must consider all the contacts and follow a logical, constant and consistent process or methodology in each conflict case, in order to arrive at the properly applicable law.
https://www.doczj.com/doc/88867501.html,uritzen v. Larsen (p.114 CSBK)
? Danish seaman, employed by Danish flag vessel, owned by Danish citizen, under articles written in Danish and stating that crew members? rights would be governed by Danish law, joined ship in NY (and was returned to NY), injury occurred in Havana. US is state of the forum. Se aman wants US law to apply: “a ship owner is liable under the laws of the forum where he does business as well as in his own country.” He claims that the ship owner?s commerce and contacts with the ports of the US are frequent and regular.
? Maritime law has attempted to avoid or resolve conflicts between competing laws by ascertaining and valuing points of contact between the transaction and the states or governments whose competing laws are involved. The criteria appear to be arrived at from weighing of the significance of one or more connecting factors between the shipping transaction regulated and the national interest served by the assertion of authority.
?Place of the wrongful act: the solution most commonly accepted as to torts in US and international law is to apply the law of the place where the acts giving rise to the liability occurred, the lex loci delicti commissi. This rules of locality, often applied to maritime torts would indicate application of the law of Cuba. The test of location of the wrongful act, however sufficient for torts ashore, is of limited application to shipboard torts, because of the varieties of legal authority over waters she may navigate. We have asserted territorial rights, as when we held that foreign ships voluntarily entering our waters become subject to our prohibition laws and other laws. This would seem to indicate Cuban law. But the territorial standard is so unfitted to an enterprise conducted under many territorial rules and under none that it usually is modified by the more constant law of the flag.
?The flag law of a merchant ship overbears most other connecting events in determining the law applicable to events on board, unless some heavy counterweight appears.
?Allegiance or Domicile of the injured: see case for more details
?Allegiance of the Defendant Shipowner:
?Place of contract: Place where a seaman?s contract is made is of less importance that the flag.
?Inaccessibility of the foreign forum:Inaccessibility of the forum of the ship?s flag is not pe rsuasive as to the law by which a seaman?s case shall be judged, especially when (1) home rights are available through a consul; and (2) free passage home is offered.
?Law of the forum
? On the basis of these connecting factors, court chose Danish law.
V. Topic Five: Contract
Chapter VIII – Contracts in General
? Express Choice – Part Autonomy:
? Express choice: express choice is the first rule of choice of contract law in the US, Canada, Australia, England, France, whether or not the Rome Convention 1980 applies. Usually, there need not be any connection between the contract and the applicable law if the choice is bona fide, but not all jurisdictions follow this view. Plus, there are exceptions to any choice of law rule for public p/o, mandatory rules, illegality and evasion of the law.
? The parties, by express choice or mutual agreement may change the applicable law after the contract has been entered into under all systems of law.
? Where there is no express choice, the choice may be implied or inferred in many jurisdictions. Rome Convention at
a.3(1) suggests a subjective test – what the parties really intended, not what the court believes reasonable people in the
place of the contractants would have intended. The intent is drawn from …the terms of the contract? or …the
circumstances of the case?, demonstrated with reasonable certainty. Prof thinks that the Restatement Second 1969 method of proceeding from express choice directly to closest and most real connection (without considering implied choice) is preferable.
? In the absence of express choice (or implied or inferred choice in those jurisdictions which apply them) one must choose the law to which the contract has its closest and most real connection. This is the rule in the US, Canada, Australia, Switzerland, Quebec (a.3112) and Rome Convention. Under the latter, there is a rebuttable presumption of characteristic performance in a.4(2): that the contract is most closely connected with the country where the party is to perform the contract has its habitual residence, or in the case of a company, its central administration or in the case of
a party?s trade or profession, its principal place of business. In questions of carriage of goods, the above presumption
does not apply and is replaced by the law of the place where the carrier has his principal place of business, if it is also the place of loading or discharge or the place where the shipper has his principal place of business (a.4(4)). This is rebuttable pursuant to a.4(5).
? Essential (material) and formal validity
?The law applicable to the formalities of a contract is usually known as the law of its …formal validity? and the law applicable to the contract itself and the obligations of the parties as the law of its …essential or material validity.?
? Usually, the 2 laws are identical. Contractants are advised to so specify in their choice of law clauses.
? Essential validity:
? Essential validity has normally been subject to the proper law of the contract and to the lex loci solutionis. Any right claimed must be essentially valid (legal) under the proper applicable law (see Vita Food Products). Just as one should not enforce a contract if it contradicts international public o/p of the forum or the public law p/o of the proper law or the mandatory rules of the putative proper law, so the essence of the contract must be valid under the putative proper law. The contract must also be essentially valid under the law of the place where it is
performed. Otherwise it will be unenforceable in the forum.
?The Rome Convention stipulates that the existence and validity of a contract shall be subject to its putative
proper law (a.8(1)). However, exception at 8(2): instead of the putative proper law, a party may rely on the law of his habitual residence to establish that he did not consent, if it appears from the circumstances that the application of the putative proper law would lead to an unreasonable result. The foregoing rule is really the application of the closest and most real connection.
?Blacking: In th e Evia Luck (no.27), a ship was “blacked” in Sweden and consequently, crew contracts written in the Philippines were voided by the shipowner and replaced by more generous agreements. The blacking was at the insistence of the International Transport Worker?s Federation which had convinced Swedish dock workers to refuse to discharge the ship unless better contracts were entered into by the ship with the ship?s crew. Blacking
and resulting new contracts are valid in Sweden and in the Philippines. In England, blacking can result in
voidance of the resulting new contracts. A suit was brought in England. The HoL did not invoke public o/p since blacking is not contrary to either Swedish domestic public policy or English international public policy. The court did hold, however, that because the parties had agreed to the application of English contract law, the contracts
would be void in contract under English law because of duress. The contracts were essentially invalid under the proper law – English contract law, the putative proper law chosen by the parties. This illustrates that 1) blacking is not of public p/o in England but a question of essential validity (legality); 2) Essential validity (legality) of the
contract should be judged under the putative proper law of the contract.
? Formal Validity
? Formal Validity of a contract was usually established by either its proper law or the lex loci contractus, subject to the exception of public order.
? Rome Convention does not define formal validity but the Giuliano and Lagarde Report defines form as every external manifestation required on the part of a person expressing a will to be legally bound, and in the absence of which such expression of will would not be regarded as fully effective. Rome Convention at a.9(2) is broad and stipulates that a contract concluded between persons in different countries is formally valid under the law which governs under the Convention or the law of one of those countries. See also p.326 for contract concluded by agent.
? It would have been better if 9(2) stipulated that the formal validity of a contract depends on the proper law of
the agreement, while the formal validity of its performance depends on the proper law of its performance.
? Capacity
? Capacity of a person to enter into a contract has been the subject of dispute as to whether the question is to be decided by the law of the place where the contract was entered into as the domicile or residence of the person in question or by the proper law of the contract.
? Australian Law R eform Commission: supports a rule that capacity according to either law of the relevant party?s residence or the proper law of the contract should suffice to make a valid contract. (p.237)
? Prof thinks that decision as to capacity of the person should be part of the general decision as to whether the
contract is valid, in a uniform methodology, which takes into account public o/p, mandatory rules, evasion and all the exception.
? Dépe?age
? This is the dividing into two or more parts and, in conflicts of law, means that a legal relationship (a contract or delict) can have two or more different parts, each subject to a different law.
? Thus is an arbitration proceeding, one law may apply to the agreement to arbitrate a dispute, the contract under dispute may be subject to another law; the arbitration proceedings themselves to yet a different law and rules, and the performance of the award to even another law.
? Those who have difficulty in accepting dépe?age in respect to conflict of contract laws should look at the principles of formal and material validity: the possibility of different laws affecting a contract?s formation and content. Formal and material validity as a distinction is an admission that depecage exists in the conflict of contract laws. In the same way, the drawing of a distinction between the law of a contract and the law of its performance is another example.
? Depecage is more and more accepted to contract, as seen in the Rome Convention (a.3(1) and 4(1)) and in the Restatement Second, Revisions, 1988.
?Contract and Tort: It is often very difficult to distinguish between claims in tort and claims in contract. Very often, the claimant has both rights available or at least as alternatives. It is dangerous to have different conflict rules for tort and contract. This is why a general rule such as the closest and most real connection for both contract and tort is sensible.
?Conflict Presumptions of the Closest and Most Real Connection: useful as pointing in a certain direction, but can be dangerous unless they themselves have an escape hatch allowing them to be avoided at the discretion of the judge.
? The multiple rules of the Restatement First and Second, of Dicey & Morris and of McLeod are presumptions based on a basic principle – the closest and most real connection – added to which are escape hatches allowing the court to revert to the law of the closest and most real connection (at its discretion) when injustice otherwise is likely to occur. It would be better apply the closest and most real connection immediately.
? Escape Clauses:
? 2 types: 1) those found in codes or statutes permitting a different law to apply as a general rule and 2) those which permit a particular rule or presumption to be ignored if the court believes it is wise to do so.
? Escape clauses allow a choice of law rule or choice of law presumption to be circumvented when it is clear that the law chosen has only a slight connection to the facts of the case and another law has a much closer connection.
? A general escape clause is found in a.15 of the Swiss Federal Statute on Private International Law (p.239 TEXT).
See also a.3082 CCQ. See Restatement Second at p.240.
? See p.240 for examples of particular escape clauses: Rome Convention (a.4(5), 5(2), 6(2), 7(2), 8(2)).
? Conclusion:
? Formal and material validity, capacity, choice of law (express or otherwise) cannot be adjudged on their own. There are too many exceptions, such as public order, legality, mandatory rules, evasion of the law, all of which are subject to conflict presumptions, which, in turn, are subject to escape hatches.
? Doctrinal rules, national laws and international conventions of conflict of laws provide piecemeal, often incoherent, unrelated directions. Rather, each choice of law question should be decided by means of a uniform, consistent
methodology which faces each question and exception in turn.
? Chapter X – Bills of Lading:
? See Origins at p.292.
? Bills of lading are contracts for the carriage of goods, unlike charterparties, which are contracts for hire of the ship or of her services. A bill of lading is a contract of carriage, a receipt and a document of title, while a waybill is a nonnegotiable bill of lading, i.e. it is a contract of carriage and a receipt but not a document of title.
?A …straight bill? is a waybill, as defined specifically under the terms of the excellent US Bills of Lading Act, known as the Pomerene Act 1916.
?The modern contract of carriage includes not only a bill of lading and a waybill, but also a ship?s delivery orde r and electronic documents.
? A BoL is signed by only one party and is issued only after the ship sails. It is not the contract, but only the best evidence of the contract. The real contract includes the offer, the oral and written agreements for shipment, the advertisements of the carrier, the booking note, the carrier?s tariff, as well as the bill of lading itself, and even certain practices of the carrier known to, and accepted by, the shipper.
? A BoL itself is not a contract of adhesion, but a standard form contract – a printed form to which various items and details are added by one of the parties (usually the carrier). On occasion, however, shipowners will have copies of various carriers? bills of lading on and it is the shipper who will insert the d escription of the cargo into these
documents, which are then returned to the carrier for completion and signature. The shipper, who usually sees the BoL only after the ship has sailed, will not be bound by special terms which are contrary to what he had particularly agreed upon. Nor should the consignee or endorsee of such a BoL be so bound.
? BoL vs. Charterparty: Both are contracts for transportation of goods, but the BoL is a contract of carriage of goods while a charterparty is a contract of hire of the ship or of her services. More at p.295).
?BoL are used, for the most part, in the …liner? trade, where a common carrier offers to transport the public?s goods on a pre-arranged route (or line) at pre-arranged times. Voyage charterparties, on the other hand, are used in the private carriage of goods, usually a single shipper from one place to another. Time charterparties are for the hire of the ship?s services over a period of time and a bareboat charter is the hire of the ship itself devoid of master an d crew. A demise charter is a bareboat charter where the master and crew are named by the owner but serve under the
responsibility and control of the charterer.
?Carriage by BoL is similar to riding on a bus route; voyage chartering is similar to hiring a taxi for a day?s outing, and demise chartering is similar to leasing a car for a very long time with a driver chosen by the owner but paid and controlled by the passenger. A bareboat charter is similar to the long-term lease of a car without a driver.
? In many, of not most, contracts of transportation of goods, a BoL and at least one charterparty are involved. It is therefore essential, in deciding which law is applicable, to first decide if it is the BoL or the charterparty which is the contract under consideration. A BoL in the hands of a charterer who is also the shipper is only a receipt and it is the charterparty which is the contract of hire (and of transportation) between the parties. This is important because the charterparty is not subject to the compulsory provisions of the Hague or Hague/Visby or Hamburg Rules, unless they are incorporated into the charterparty by reference. On the other hand, a bill of lading issued under a charterparty, but transferred to a third party acting in good faith, is the contract of carriage between the third party, on the one hand, and the contracting and actual carrier, on the other. In this case, the mandatory provisions of the Hague or
Hague/Visby or Hamburg Rules apply.
? Directives in Carriage of Goods Conventions
? International carriage conventions are mandatory: Unlike transport under charterparties, is subject in most cases to the compulsory application of one or other of the international carriage of goods conventions. These carriage of goods conventions contain mandatory directives as to their applicability.
?The Hague Rules (1924): mandatory as seen from a.3(8) and 10, but do not contain a statement indicating that they have …force of law? as do the Visby rules. Nevertheless, most courts and authorities hav e considered them as having force of law.
?The Hague/Visby Rules (1968 & 1979): Mandatory because of a.3(8), while a.10 states that each contracting state shall apply the provisions of this Convention, thus giving them force of law. The UK Carriage of Goods by Sea Act 1971, implementing the Visby Rules, specifically gives the Rules …force of law? at s.1(2), 1(3) , 1(6) and 1(7), thus expressly answering the Privy Council in Vita Food Products. A paramount clause is not necessary under a.10 of the Visby Rules, and was never really considered under the Hague Rules.
?Hamburg Rules (1978): apply to all contract of carriage by sea, not merely BoL, and to contracts for shipment inward and outward, but only if a contracting state is involved.
? The Hamburg Rules (a.2(1)) gives the plaintiff the choice of jurisdiction (but not choice of law, the Hamburg Rules being mandatory). The plaintiff, either shipper (most often) or carrier (more rarely) may sue before the
competent court in either: 1) the principal place of business of defendant or, in the absence of such a place, the place of the defendant?s habitual residence; 2) the place where the contract was made, provided the defendant has a branch, agency or office there through which the contract was made, 3) the port of loading or discharge; or 4) any other place designated in the contract of carriage.
? Suit may also be taken in the courts of any port or place in a contracting State where the carrying vessel or one of its sister ships may have been arrested, subje ct to the defendant?s right to have the case removed to a court mentioned in a.2(1) on giving security (a.21(2)). Moreover, after the cargo claim has arisen, the parties may agree on
a place for instituting the action (a.21(5)).
? The Hamburg Rules at a.22(3) and (6) have stipulations similar to a.21(1) and (5) respectively as the choice of jurisdiction in questions of arbitration, but again, the only applicable law is the Hamburg Rules, because they are mandatory.
?The Multimodal Convention (1980): see p.298.
? Directives in Conflict Conventions & Laws
? Montevideo Convention (1940): a.25-6: when the goods are transported within a single Treaty State or when transport contracts are to be executed in one of the Treaty States, such contracts are governed by the law of that State, regardless of the place where the contracts were concluded. The place of execution refers to the port where the merchandise is unloaded or the passengers are disembarked (a.26)
? Rome Convention (1980): a.3(1): contains a conflicts directive as to a choice of law, whether express or implied, whereby the contract is subject to the law chosen by the parties, or the choice of which is demonstrated with
reasonable certainty by the terms of the contract or the circumstances of the case.
? In the case of absence of express or implied choice, a.4(1) stipulates that the contract shall be governed by the law of the country with which it is most closely connected.
? A.4(2) sets out a rebuttable presumption that the most closely connected country is the one which the party who is to effect the characteristic performance has his habitual residence or its …central administration? or in some cases, his principal place of business. Under a.4(4), however, the presumption in a.4(2) does not apply to …contracts of carriage of goods? which term includes …single-voyage charterparties and other contracts the main purpose of which is the carriage of goods.” Rather, there is a rebuttable presumption that the country of the carrier?s principal place of business is the most closely connected country, if it is also the country in which the loading or discharge took place or where the consignor?s principal place of business is located.
? Escape hatch (a.4(5): The presumptions established by a.4(2) and 4 are to be disregarded if it appears from the circumstances as a whole that the contract is more closely connected with another country. Nor does a.4(2) apply if the characteristic performance cannot be determined.
? a 21 stipulates that the Rome Convention may not prejudice the application of international conventions to which the contracting state is or becomes a party. This means that in a direct confrontation between a law chosen under the Rome Convention and a shipment from a EC state which is party to the Hague/Visby rules, the latter shall apply.
? Australian Law reform: p.300-301
? Various conflict of Law Theories and Bills of Lading (see p.302ff)
? For a conflict of law to result, there must be at last 2 competing legal systems. Until the end of the 16th C, the maritime law of Europe, the lex maritima, was universally accepted and applied as an acknowledged part of the law merchant, the lex maritima. Because there was only one law, there was no conflict.
? Law of the Flag:The law of the ship?s flag was perhaps the earliest single criterion used to decide applicable carriage of goods law. The law of the flag is less relevant to BoL than to Charterparties, which latter concern the hire of a specific ship (with its flag) and its services, while BoLs are more concerned with the goods being transported.
?Territorial theory:
1)lex loci contractus: If a BoL is issued in a particular jurisdiction, then that jurisdiction must have had a prime
significance for the parties, unless the contractants expressed a contrary intention. However, this is not always
satisfactory. In particular, it ignores the place of performance, the place of suit or arbitration, the currency of
performance, the place of payment, the nationalities of the parties, their place of business, etc., and in fact the
place of the formation of the contract may be entirely fortuitous. Applying this theory may be consistent, but
does not necessarily result in the properly applicable law.
2)lex loci solutionis: as described in Chatenay v. Brazilian Submarine, this depends upon both parties having to
perform their obligations in the same country. Thus, the two most integral acts to result from a contract are
united in one jurisdiction. Like the ship?s flag and the place of contracting, the place of performa nce is but a
single factor, which taken in isolation, should not determine the applicable law. It must be considered, along
with other factors surrounding a contract.
? Express choice: Since at least 1796 and the decision in Gienar v. Meyer, and even as early as 1760 in Robinson v.
Bland, English courts have held that the governing law is that chosen by the contracting parties. Even under the territorial theory, express choice of the parties was a binding consideration in the choice of contract law. The par ties? free choice would not be upheld, however, if there was a violation of the public policy of the forum or if the choice was not bona fide or legal. One such limitation was underscored in The Hollandia, where it was held that the parties could not avoid the Hague/Visby Rules by virtue of a contractual provision.
? Implied, inferred or imputed choice: When no express choice of law clause appear in the contract, English and other CL courts next attempt to find implied intention by such evidence as an arbitration or jurisdiction clause. A contractual term which is valid under one law but invalid under another might point to the law under which the term is still usable. A BoL clause incorporating the terms of a charterparty has been held to imply an intention that the law governing the charterparty is to be applied to the BoL. The use of certain forms, as well as the use of certain
expressions, has been found to indicate the parties? implied intentions. These same criteria continue to be useful in inferring the actual intention of the parties as to choice of law under the Rome Convention. Their utility has also been confirmed in Australia. The principle of contra proferentem, however, has been used against the carrier where there was ambiguity in its BoL.
? Proper Law of the contract: the closest and most real connection: In 1951, an English court formally recognized that the proper law to govern a contract could be arrived at objectively, by looking at the contract terms and
circumstances surrounding it, witho ut the parties? implied intention being the sole criterion (Bonython v.
Commonwealth of Australia). In that case, the court referred to the closest and most real connection as a test to ascertain the proper law of the contract. (See example at p.306)
? The Lex fori – the desire to promote local jurisdiction:
a)England and London: Suit or arbitration in London can provide efficient and sound justice by competent
courts, arbitrators and counsel; it is therefore in the interest of many foreigners to resolve their disputes there.
(more at p.307) Courts are seen to cooperate in that regard. It is noteworthy that even if a contract has bot
been entered into or even been breached in the UK, it can be litigated here if English law is stipulated as being
applicable. For all the above reasons, English law is at times applied by English courts, even when some other
law would seem to be the properly applicable law. See the San Nicholas and Mineracoas v. E.F. Marine
(p.307-8).
b)US: The seemingly unanimous desire of the English merchants, barristers, solicitors (and even courts) to
promote the application of English law, necessary in many cases to find English jurisdiction, is not too
different from the approach of American courts in applying governmental interest analysis. Many reasons are
given to accept American Jurisdiction, usually because of the desire of litigants and courts to be able to award
high sums of money to the victims improperly treated.
? Negotiations of Bills of Lading: see p.308ff to see why BoL are documents of transfer and not negotiable instruments. Thus, Rome Convention applies. In order for a document to be a negotiable instrument, it must be transferable by delivery, or by indorsement and delivery, so as to confer a good title on a bona fide transfere e, despite defects in the transferor?s title. A BoL is not a negotiable instrument because the endorsee does not get a better title to the goods than his assignor merely by virtue of the endorsement of the bill.
? Vita Foods Decision: Despite the mandatory nature of the Hague Rules, the Privy Council held that the Hague Rules were not mandatory if the paramount clause was not present in the bill of lading. The court applied the conflict principle
of express choice of the parties, ignoring the compulsory nature of the Hague Rules as in a.3(8) and 10. Fortunately, the decision has been distinguished or ignored on all sides, by-passed by the Visby Rules, by private agreement, and by the lack of any reference to paramount clauses in the Visby Rules, the Hamburg Rules and the multimodal Convention. See p.316ff for opposition to the decision. Therefore, the decision, although not approved for the mandatory nature of the Hague Rules, is nevertheless good law as to the expressed choice of the parties being a fundamental criterion or contact in determining the proper law of a contract.
? US Carriage of Goods by Sea Act: applies to shipments both inward to the US and outward from the US in foreign trade (instead of outward only as in most other Hague Rules nations). This violates the principle comity of nations3 and the basic principles of conflict of laws. The inward application of COGSA was perhaps useful in the past for American consignees, when the package limitations of many nations were derisory or non-existent as compared with the US$500. Today, it is often a handicap in the light of the higher limits of Visby and Hamburg and the drop of the value of $500 from 1936 to the present.
? The inward/outward application of COGSA also violates the s.197 of the Restatement Second (validity of the contract for the transportation, absent express choice, is determined by the local law of the state of departure, unless a more significant relationship is established).
? The Philippines, Liberia, and Belgium also apply the Hague Rules inwards and outwards.
? see p.321 for how Hague/Visby rules are more/less favourable to cargo than Hague Rules (COGSA)
? The result of the US application of COGSA inwards is unfortunate. American courts have applied COGSA (and its lower package limit) even to shipments from Hague/Visby nations, which have a higher package as well as a kilo limit. Fortunately, American courts have permitted BoL clauses which increase the carrier?s liability rather than relieving or lessening liability. Thus a shipment from Belgium, Spain, Sweden, or Italy to the US hash been held subject the higher Visby package and kilo values (see Daval Steel v. Acadia Forest and Associated Metals v. M/V Lumbe) ? Similar decisions should have been rendered in other shipments from Visby nations, but the clause incorporating the Visby Rules was not deemed clear enough (Sunds Defibrator v. Atlantic Star). In each case, the Visby Rules should have been deemed applicable, being the proper law of the contract and also because of their mandatory nature.
? Nine Package and Limitation Regimes (see p.322)
? The Hamburg Rules and Conflicts with Hague and Hague/Visby
? Hamburg rules also apply inwards and outwards.
? Since the entry into force of the Hamburg Rules (1992), we now have 3 international carriage of goods by Sea conventions and 9 package and kilo regimes. As a consequence, various conflicts may arise, and will generally be resolved by applying the regime which favours the cargo claimant, in virtue of the Hague and Hague/Visby Rules at
a.3(8) and 5, the Hamburg Rules at a.23(1) and (2).
? See scenarios at p.325. and Hamburg Rules vs. Hague and Hague/Visby Rules.
? Conclusions
? Ocean BoL are only documents of title (or documents of transfer) and not negotiable instruments. In consequence,
a.1(2)(c) of the Rome Convention, at best, only exclude BoL from its scope in respect of the so-called …negotiable
character? but not in respect of their character as contracts of carriage.
? The 3 international Conventions (Hague Rules, etc.) do resolve certain conflicts revolving around BoLs, by virtue of the mandatory nature of these international regimes. Their compulsory nature is now generally acknowledged as overriding unbridled freedom of choice of law by the parties (à la Vita Food Products) and is even beginning to be recognized by American courts as they give effect to higher Visby package/kilo limitations on shipments inbound to US ports, despite COSGA.
? Regrettably, the coming into force of the Hamburg Rules, with its compulsory inwards/outwards application,
promises to generate new conflict of laws, while other conflicts in respect of the nine package/kilo regimes may arise, even between States ostensibly party to the same carriage by sea convention.
? With BoL, as with other contracts, single rules of thumb, such as law of the flag, lex loci contractus or lex loci solutionis are outmoded and inadequate tools to determine the properly applicable law and should be discarded in favour of the closest and most real connection (or most significant relationship). Better still is the use of a consistent methodology, as proposed in ch.2.
? Sunds Defibrator v. Atlantic Star (p.120 CSBK)
? Carrier claims that if it is liable for any damage, it is only liable to a maximum of $500/package pursuant to the terms of the BoL and the US Carriage of Goods by Sea Act (COGSA).
3 By the principle of comity, courts in one country will respect the law and judgements of other countries, with the exception that this respect will be reciprocated. Comity was first enunciated by Story. For judicial treatment, see Somportex v. Philadelphia Chewing Gum, Atlantic Ship Supply v. The M/V Lucy. However, a criticism of comity by Cheshire & North.