Implementation of Non-State Law: Issues in Private International Law. A Review of Selected Contributions

Heidemann, Maren

doi:10.1007/978-3-642-27500-5_3

Maren Heidemann²

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Abstract

In this Chapter I will be looking at the legal framework of cross border contracts, the role of non-state law in arbitration and commercial law and the effects of the European legislation on the development of cross border trade. Methods of applying transnational law in a national context are therefore the main focus.

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Notes

1.
Cf 1. above.
2.
See Sect. 2.4.2.1.
3.
European Commission, Green Paper from the Commission on policy options for progress towards a European Contract Law for Consumers and Businesses, COM(2010)348final (2010).
4.
LJ Waller in Halpern v Halpern [2007] EWCA Civ 291, para 21, quoting from the 14th Edition of Dicey, Morris and Collins ‘that a choice of [non-state law] is not an express choice of law under the Rome Convention’. See also Sect. 2.5.1.
5.
European Commission, Green Paper from the Commission on policy options for progress towards a European Contract Law for Consumers and Businesses, COM(2010)348final (2010), 10, note 27.
6.
See Sect. 2.5.4.
7.
See Heidemann (2007), chapter 7.
8.
See e.g. Mankowski (2003).
9.
But as all too often this choice may also be futile this concern is not shared by the author. See for one plausible explanation alone Kagami’s evaluation of the role of timing in the choice of law and its significance for use in game theories, Kagami (2006), pp. 19–21.
10.
Well described as an ‘atavistic power game’ by Mankowski (2003), p. 2, col 2.
11.
See Sect. 3.7.2.
12.
Cordero-Moss (2010), p. 81 et seq.
13.
Cordero-Moss (2010), p. 81.
14.
Kronke und (2000), p. 385, 390.
15.
‘Eurotunnel v. Balfour Beatty’ 2 Lloyd's Rep. 7 (C.A.); [1993] 1 Llloyd's Rep. 291 (H.L.).
16.
Section 3.6.
17.
1980 Convention of the Law applicable to contractual obligations as enacted in the United Kingdom by the Contracts (Applicable Law) Act 1990.
18.
Reg (EC) 593/2008.
19.
Fawcett, Harris and Bridge (2005), No. 16.111.
20.
Commission of the European Communities, Green Paper on the conversion of the Rome Convention of 1980 on the law applicable to contractual obligations into a Community instrument and its modernisation, COM(2002) 654 final.
21.
Ibid., para 3.2.8.1.
22.
Operational conclusions expert group, 12 April 2011, stakeholders, available at http://ec.europa.eu/justice/contract/stakeholder-meeting/index_en.htm [last accessed 12 June 2011], 2.
23.
Private internation law.
24.
COM(2011) 635 final.
25.
COM (2011) 635 final, 6.
26.
Ibid.
27.
Briggs (2008), p. 383 (10.04).
28.
So that they are not ‘contracting out’ as some authors might like to put it, cf Briggs (2008), p. 383 (10.03).
29.
Briggs (2008), p. 383 (10.04.).
30.
“The test should probably be whether the content of the rules chosen is clear and complete enough to meet the general requirements of certainty of terms.”, Briggs (2008), p. 385 (10.06).
31.
Brigss (2008), p. 385 (10.06). Where he points out that most supporters limit such a choice to arbitration proceedings anyway.
32.
Shamil Bank of Bahrain EC v Beximco Pharmaceuticals Ltd. [2004] EWCA Civ 19, [2004] 1 WLR 1784.
33.
Halpern & Ors v Halpern & Anor [2007] EWCA Civ 291.
34.
Briggs (2008), p. 386 (10.08).
35.
See for instance Briggs (2008), 10.14.
36.
Briggs calls them ‘protected relationships’ (2008), p. 389 (10.14).
37.
Briggs (2008), 10.11.
38.
Briggs (2008), 10.11.
39.
Briggs (2008), 10.11.
40.
Leaving aside the difficulty of establishing a party’s habitual residence here, this is obviously replacing or comprising the ‘central administration’ in case of a company as provided for in the Rome Convention.
41.
An intense discussion of the case law in the UK and in Europe is presented by Hill (2004), p. 325.
42.
The latter is sometimes called ‘personality’ principle and usually discussed in the context of the law applicable to torts where it has become the counterpart of the ‘territoriality’ principle.
43.
This was in fact the same in the pre-Rome Convention continental jurisdictions but not worded in such a self-assertive manner.
44.
Meaning primarily ‘B2C’ contracts. Contracts among consumers (contracts for non- professional purposes) might not display the potential imbalance of bargaining power which is at the heart of consumer protection.
45.
Briggs (2008), p. 427 (11.10).
46.
Clarkson and Hill (2006), p. 196.
47.
Rome Convention, the 1980 Rome Convention on the law applicable to contractual obligations.
48.
1992 Netherlands Jurisprudentie 750.
49.
Clarkson and Hill (2006), p. 190.
50.
Clarkson and Hill (2006), p. 190.
51.
[2001] 1 WLR 1745.
52.
Hence the reservations made under the RC by a number of states.
53.
One opinion sees signs of immaturity in potential users of unlimited choice of law: “Die Lehre von der Teilrechtswahl bedeutet nicht, daß sich die Parteien Gesetze wie Kinder die Rosinen aus dem Teig herauspicken dürfen.” (The doctrine of a cumulative choice of law does not mean that the parties are allowed to pick the raisins from the dough like children do.), Bar (1991), vol. 2 No. 426.
54.
Vita Food Products Inc. v. Unus Shipping Co. Ltd., [1939] A.C. 277. See also again the discussion by Briggs (2008), 10.2, 10.03.
55.
See the overview over the existing literature in Basedow et al. (2006).
56.
See especially the concise and interesting contributions by Ota (2006), pp. 3–14, Kagami (2006), pp. 15–32 and Shokuza.
57.
Schäfer and Lantermann (2006), pp. 87–119.
58.
Michaels (2006), pp. 144–184, at p. 144 note 1.
59.
Rühl (2007).
60.
Joseph Story coined the expression ‘conflict of laws’, in the early nineteenth century. The English terminology not only for the act of choosing or establishing the law applicable to a contract but for the whole area of law is choice of laws or private international law.
61.
The sources of law she compares are the Rome Convention (Articles 3 and 5), the UCC (§1–105, now §1–301) and the Restatement Second of Contracts, §187.
62.
Rühl (2007) at II. 1., esp. p. 156 and notes.
63.
Rühl (2007), p. 158, note 26.
64.
Such as in the ‘Gran Canaria’ cases, see Rühl (2007), p. 161, note 36.
65.
Rühl (2007), p. 167–171.
66.
See in support of this argument in particular America Online Inc. v Superior Court 108 Ca. Rptr. 2nd 699 (Calif. App. 2001): the fact that the choice of law incorporated in the (B2C) contract pointed to Virginia law which was less favourable to consumers than Californian law was conceived to represent a waiver of the consumer law in California which was then decided to be inadmissible (i.e. contrary to Californian public policy) and hence invalidated the choice of law clause.
67.
E.g. the laws of Louisiana, L Revised Statutes §51:1418 C (1) and Oregon, O Revised Statutes §81.105 and see Rühl (2007), p. 170.
68.
Rühhl (2007), p. 173.
69.
Oregon Revised Statutes §81.120.
70.
Louisiana Civil Code Article 3540.
71.
This will be the very group of cases that might benefit from a choice of non-state law and that most often reach a settlement in arbitration, cf. Heidemann (2007), (2008), p. 21–22 (227–244) and Dasser (2008).
72.
Radioactive, J.V. v Manson, 153 F. Supp.2nd 462 1993, S.D.N.Y. 2001). Quote from this decision at p. 471 after Rühl (2007), p. 161, note 40: “New York federal and state courts have significant experience with music industry contracts, and the parties wanted to avail themselves of that experience by selecting a New York forum and New York law.”
73.
Restatement (Second) §187, cmt.f, Rühl (2007), p. 161.
74.
Op. cit., Rühl (2007), p. 61 note 39 quoting Ribstein (1993), p. 245, at 264.
75.
Op. cit., Rühl (2007), pp. 164–167.
76.
Nafziger (2002), p. 397; Symeonides (2003), p. 726.
77.
Baetge (2007).
78.
Weller (2007).
79.
See below.
80.
This could be a large number of consumer contracts viewed together or large volume commercial transactions both making for a noticeable proportion of GDP.
81.
Cf. Dalhuisen (2010), p. 199 and 202.
82.
Baetge (2007).
83.
Baetge (2007), p. 230.
84.
Hoffmann-La Roche Ltd v Empagran S. A. 124, S.Ct. 2359 (2004).
85.
Ibid., p. 231.
86.
Such as extradition agreements or administrative or legal co-operation or mutual assistance agreements.
87.
For example unfair contract terms legislation or anti-discrimination laws in employment contracts. See further discussion below and Wagner (2010).
88.
Weller (2007), pp. 245–255.
89.
Weller (2007), pp. 245–255.
90.
Weller (2007), p. 260.
91.
Weller (2007), p. 260, note 106 quoting Callies (2006), p. 59.
92.
This is another expression of the American understanding of ‘state interest’, see e.g. Currie (1959), p. 171, 172—comity was used in the Empagran judgement, above, as a means of responding the interventions of foreign states, not in the European tradition.
93.
Teubner (1996), p. 11 as quoted in Weller (2007), p. 259.
94.
Teubner (1996), p. 13.
95.
Dalhuisen (2010), see a full review of all three volumes in Heidemann (2011), p. 52.
96.
Ibid., p.206.
97.
Ibid., p.207.
98.
Ibid.
99.
Cf. Heidemann (2009), p. 119.
100.
I use here the narrower term contract law instead of the terms private law or law of obligations which Wagner uses in the German text of his article because these terms comprise a wider area of German private law but are not identical with the English use of these words, so that reducing the terminology to the subject matter of this paper appears useful.
101.
Wagner (2010), IV.1, pp. 18–21.
102.
93/13/EC, 5 April 1993, implemented in Germany since 1996 and since transferred into the new BGB of 2001.
103.
Cf. Wagner (2010), p. 18, 20.
104.
Wagner (2010), p. 19 and 16.
105.
The classic idea of liberalism, or as Wagner puts it—its misconception and caricature, Wagner (2010), p. 19.
106.
Wagner (2010), p. 19.
107.
Cf. Wagner (2010), p. 19.
108.
Wagner quotes Isensee and Schmidt-Rimpler and Canaris (1999), p. 20, notes 34–36.
109.
Wagner (2010), p. 18.
110.
See for a concise overview of the development of private law in Europe Grossi (2010).
111.
Ibid., p. 20.
112.
Ibid.
113.
Ibid.
114.
Ibid. 20/21.
115.
Council Directive 87/102/EEC and Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC.
116.
Directive 99/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees.
117.
Council Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises.
118.
Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts.
119.
Directive 94/47/EC of the European Parliament and the Council of 26 October 1994 on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a timeshare basis.
120.
Wagner (2010), p. 46.
121.
Allgemeines Gleichbehandlungsgesetz, AGG, of 14 Aug 2006 (General equal treatment law).
122.
Wagner (2010), p. 49.
123.
Wagner (2010), p. 51.
124.
B.N.O Walrave and L.J.N. Koch v Association Union cycliste internationale, Koninklijke Nederlandsche Wielren Unie and Federación Española Ciclismo, (1974) Case 36-74.
125.
Union Royale Belge des Sociétés de Football Association ASBL v Jean-Marc Bosman (1995) C-415/93.
126.
Judgment of 15 June 1978, Gabrielle Defrenne v Société Anonyme Belge de Navigation Aérienne Sabena (1978) Case 149/77.
127.
Roman Angonese v. Cassa de Risparmio di Bolzano (1998) Case C-281/98.
128.
Gaetano Donà v Mario Mantero [1976] ECR 133, Case 13/76.
129.
Werner Mangold v Rüdiger Helm (2005) Case C-144/04.
130.
Ibid., p.57.
131.
Ibid., p.58.
132.
Ibid., pp. 55–58. But see Ibid., p. 80 where Wagner concedes that private law should be considered as an instrument to achieve political objectives. His recommendations how to do this better than according to his view of the current lex lata remain very summary.
133.
Weimarer Reichsverfassung.
134.
BVerfGE 8, 274; 72, 155, 170; 12, 341,347; 65,196, 210; 74, 129,151; 89, 214, 231; 103, 89, 100.
135.
BVerfGE 7, 198 (judgment of 15th January 1958).
136.
Wagner (2010), pp. 77–81.
137.
A point that was picked up on in the discussion after his presentation of this paper at the symposion of the Ernst Von Caemmerer Stiftung in Freiburg in 2009 by Prof. Picker.
138.
“… a disproportionate breach of civil liberties”, Wagner (2010), p. 57, summarises his points.
139.
Ibid., p. 80.
140.
Ibid., p. 81 (VI).
141.
Ibid., p.74, referring to the agency decision of the BGH and the Hohenzollern case, BGH, Urteil vom 26. April 2006—IV ZR 26/05; NJW 2006, 2856; BGHZ 167, 272.
142.
Ibid., p. 74/75.
143.
Ibid., p. 75. Similar Schilf (2005), p. 243.
144.
The first time it appears on page 19 in a slightly ironic context. See also Schilf (2005), p. 243.
145.
Schilf (2005), p. 75.
146.
Bundesgerichtshof, the German Federal Supreme Court dealing with civil and criminal matters.
147.
The dilemma is illustrated well by the quote by Dürig (1956), p. 157: “Offensichtlich verfehlt wäre es, wenn man von der Tatsache, daß auch die Zivilrechtsprechung (weil staatliche Tätigkeit) als solche nach Article 1 Abs. 3 [GG] grundrechtsgebunden ist, irgendwie zurückschließen würde auf das materielle Zivilrecht, das der Zivilrechtsprechung zur Entscheidung anvertraut ist.”—‘It would obviously be wrong to somehow derive from the fact that civil courts (exercising state action) are bound by the fundamental law under Article 1 (3) [GG] an effect onto the substantive civil law which is subject to civil jurisdiction’ [as opposed to constitutional jurisdiction’, as cited by Wagner (2010), p. 66. This quote fails to offer proof or an explanation for the wrongness of such conclusions as well as posing another unanswered question—that of the exclusive jurisdiction of the civil courts over the civil law (in the German sense of the term).
148.
Bundesverfassungsgericht, the German Federal Constitutional Court.
149.
There is a Joint Senate under Article 95 (3) GG consisting of judges of all federal supreme courts except the constitutional court.
150.
Judges in the civil courts are in a difficult position to second guess the constitutional court in the absence of any formal consultation procedure. The only option of retrospective confirmation or disapproval (“die gebotene Abwägung [under Article 6 GG] sei dem BGH ‘in verfassungsrechtlich nicht mehr hinnehmbarer Weise missglückt’”, BVerfG in NJW 2004, at. p. 2010, in Wagner (2010), p. 73.). This should not be the set mechanism for obtaining authority on constitutional questions not only because of the additional burden for the parties to resort to the BVerfG but also because it discourages the readiness of the specialised courts to comment on constitutional questions as it bears the risk of being overruled in such instances.
151.
BVerfG NJW 2004, 2008, overruling BGHZ 140, 118 in which the BGH declared the clause in a contested will valid and enforceable according to which the aristocratic heir had waived his rights of the succession to the Prussian throne by his marriage to a wife of unequal descent.
152.
Organized according to Articles 94 and 95 GG.
153.
See for instance No. 3 second sentence of the operational part in the above mentioned Lüth decision, BVerfGE 7, 198.
154.
Bundesverfassungsgerichtsgesetz, the act containing the procedural rules of German Federal Constitutional Court.
155.
The author thinks that it is a misconception of the process of contracting and enforcement of contracts to take the view that agreements under the BGB can deprive a party of their constitutional freedoms as expressed by Dürig (1956), p. 160: “…eine zivilrechtlich rechtmäßige Freiheit, von anderen vertragliche Verzichte auf Grundfreiheiten anzunehmen und von anderen die Erfüllung der Verträge trotz dabei auftauchender Freiheitsbschränkungen zu verlangen.”, quoted after Wagner (2010), p. 66.
156.
This observation made by Merz (1968) has not been expanded on in subsequent years. It stood at the start of the development of standard contract terms legislation and might still serve as a model to explain modern cross-border trade.
157.
Regulation (EC) No 864/2007 of 11 July 2007 on the law applicable to non-contractual obligations (Rome II).
158.
Hague Convention of 4 May 1971 on the Law Applicable to Traffic Accidents.
159.
Kadner Graziano (2009).
160.
See ibid., note 34 referring to Swiss, German, Dutch, Belgian and Austrian law and jurisprudence on PIL and note 40 introducing further references.
161.
See case scenario ibid. at VI.2.c.
162.
Ibid. at III.
163.
‘complex construction contracts’, ibid. IV.
164.
Ibid. IV.
165.
Reminding of the position of subcontractors and suppliers in large commercial projects, Ibid. IV.

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Dr. Maren Heidemann

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Heidemann, M. (2012). Implementation of Non-State Law: Issues in Private International Law. A Review of Selected Contributions. In: Does International Trade Need a Doctrine of Transnational Law?. SpringerBriefs in Law. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-27500-5_3

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