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The Law of Open Societies
Private Ordering and Public Regulation of
Cross-Border Relations
Lectures, Lomonossov State University Moscow
11 – 15 May 2015
Jürgen Basedow, Hamburg
Director, Max Planck Institute
Associate Member, Institut de droit international
Basedow 2 / 96
Outline of the course (I)
• Introduction: PIL and social change; Purpose and methods of PIL;
Recent trends in PIL; private and public actors; types of conflict
Part I: From closed nation-states to the open society
• Philosophical foundations; globalization, its legal underpinnings and
consequences for PIL
Part II: Private ordering
• Private arrangements to cope with the international transaction
dilemma: export trade and package travel as examples
• Choice of law: theoretical foundations
• Choice of law: new domains
Basedow 3 / 96
Outline of the course (II)
• Optional law in Europe: Europeanisation of private law; Societas
europaea; unitary IP rights; CESL
• Deliberate connections (indirect choice of law): mobile connecting
factors; the principle of recognition; evasion of law
Part III: Public regulation
• Foreign policy measures and their effects in private law: (non)recognition of foreign states; embargoes; blocking statutes
• Countervailing state measures for asymmetric private relations:
consumer protection; employment relations
• Protection of foundational principles: imperative norms
Basedow 4 / 96
Introduction: PIL and social change
• The growing permeability of frontiers and the response of PIL:
– from the regulation of the periphery of legal systems to the law of global
home affairs
– from the ex post search for the proper law towards ex ante regulation of
the law applicable to the vast and growing number of international
private relations
• Consequences for the course:
– reflection on the “open society“ in a broader sense including economic
and social aspects
– an inquiry into the tendencies emerging from ex ante regulations, i.e.
international conventions and the more and more numerous national
PIL statutes
Basedow 5 / 96
Purpose and methods of PIL
• International transaction dilemma: quest for legal certainty in a
multi-jurisdictional world
• 5 methods to attain that goal:
– Localization of legal relations to find their “seat“ (proximity and choice
of law)
– Exclusive jurisdiction
– Jurisdiction dependent on recognition, i.e. the prediction that the
resulting judgement will be recognized by the law of the “seat“
– determination of the applicable law on the basis of certain values
favouring either the validation (alternative connection) or the
invalidation (cumulative connection) of a transaction
– Recognition regardless of the law applied by the foreign court
• Here: Focus on choice of law
Basedow 6 / 96
Exclusive jurisdiction
• Exclusive jurisdiction in positive law: e.g. Art 24 EU Reg 1215/2012
–
–
–
–
–
rights in rem in immovable property
constitution of legal persons
validity of entries in public registers
validity of IP rights
enforcement of judgements
• Static cases having an exclusive link with a single state
• Exclusive jurisdiction for dynamic cases ? The example of
international divorce law in England:
– LeMesurier v. LeMesurier, [1895] AC 517 (PC): exclusive jurisdiction of the
courts at the spouses‘ common domicile
– Consequence: potential denial of justice
• Concurrent jurisdiction cannot be excluded across the board,
legal certainty must be attained by other means
Basedow 7 / 96
Uniformity of outcome
• Uniformity of outcome as an objective (Savigny) to be attained by
the assignment of a legal relation to one and the same substantive
law in different courts
• Criticism: futile and even harmful (US conflicts revolution, Hartley)
– no complete harmony possible due to lex fori governing procedure
– no sufficient consideration of governmental policies involved
• Objections:
– Private law primarily serves the private interest in legal certainty
– Private interests exist already at the time a transaction is made, not only
later when litigation arises
– Where governmental interests exist (welfare state) their intensity
depends on proximity
• Consequence: bilateral conflict rules as basis; differentiation and
flexibilisation; exceptional interest analysis
Basedow 8 / 96
The principle of recognition
• Recognition establishes harmony in cross-border private relations;
a crystallization of the law in State A (e.g. a company, marriage,
judgment etc.) may extend its effects to State B
• Enshrined in positive law in federal entities:
– US: Full Faith and Credit Clause of the Constitution, Art. IV(1)
– EU: Principle of mutual recognition, Art. 67(4) and 81(1) TFEU as a
guiding principle, not directly applicable
• Suited for international private relations in general ?
• Recognition only addresses the reaction by second State B
regardless of the content of, and the law applied for, the
crystallization of law in first State A
• No answer to the choice-of-law question in State A. If lex fori,
recognition provides a strong incentive for law shopping
• Easier in federal entities than in regular cross-border relations
Basedow 9 / 96
Recent trends in PIL
• Great increase of cross-border relations and of litigation with
international dimension
• Codification: since 1978 (Austria) more than 40 national statutes on
PIL have been enacted
• Differentiation and flexibilisation of the resulting conflict rules
• Materialisation of PIL: both in conflict rules (alternative and
cumulative connections) and in substantive content (human rights,
governmental policies)
• Liberalisation: growing recognition of party autonomy in all areas of
the law
• Proceduralisation: jurisdiction, recognition of foreign judgements
and various forms of cooperation receive growing attention
Basedow 10 / 96
Public and private actors
• The traditional view on PIL is that of a state actor, either a court or
a legislature; it is mainly an ex post view directed at the
implementation of regulatory policies or foreign policy
• But private law is above all a legal framework for private actors,
allowing them to make their plans in a prospective and ex ante view
• PIL should therefore primarily focus on action taken by private
actors with regard to their cross-border relations; this approach
widens the range of possible private action beyond the choice of
the applicable law
• Public measures adopted in pursuance of regulatory and foreign
policy become an exceptional interference with private ordering,
if viewed in this perspective
Basedow 11 / 96
Types of conflicts
• Levels of regulation
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–
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Regulation at the sub-national level in federal states
Regulation at the national level
Regulation at the supra-national level (EU)
World regulation
• Resulting types of conflicts
– Vertical conflicts: a matter of constitutional law and – in Europe – of EU
law
– Horizontal conflicts: traditional matter of PIL
– Diagonal conflicts: mix of PIL, constitutional law, EU law
Basedow 12 / 96
Part I: The open society
- philosophical foundations (I) • Henri Bergson (1859 – 1941), The two sources of morality and
religion (1932): biologist view of society as an organism, developing
on a scale ranging from the closed society governed by instinct to
the open society where intelligence prevails
• “The closed society is that whose members hold together, caring
nothing for the rest of humanity, on the alert for attack or defence,
bound, in fact, for a perpetual readiness for battle. Such is human
society fresh from the hands of nature.“
• “The open society is the society which is deemed in principle to
embrace all humanity. ... Between the nation, however big, and
humanity, there lies the whole distance from the finite to the
indefinite, from the closed to the open.“
Basedow 13 / 96
The open society
- philosophical foundations (II) • Karl Raimund Popper (1902 – 1994), The open society and its
enemies (1945), a critique of the assertion by Plato, Hegel and Marx
of superior knowledge about the final goals of society
• Such claims are said to be elements of totalitarian programs and
equivalents of magic and taboos governing primitive tribal societies
(closed societies) which are juxtaposed to modern society steered
by rational discourse and decision-making (open societies)
• Commerce as a threat to the closed society: “Perhaps the most
powerful cause of the breakdown of the closed society was the
development of sea-communications and commerce. Close contact
with other tribes is liable to undermine the feeling of necessity with
which tribal institutions are viewed.“
Basedow 14 / 96
Globalisation (I)
Technical innovation as driving force
• First phase of globalisation (second half of 19th century): steam
engine, railroads, steel vessels, telegraph
• Second phase of globalisation (from 1970s onward):
– Passenger transport: widebody aircraft reducing airfares and making
air transport available for population at large
– Carriage of goods: container revolution cutting costs as compared with
traditional transport of general cargo; consequential extension of
markets
– Transport of data: internet, fibre optic cables, satelite communication
allowing for the transport of large quantities of data to very distant
destinations within seconds
• Impact on awareness of economic, social and political events and
changes: “killing of distance“ and unboundedness of discourse
Basedow 15 / 96
Globalisation (II): Trade and investment
• Trade in goods: development of worldwide merchandize exports:
1948: 59 b $; 1983: 1,838 b $; 1993: 3,676 b $; 2008: 15,717 b $
• Average growth rate of worldwide production 2000 – 2007: 3 %
p.a., of global exports 2000 – 2007: 5.5% p.a. Consequence:
growing significance of international trade in goods
• Trade in services: annual growth rate of trade in commercial
services 2000 – 2007: 12%
• International division of labour and Foreign Direct Investment
(FDI)
• Development of worldwide FDI inflows: 1982: 58 b $; 1990: 207 b
$; 2007: 1,833 b $
• Soaring growth rates and increase in mergers and acquisitions
• Drastic cuts in 2008 and 2009 due to world financial crisis, gradual
recovery
Basedow 16 / 96
Globalisation (III): Migration
• Refugees and other migrants: national statistics using different
criteria, but a minimum stay of 1 year is required
• Migration statistics include remigration, e.g. from central Asia to the
Russian Federation or from Germany to Turkey; they do not
necessarily indicate growing multiculturalism
• 2011: UN estimate 215 m migrants or 3.2% of world population.
Low immigration shares in European countries (6.8% of
population) as compared with Canada (21.3%), Australia (25.7%),
Saudi Arabia (27.8%), Israel (40.4%), United Arab Emirates (70.0%)
• “South-south“ migration between developing countries stronger
than “south-north“ migration towards higher-income OECD
countries
Basedow 17 / 96
Globalisation (IV): Assessment
• John Baylis / Steve Smith (political scientists) define globalisation
as
“the process of increasing interconnectedness between societies such
that events in one part of the world more and more have effect on
people and societies far away. A globalised world is one in which
political, economic, cultural and social events become more and
more interconnected. ... The world seems to be ‘shrinking‘, and
people are increasingly aware of this.
• Sociological and economic descriptions
• Globalisation: inescapable course of history or based on political
determination ?
Basedow 18 / 96
Legal Underpinnings of globalisation (I)
• Free trade in goods: 19th century: bilateral treaties on commerce,
friendship and navigation; post World War II: GATT as part of the
Havana Charter, de facto application; institutionalisation in the WTO
Treaty of 1994
• Basic principles: Most Favoured Nation (MFN) Treatment;
minimum liberalisation in accordance with schedules; prohibition of
quantitative restrictions; national treatment for internal taxation;
negotiations on tariff reductions
• Free trade in services: GATS as annex 1B of the WTO Treaty;
MFN clause and transparency obligation are of little effect;
liberalization is left to special commitments by states
• Free capital flows in general: OECD code of liberalization of capital
movements of 1961
Basedow 19 / 96
Legal underpinnings of globalisation (II)
• FDI: since 1959 about 3000 bilateral investment treaties (BITs)
regulating (1) the admission of foreign investors; (2) repatriation of
profits; (3) fair and equitable treatment, in particular pre-conditions of
lawful expropriation; (4) MFN clause; (5) Dispute settlement
• Migration: no comprehensive multilateral treaty except for refugees
(1951, 1967); free movement in general is ensured in the EU
• Migrant workers: numerous bilateral recruitment agreements,
concluded e.g. between Germany and Italy, Greece or Turkey in the
1960s
• Institutionalisation: foundation of numerous international lawmaking agencies
• International tribunals and dispute settlement bodies which grant
standing to private persons
Basedow 20 / 96
Consequences for policy-making (I)
• Confrontation of values and habits of lifestyle
• PIL: loss of the State‘s knowledge about the present and future
location of the centre of gravity of a legal relation (von Hayek); open
frontiers render that knowledge haphazard
• This knowledge is a basis not only for court decisions where it can
be procured ex post, but even more for legislation and regulation
where it must be available ex ante
• Loss of State knowledge deprives conflict rules of their basis and
shifts responsibility to private actors who are better placed to predict
their future whereabouts
• The shift to private ordering unfolds regulatory competition and
renders it legitimate
Basedow 21 / 96
Consequences for policy-making (II)
• Single states lose significance except for some areas where the
extraterritorial application of national laws is possible, but
• a state-driven world order can subsist only by means of
collaboration of states
• Institutionalisation of that collaboration
• Harmonization and unification of substantive laws
• Coordination of legal systems by uniform rules of private
international law and of international civil procedure
• From coordination to cooperation of courts: Hague Conventions
on children; international insolvency law
• Outlook: The enquiry aims, first, at forms of private ordering of
international prive relations, then, second, at their public regulation
Basedow 22 / 96
Part II: Private ordering
Private “anational“ arrangements
• The international transaction dilemma: rational behaviour in a
multi-jurisdictional world leads to abstention from trading due to
legal insecurity
• Public remedy: Unification of laws; difficult to achieve because of
multi-tiered legislative process and political complications
• Private remedy 1: iteration and reputation-building: commercial
agents; central counterparty in capital markets...
• Private remedy 2: procurement of “hostages“: securities such as
first demand guarantees or export credit insurance
• Examples: Export trade and package tours
Basedow 23 / 96
The export trade (I)
• The separation of trade and transport and the emergence of new
risks
• The export trade as web of multiple contractual relations: sellers
and buyers; shippers and carriers; banks and their customers;
insurers and policyholders
• The lex mercatoria as a collective designation of the various
contract forms governing those contractual relations
• Lex mercatoria: a legal system of its own, independent from any
other law ?
Basedow 24 / 96
The export trade (II): sellers & buyers
• State law on the sale of goods: pathological situations – breach of
contract, warranties etc.
• Rules on ordinary issues – procurement of documents and
certificates, insurance of the goods, sharing of costs etc. – are left to
private arrangements
• Need for tailor-made solutions and standardization: FOB, CIF etc.
• Incoterms as definitions of several trade terms; periodic survey by
ICC; current version of 2010 deals with 11 trade terms defining
intermediate points as interfaces of either party‘s obligations
• Links between the Incoterms and state law
Basedow 25 / 96
The export trade (III): carriers
• Key function of the transport document for the sale of goods
• The significance of the carrier‘s liability for the traders‘ trust in the
transport document
• Contractual exclusion of the carrier‘s liability as a threat to the
export trade
• State intervention: Harter Act 1893 (USA); Hague Rules 1924;
later amendments: Hague Visby Rules 1968
• Dissolution of the law on carrier‘s liability from trade law by
Hamburg Rules 1978 and Rotterdam Rules 2009
Basedow 26 / 96
The export trade (IV): payment
• Transfer of payment usually incumbent not on carrier, but on bank
• Documentary credit operation: contract between buyer and issuing
bank for the benefit of the seller as beneficiary
• Issuing bank irrevocably promises to pay out price to seller upon
presentation of certain documents as evidence of delivery in
conformity with the contract: “clean“ transport document, insurance
policy, certificates of origin, quality etc.
• Advising bank acting in the seller‘s country on behalf of issuing
bank, usually not accepting its own liability
• Uniform Customs and Practice for Documentary Credit, UCP 600
Basedow 27 / 96
The export trade (V): insurers
• The buyer‘s irrevocable promise to pay (UCP) depends on his being
certain of getting consideration, i.e. either the goods or
compensation resulting from carrier‘s liability or insurance money
• In CIF contracts the seller must take out cargo insurance in line with
Incoterms requirements and present a transferable cargo policy to
the issuing bank under UCP 600
• Note the interrelation between the insurance obligation, the sales
contract and the letter of credit
• The cargo insurance contract, while strictly speaking subject to the
governing state law, is usually regulated by private standard
conditions exclusively (Institute Cargo Clauses etc.).
Basedow 28 / 96
Package tours
• Emergence of tourism in the 19th century
• From the intermediary promoting contracts between the tourist and
the foreign service provider to the package tour operator promising
the organization of a whole holiday trip consisting of several travel
services (transport, hotel, excursions etc.)
• Increasing certainty through state regulation: the CCV 1970 and its
loopholes
• European Directive on Package Travel (90/314/EEC): prearrangement of a combination of different travel services
Basedow 29 / 96
Domestication of international deals
• 4 common features of export trade and package tourism:
-- recourse by the interested persons to the services of third parties
-- reduction of complexity as between the interested persons
-- relations between interested persons are domesticated
-- shifting complexity to the third party dealing with it by iteration
• The overall effect of the recourse to third persons is a
dissemination of the risk arising from international transactions
among multiple participants in the sector (indirect insurance)
Basedow 30 / 96
Private arrangements and state law
• Export trade and package tourism are examples of private
innovation paving the way out of the international transaction
dilemma
• But state law is not redundant: regulation of carriers‘ liability and
of package tour operators by international instruments and other
state law, made the new arrangements viable
• Often the specific problems of international law are shifted into
other areas of the law, e.g. from sales law into banking law
• Where national laws differ, choice-of-law remains on the agenda
• Arbitration is no escape device either: arbitrability, annulment etc.
Basedow 31 / 96
Theory of choice of law - introduction
• 1910: Joseph Beale‘s “fundamental objection“ to the parties‘ choice
of the applicable law; it “involves permission to the parties to do a
legislative act.“
• 1929: Jean-Paul Niboyet‘s “first truth that the parties‘ intention is
never superior and not even parallel to the law; it is always confined
to the circle admitted by the competent legislature.“
• After World War II Gerhard Kegel designated party autonomy as a
“stopgap“ solution, a second-best accepted for practical
convenience
• At present party autonomy is a bedrock principle of PIL, but the
theoretical foundation is still elusive. How is its success possible ?
Basedow 32 / 96
Restrictions of party autonomy (I)
• Categorical Restrictions: Latin America and Middle East
• Brazil: exclusion by Art. 9 of the Introductory Act of the Civil Code of
1942; but choice of law permitted by Law 9307/1996 for arbitral
proceedings
• Uruguay: Art. 2304 CC admits no contractual derogation from the
rules of the code on the legislative and judicial competence
• Iran: Art. 968 CC (1935): “Obligations arising out of contracts are
subject to the laws of the place where the contract was concluded,
except where the contracting are foreign nationals and have
expressly or impliedly subjected the contract to another law“.
Basedow 33 / 96
Restrictions of party autonomy (II)
• Less intrusive restrictions: widely spread
• No choice of non-state law (e.g. UNIDROIT Principles); only
incorporation within the framework of the state law governing the
contract (Rome I)
• No choice of a law lacking a substantial or reasonable relation
with the transaction in question, § 1-105 UCC
• Restrictions for specific contracts, e.g. employment, consumer or
insurance contracts, to be found in many countries
Basedow 34 / 96
Survey: theoretical objections
• Cecilia Fresnedo de Aguirre (1991): 8 rationales of proponents of
party autonomy, both practical and theoretical, are subjected to
criticism
• Here: focus on 4 of them which are of a more theoretical nature:
(1) Impairment of sovereignty;
(2) Incompatibility with ordre public;
(3) Absence of binding agreements outside a given legal order;
(4) protection of the weaker party
Basedow 35 / 96
Objections: impairment of sovereignty
• Uruguayan draftsman: “international competences ... affect, in their
legislative or judicial specification, the sovereignty of a country
where a legal relation is localised, and ... are therefore placed
above the individual will.“
• Objective, pre-individualistic, positivistic concept of law coined by
Hegel and Kelsen; state as the only and ultimate source of law, not
based on prior human action
• Contrary the subjective or contract-based theories of Locke and
Rousseau; the state is the result of individual volition
• Only subjective concept can explain the emergence of new states
and the recognition of human rights
Basedow 36 / 96
Other theoretical objections
• Incompatibility with ordre public:
-- an exception to choice of law, not a general exclusion
-- differentiation into various types of ordre public
• Binding effect of agreements only within a given legal order:
-- corona of an agreement determined by a given positive law
-- core of the agreement: pacta sunt servanda as general principle
• Protection of weaker party:
-- would be an exception to freedom of contract in general
-- solution must be more targeted, e.g. for specific types of contract
Basedow 37 / 96
Theoretical basis of party autonomy (I)
• Two strands: efficiency and natural freedom
• Efficiency:
Given the scarcity of resources, an agreement on their use and
allocation indicates the growing satisfaction of both parties which is
defined as an increase of efficiency. This also applies to choice of law
clauses.
• Doubts about efficiency as the sole justification
-- whose benefits will be taken into account ?
-- only short-term or also long-term perspective ? Problem of proof
-- competing values
Basedow 38 / 96
Theoretical basis of party autonomy (II)
• Natural freedom; Locke, Rousseau, Kant
• John Locke: “We must consider what State all Men are naturally in,
and that is, a State of perfect Freedom to order their Actions, and
dispose of their Possessions, ... within the bounds of the Law of
Nature, without ... depending upon the Will of any other men.“
• Immanuel Kant: “There is only one innate right. Freedom
(independence from being constrained by another‘s choice), insofar
as it can coexist with the freedom of every other in accordance with
a universal law, is the only original right belonging to every man by
virtue of his humanity. – This principle ... involves ...: innate equality,
that is, independence from being bound by others to more than one
can in turn bind them.“
Basedow 39 / 96
Theoretical basis of party autonomy (III)
• Enlightenment philosophy presupposes the existence of a single
legal framework, a “universal law“ (Kant); how can it operate in a
world with numerous laws?
• Choice of law agreement is meant to select that single legal
system, it is allocated before any positive law can unfold its effects
• Two types of contracts: contract-promise – dispositional contract
• Choice of law as a dispositional contract, unfolding its effects at
the very moment of its conclusion
Basedow 40 / 96
Theoretical basis of party autonomy (IV)
• From enlightenment philosophy to the Universal Declaration of
Human Rights
• Right of due process and right to legal certainty as human rights,
Art. 28 Universal Declaration
• What is the meaning of this right to legal certainty in a multijurisdictional world ? It can only be implemented by permitting the
individuals to choose the governing law. This amounts to a basic
and pre-governmental recognition of that choice.
• Affirmation by the Institut de droit international
Basedow 41 / 96
Choice of law: new domains
• Contractual relations affecting third parties: agency – Hague
Convention 1978, third party effects of assignment – Netherlands
• Tort and delict – Rome II
• Property in movables – Chinese Act 2010, in securities – Hague
Convention 2006 and intellectual property – ALI Principles
• The law of persons: capacity; enduring powers to act for incapable
persons – Hague Convention on the protection of adults
• Family law:
-- marital property – Hague Convention 1978; EU draft regulation
-- divorce – Rome III
-- maintenance – Hague Protocol 2007
• Succession – Hague Convention 1989, EU Reg 650/2012
• Procedural agreements on foreign law
Basedow 42 / 96
New domains: assignment (I)
• Multiple relations:
-- Creditor (C) – Debtor (D)
-- C = Assignor – Assignee (A)
-- A – D;
-- further relations between C and its creditors (C – CC);
-- as well as A and its creditors (A – CA)
• Economic functions: security (fiduciary) assignment; factoring;
securitization
• Issues: Which requirements for a claim brought by A against D? Will
D be discharged by payment to C? Or payment to A?
Basedow 43 / 96
New domains: assignment (II)
• The law governing the main claim (C – D relation)
• The law applicable to the assignment relation (C – A)
• The law governing the effect of the transfer of entitlement to the
claim vis-à-vis third parties, in particular CC and CA
• Art. 14 Rome I only addresses C – A (para. 1) and the scope of the
law governing the main claim (para. 2), but not explicitly third party
effects
• Dutch solution: Art. 14(2) as a narrow exception to Art. 14(1) which
also covers third party effects, allowing C and A to choose the law,
HR 16 May 1997 NJ 1998 no. 585, now Art. 10:135 Dutch Cc 2011
Basedow 44 / 96
New domains: assignment (III)
• Other national solutions: the law governing the main claim
(proposal UK government); but: intransparent for assignee
• The law of the debtor‘s residence (common law); impracticable in
the case of bulk assignments
• the law of the assignor‘s residence (Belgium: Art. 87(3); Art. 30 UN
Assignment of Receivables Convention 2001); intransparency in the
case of multiple assignments of the same claim by subsequent
creditors/assignees
• Proposal for a two tiered solution: Registration of assignments
plus choice of law for third party effects; in the absence of
registration the law of the assignor‘s residence should prevail
Basedow 45 / 96
New domains: intellectual property (I)
• Specificity of intellectual property
• History: mercantilistic background and the territoriality principle
• Framework in international law: Paris Convention of 1883
(industrial property) and Berne Convention of 1886 (copyright) with
2 principles
-- Minimum standards for protection of IP rights
-- National treatment of foreign originators
• Art. 5(2) Berne Conv.: “the extent of protection as well as the
means of redress afforded to the author shall be governed
exclusively by the laws of the country where protection is claimed.“
• Choice-of-law rule? Or prohibition of discrimination?
Basedow 46 / 96
New domains: intellectual property (II)
• Most countries follow the lex loci protectionis rule, for both
registered and non-registered ip rights
• For non-registered rights (copyright) Portugal (Art. 48) and Romania
(Art. 2624(2) CC) apply the the law of the place of first publication
or – failing that – the law of the author‘s domicile or nationality
• Security rights in IP: Recom. 248 of UNCITRAL Legislative Guide
on Secured Transactions, Supp. on Security Rights in IP: law of the
grantor‘s domicile, allowing consolidation of parallel IP under 1 law
• Is party autonomy possible in IP? If Art. 5(2) Berne Conv. is a mere
prohibition of discrimination, it would not be affected by private
choice of law; but where is party autonomy actually recognized ?
Basedow 47 / 96
New domains: intellectual property (III)
• Contracts for the sale and licensing of IP rights: general conflict
rules on contracts, e.g. Rome I, apply, but only to obligatory, not to
proprietary aspects
• IP arising from employment: Art. 60 EPA 1973: employee‘s habitual
working place, no choice
• IP from employment: Switzerland Art. 122, Poland Art. 47: IP law
ancillary to law governing the labour contract, but little choice
• Wider party autonomy for labour contracts and – indirectly – for
law applicable to resulting IP in Taiwan, Art. 42 and Belgium, Art. 93
Basedow 48 / 96
New domains: intellectual property (IV)
• Rules on IP rights emerging from employment address the question
of “initial ownership“: who is the first owner of a creation ?
• Under the lex loci protectionis that question would have to be
answered by all laws of countries for which protection is claimed. If it
is possible to reduce, either by objective connection or by the
parties‘ choice, that large number of laws to a single law in the field
of employment, why should that not also be permitted where an IP
right arises from a cooperation agreement different from labour?
• In Belgium Art. 93 § 2 does not distinguish the forms of
cooperation
• § 302 of the ALI Principles allows for a contractual designation of
the law applicable to IP arising from pre-existing relationships
Basedow 49 / 96
New domains: capacity
• Logic: how can an incapable person choose the law granting him or
her capacity? Is contracting out of incapacity possible?
• Consequence: capacity governed by the law of personal status, i.e.
either by the national law or by the law of domicile; protection of
the other party by the law of common residence (market)
• Common law jurisdictions: capacity governed by the law applicable
to the contract, § 198 Rest.2nd, Art. 3539 La.Cc. Australian Law
Refom Comm.: even if chosen by the parties
• Practical consideration: in the era of e-commerce, how can
someone assess the capacity or the whereabouts of the other party
?
Basedow 50 / 96
New domains: concluding remarks
• Broad tendency granting greater weight to the parties‘ choice of
law in many areas is undeniable
• Differences of the enabling provisions are noteworthy
-- must the choice be explicit or can it be implied?
-- are there formal requirements for the validity of the choice?
-- is dépeçage permitted?
-- when must the choice be made?
-- can the choice later be amended?
• Efforts should be made to review the various provisions at a later
stage aiming at greater consistency where appropriate
Basedow 51 / 96
Optional law in Europe
• Europeanisation of private law – Survey
• Fragmented legislative bases in the TFEU
• Types of legislation: decisions, directives, regulations
• “Binding“ and “optional“ regulations; the 29th or 2nd model
• Scope rules of optional instruments
• Choice of law and choice of optional instrument: double choice?
• Filling of gaps of the optional instrument
Basedow 52 / 96
Optional company law
• Survey: EEIG (e.g. arte), SE (e.g. Allianz, BASF), SCE
• The international dimension – condition of eligibility; practical
implementation and difficulties arising for the SPE
• The residual national law and private ordering
-- EEIG (Arts. 2,6 Reg. 2137/85): law at the central administration
-- SE (Art. 9 Reg. 2157/2001): Statutes + law of registered office
• Transfer of registered office/central administration into other
Member State is possible without a need of winding-up the company
• Consequence of relocation will be a change of the residual national
law; hence an indirect choice of law is permitted
Basedow 53 / 96
Optional intellectual property law (I)
• Territoriality as an impediment to the Internal Market; it cannot
entirely be overcome by harmonisation of national laws
• Unitary IP rights in the EU:
-- Community trade mark, Reg 40/94, consolidated Reg 207/2009
-- Community plant variety right, Reg 2100/94
-- Community design, Reg 6/2002
-- European patent with unitary effects, Reg 1257 and 1260/2012
• These rights are established in one go for the whole EU, in
accordance with territoriality principle, administered by EU offices
• They are not accumulations of 28 national rights, but may even
co-exist with them (Recital 6 of Reg. 207/2009 for the trade mark)
Basedow 54 / 96
Optional intellectual property law (II)
• Community trade mark acquired by registration in Alicante
• Owner may be any natural or legal person, both from inside the
EU or from third countries (national treatment)
• Comprehensive coverage of almost all pertinent issues, few gaps
• Gaps in the administrative procedure: to be filled by “the
principles of procedural law generally recognized in the Member
States“, Art. 83 Reg 207/2009
• Gaps in the legal regime of infringement proceedings: filled by
-- lex fori in respect of procedure of Community trade mark courts
-- PIL of the forum state, i.e. Art. 8(2) Rome II: lex loci actus
Basedow 55 / 96
Optional contract Law (I)
• Scholarly activities aiming at a European contract law since 1980
• 2001: first communication and public consultation by European
Commission; Action Plan in 2003; Network on Common Principles
of European Contract Law (CoPECL) 2005; Finalisation of the Draft
Common Frame of Reference (DCFR) in 2008/2009; Appointment of
Expert Group in 2010; Feasibility Study in 2011
• Proposal for a Regulation on a Common European Sales Law
(CESL) in October 2011, COM(2011) 635 final; withdrawl December
2014, announcement of new proposal
• 16 articles on scope (“chapeau rules“) + annex with 186 articles on
sale of goods, supply of digital content and related services
Basedow 56 / 96
Optional contract law (II)
• Contrary to corporate and IP law, registration is insignificant for
the determination of the law governing a contract; hence that law is
intransparent for third parties and cannot bind them
• Rules on scope are the more important: choice of law v.
incorporation
• 2 alternative conceptions: the 2nd model, i.e. optional law as part of
the (national) substantive law applicable in accordance with PIL, or
the 28th model, i.e. optional law as a special version of uniform law
(e.g. CISG, Montreal Convention) with scope rules superseding PIL
• CESL proposed as 2nd model of Member States‘ laws; consequently
not available where the law of a non-EU state governs
Basedow 57 / 96
Optional contract law (III)
• CESL eligible only for cross-border transactions, Art. 4, and only
for B2C transactions and for B2B transactions if a party is a SME
• CESL not available for two big traders and not for domestic
contracts, unless Member State decides otherwise, Art. 13
• What is a cross-border transaction? B2B and B2C contracts
• One of the parties must be established in the EU; hence CESL is
available for transactions between EU party and third-state party,
but not for two third-state parties
• No recourse to national law for interpretation or gap-filling
permitted, Art. 7(2)
Basedow 58 / 96
Optional law in international treaties
• Uniform Law on International Sale of Goods (ULIS) of 1964
-- no prior application of PIL (=29th model)
-- reservation under Art. V: application only if chosen by the parties
• Franco-German optional matrimonial property regime, bilateral
convention of 4 February 2010: assets acquired before and after
marriage remain separate property; dissolution of marriage gives
rise to a compensatory claim sounding in money
• Treaty provides for substantive law; regime is available irrespective
of international dimension of marriage
•
Available where the applicable law is either French or German
(2nd model); quid where a third state‘s law governs as spouses live
there ?
Basedow 59 / 96
Concluding remarks on optional law
• Creation of optional law becomes popular in the EU because it is
less intrusive on national law: next candidate after sales law will
likely be insurance law
• Confinement of optional law to cross-border situations is
widespread, but not imperative
• Optional law unfolds so-called vertical regulatory competition
• Relation between the opting-in agreement and private international
law, in particular the parties‘ choice of law is still uncertain; the 2nd
model appears too complex and contradictory: why should we apply
conflict rules in the absence of a conflict of laws?
Basedow 60 / 96
Indirect choice of law
(Deliberate connections)
• Deliberate creation of a link with a jurisdiction as a means of
(indirect) choice of law
• The smack of evasion (fraus legis)
• Background: assumption of quasi-natural and stable connection
of persons, assets or legal relations with a specific jurisdiction
• Trend towards connecting factors referring to mobile instead of
immutable facts
• Progressive adherence to the principle of recognition
• And what is left of fraus legis ?
Basedow 61 / 96
Indirect choice: lex loci celebrationis
• Form and substance: their changing weight in legal history
• Liberalization through the recognition of the local form of execution
of a contract, the lex loci celebrationis
• Example 1: Avoiding notarial fees due under German company
law by moving certain share deals to Switzerland
• Example 2: Marriage of European spouses in the ceremonial
forms of African peoples under the Southern Cross
• Example 3: the “internet will“ established by a Dutch testator in
Germany
Basedow 62 / 96
Indirect choice: habitual residence (I)
• Decline of nationality as a connecting factor for the law of personal
status, family law and the law of succession
-- the nationality/domicile conflict: no uniformity of outcome
-- Europe: from emigration to immigration; nationality principle
compelling more frequent application of foreign law
-- increase of double citizenship depriving nationality of its
indicative value for PIL
-- law of citizenship became object of national policy-making
driven by other considerations than cultural affiliation
-- EU: prohibition of discrimination on grounds of nationality
• Strong inclination of many countries in the Western Hemisphere to
domicile and habitual residence
Basedow 63 / 96
Indirect choice: habitual residence (II)
• Old and new Hague Conventions on the same subjects – from
nationality to habitual residence
-- Guardianship 1902 – Protection of infants 1961/children 1996
-- Marriage 1902 – Marriage 1978
-- Effects of marriage 1905 – Matrimonial property 1978
-- Effects of marriage 1905 – Maintenance 1973/Protocol 2007
• From domicile to habitual residence
-- domicile as a legal concept with divergent definitions
-- habitual residence as a factual concept
• Private International Law of the EU: remainders of the nationality
principle (Brussels IIbis, Rome III), but general trend towards
habitual residence
Basedow 64 / 96
Principle of recognition (I)
• Liberalization of recognition in State A of (foreign) crystallizations
of law occurred in State B indirectly grants private actors a choice
between A and B
• The concept of recognition of foreign crystallizations of the law
-- recognition of judgments = importation of res judicata effect
-- recognition of authentic instruments and settlements ?
-- recognition of administrative acts
•
Recognition of legal situations
-- Recognition of a marriage celebrated abroad
-- Recognition of foreign companies
-- Recognition of foreign trusts
Basedow 65 / 96
Principle of recognition (II): judgments
• Liberalization by abandoning the review of the foreign court‘s
choice of law
-- Foreign divorce decrees: from Hague Marriage Convention 1902
to the Hague Foreign Divorce Convention 1970 and Brussels IIbis
-- Recognition of money judgments depending on incidental
question of personal status: from Art. 27 no. 4 Brussels Conv.
1968 to Art. 34 Brussels I and Art. 24 Maintenance Reg. 4/2009
• Liberalization by loosening the review of jurisdiction
-- recognition of foreign jurisdiction under the “mirror theory“ in
Latin America and de facto also in the EU and US
-- no review within US and prospectively in the EU
-- divorce decrees: Hague 1902, Hague 1970 and Brussels IIbis
growing recognition of jurisdiction of petitioner‘s court
Basedow 66 / 96
Principle of recognition (III): companies
• “Incorporation theory“ and “real seat theory“
• Attempts at international unification: Bilateral US treaties on
friendship, commerce and navigation; Inter-American Conventions
of 1979 and 1984 based on “incorporation theory“
• European developments: The French Cour de cassation applied the
European Convention on Human Rights in order to permit an
Anstalt established in Liechtenstein to have its day in court
• ECJ 5 Nov 2002, case C-208/00 (Überseering BV): non-recognition
of Dutch BV with place of business in Germany by German “real
seat theory“ violated freedom of establishment, Art. 54 TFEU
Basedow 67 / 96
Principle of recognition (IV): companies
• Consequences of ECJ decisions in EU Member States: Belgium and
Poland (legislation); Germany (Bundesgerichtshof)
• International company law and regulatory competition: the
teachings of CENTROS (ECJ 9 March 1999, case C-212/97);
Danish couple, with the aim of avoiding the minimum capital
required by Danish law, had established a private limited company
in UK and applied for the registration of a subsidiary in Denmark;
business activities were intended only in Denmark
• AG La Pergola: “... in the absence of harmonisation competition
among rules must be allowed free play in corporate matters.“
• ECJ: non-registration in Denmark violated Art. 54 TFEU
Basedow 68 / 96
Indirect choice and fraus legis
• Deliberate choice of connection as an evasion of the law?
• Evasion as a matter of construction of the evaded law, no special
prohibition being necessary (Oliver Wendell Holmes)
• Special statutory rules on evasion of law in national PIL (e.g.
Spain, Taiwan, Tunisia) and Inter-American Convention 1979
• Evasion is irrelevant where party autonomy is permitted
• Legal provisions favouring mobility (e.g. habitual residence as a
connecting factor, rights of free movements) restrict the possible
application of fraus legis
Basedow 69 / 96
Part III: Public regulation
Measures of foreign policy (I)
• Forms and addressees of a state‘s action within its jurisdiction
and vis-à-vis other states in the international community
• Objectives of state rules on choice of law:
-- default situations where no private ordering occurred
-- situations where third parties are affected
-- protection of the state‘s self-interest vis-à-vis third states
-- compensation of market imperfections
-- protection of the internal public good
• Foreign policy measures and their private law effects: private
actors as tools or hostages of foreign policy considerations
Basedow 70 / 96
Measures of foreign policy (II)
• The decline of reciprocity requirements in international private law
conventions:
-- older and new Hague Conventions; compare e.g. Protection of
infants 1961 and Protection of children 1996
-- maritime law conventions; compare e.g. Limitation of liability of
shipowners 1924 and Limitation of liability maritime claims 1976
• Conclusion: depolitisation of convention-based private law
• Limitation of state action through public international law, in
particular by the rules on jurisdiction
• Prescriptive, adjudicatory and enforcement jurisdiction; for PIL
matters primarily prescriptive jurisdiction
Basedow 71 / 96
Non-recognition of foreign states (I)
• Can norms emanating from an entity that is not recognized as a
state by the forum state‘s government be considered as “law“ ?
Examples: Palestine; Northern Cyprus; Kosovo, Taiwan...
• Elements of statehood: territory, population, effective government;
ascertainment depends on subjective views, i.e. on recognition
containing element of volition and being primarily a matter for
governments
• Is an assessment (recognition or non-recognition) made by the
government binding on the courts of the country?
• Normative approach: AG Neumünster 16 Dec. 1986, IPRspr. 1986
no. 108, in French: Rev.crit.dr.int.pr. 77(1986) 675; UK certificates
Basedow 72 / 96
Non-recognition of foreign states (II)
• Factual approach: what matters is that the law adopted by a foreign
entity within its territory is effective
• Texas v White, 74 U.S.700 at 732-733 (1868): non-recognition of
rebel government in sister state, but reverence for its law
• ICJ, Advisory opinion on Namibia, I.C.J.Rep. 1971, 16 at para. 125:
illegality of government does not affect internal order
• National case law on PIL from Switzerland, France, Germany, UK
• A differentiated solution: effectivity of law matters, but nonrecognised foreign state has no standing in court
Basedow 73 / 96
Trade embargoes (I)
• Types of trade restrictions:
-- exclusion of certain goods, e.g. narcotic drugs, from international
trade in general; motivation in national or universal policy
-- exclusion of certain goods from trade with a specific country,
e.g. Iran or North Korea; motivation in foreign policy
• 3 kinds of legal issues:
-- Scope of application (substantive, personal, geographical) of
the embargo: national law of the state imposing the embargo
-- Compatibility with public international law
-- Ascertainment of the impact on transactions an applicable
embargo may have: a matter of private international law and
contract law, usually litigated outside the embargo state
Basedow 74 / 96
Trade embargoes (II)
• The US pipeline embargo of 1982
-- background and development
-- the scope rules: extension to foreign affiliates acting abroad
-- Pres. Rechtbank The Hague 17 Sep 1982, English translation
in Int.Leg.Mat. 22 (1983) 66, disregarding the US embargo
because of lack of jurisdictional basis under public int‘l law
• EU embargo against Iran (Reg. 961/2010):
-- the scope rules
-- legal persons as addressees defined through “control“ by
natural persons “resident in“ Iran or Iranian state bodies – what
about control by Iranian citizens resident abroad? Joint ventures?
-- Supply of goods from non-EU states into Iran covered?
Basedow 75 / 96
Trade embargoes (III)
• Public enforcement and private law effects
• Contract terms assigning the risk of an embargo; e.g. Incoterm
2010 FOB A2: “Where applicable, the seller must obtain, at his own
risk and expense, any export licence...“ Was the US pipeline
embargo “applicable“ or was the seller excused?
• Proceedings may be pending in the courts of different countries:
-- in the embargo state, which will enforce the embargo
-- in the country whose law governs the contract
-- in a third state
• Will the courts outside the embargo state give effect to the
embargo?
Basedow 76 / 96
Trade embargoes (IV)
• Are trade prohibitions within the scope of the law governing the
contract? (lex causae approach)
-- but can the parties be expected to choose a law invalidating
their transaction?
-- how can third-state embargoes be given effect? Deliberate
breach has been considered as immoral, BGH 21 Dec 1960,
BGHZ 34, 169 at 176; supervenient embargo as excuse,
Regazzoni v Sethia (1958) AC 301 (HL)
• Proximity between contract and embargo state is always relevant,
special connection approach is more consistent, giving effect to
the embargo as an “overriding mandatory provision“
• Art. 9 Rome I and Art. 7 Rome Conv. compared
Basedow 77 / 96
Countervailing state measures
for asymmetric private relations
• The weaker party in traditional civil law – individual assessment:
minors; threat, mistake and fraud; protection of the weak – and of
other parties‘ trust in PIL
• The modern trend: “categorical weakness“ and asymmetric
information and motivation; protection by targeted mandatory
legislation
• Protection of the weaker party also in PIL? The example of standard
choice of forum clauses in consumer contracts, allowed by
Carnival Cruise Lines v Shute, 499 U.S. 585 (1991), invalidated by
ECJ 27 June 2000, joined cases C-240/98 to 244/98 (Océano Grupo
Editorial v Rocio Murciano Quintero)
• Efficiency – to be assessed by the courts or by legislators ?
Basedow 78 / 96
Countervailing state measures:
consumer contracts (I)
• 50 years of consumer policy and law
-- US President Kennedy‘s consumer message 1962
-- Art. 169 TFEU: consumer protection as an objective of the EU
-- mandatory private law
-- national divergences; unification is not realistic, not even in EU
-- need for conflict rules; challenge to party autonomy
• Personal scope of conflict rules
-- consumer: only natural persons; private purpose of contract –
purpose need not be consumption; antonym is the professional
-- small legal entities
-- dual purpose: ECJ 20 Jan 2005, case C-464/01 (Gruber v
BayWa): strict construction of Art. 15 Brussels I
Basedow 79 / 96
Countervailing state measures:
consumer contracts (II)
• Situative scope of conflict rules: “active“ and “passive“
consumers
• Defining the passive consumer: detailed conditions, Art. 5(2)
Rome Conv. or broad description, Art. 6(1)(a) Rome I: “pursuance of
commercial or professional activities in the country of the
consumer‘s habitual residence“
• Electronic commerce: worldwide activities of the professional?
-- Art. 6(1)(b) Rome I: consumer is protected by his law, where the
professional “directs such activities to that country...“; similar
to Art. 15(1)(c) Brussels I
-- ECJ 7 Dec 2010, joined cases C-585/08 and C-144/09 (Pammer
and Hotel Alpenhof): jurisdiction of courts in consumer‘s country?
Basedow 80 / 96
Countervailing state measures:
consumer contracts (III)
• Three types of bilateral conflict rules
• Complete suppression of party autonomy, e.g. in Switzerland,
Louisiana, Oregon, China
• Party autonomy subject to mandatory provisions of the law of
the consumer‘s habitual residence, Art. 5 Rome Conv., Art. 6 Rome
I, Russia, Quebec, Korea, Turkey; “law-mix“ and safeguard of
substantive minimum standard
• Application of the law most favourable to the consumer (out of a
range of laws related to the contract, proposal CIDIP VII
• Critical assessment
Basedow 81 / 96
Countervailing state measures:
consumer contracts (IV)
• Unilateral approach
-- practice in countries with bilateral conflict rules is unilateral
-- countries lacking specific conflict rules may enforce their own
standards as public policy: Tunisia, Brazil
• Public policy enforcement in favour of “active“ consumers? The
Brazilian Panasonic case, Superior Tribunal de Justiça 11 April
2000, Rev.Jur.Sup.Trib.Justiça 137 (2001) 387
• Unilateral enforcement on top of a specific conflict rule (Art. 6
and 9 Rome I)? Contra: BGH 19 March 1997, IPRax 1998, 285,
French translation in Rev.crit.dr.int.pr. 87(1998) 610; pro: Cass.fr. 23
May 2006, Rev.crit.dr.int.priv. 96 (2007) 85
Basedow 82 / 96
Countervailing state measures:
employment contracts (I)
• Complex regulation in response to market imperfections: public
law regulation, collective agreements, mandatory and dispositive
contract law
• Resulting difficulties of characterization; example: is the
prohibition to dismiss a member of a works council an issue of codetermination governed by the law of the site of the establishment or
does it relate to the individual employment contract governed by Art.
8 Rome I? Implicitly in the latter sense ECJ 15 March 2011, case C29/10 (Koelzsch)
• Manifestations of cross-border employment: seafarers, air-borne
personnel, multiple workplaces, posting, outsourcing
Basedow 83 / 96
Countervailing state measures:
employment contracts (II)
• Conflicts approach has traditionally been unilateral, e.g. Art.
11(2) of the Labour Code of the Russian Federation of 2001: “this
Code, the laws and other normative legal acts containing the labour
law norms shall be mandatory for application in the whole Russian
Federation territory for all employers...“ –
• Is the location of the court seized in Russia sufficient?
Appropriate solution where all elements of the case are foreign? No
need for the application of foreign labour law?
• Steps towards bilaterlism in the USA: § 196 Rest. 2nd, Conflict of
Laws (1971); few cases decided on that basis; instead application of
labour law is considered a matter of statutory construction
Basedow 84 / 96
Countervailing state measures:
employment contracts (III)
• The European model of a bilateral conflict rule: Art 6 Rome Conv.,
now Art 8 Rome I, with 5 basic elements
• Follow-ups outside the EU: Korea, Japan, Turkey, and Switzerland
• Exclusion of party autonomy in Tunisia, China, Ukraine, limited
effect in the EU, as mandatory provisions of the deselected law
always establish minimum protection for employee
• Hierarchy of objective connections: (1) habitual working place and,
failing that, (2) the employer‘s hiring branch; according to ECJ in
Koelzsch a “broad interpretation“ by means of an “overall
assessment“ must be given to the habitual working place; is there
any room left for the employer‘s hiring branch?
Basedow 85 / 96
Countervailing state measures:
employment contracts (IV)
• The escape clause, Art. 8(4) Rome I, especially in maritime labour,
BAG 24 Aug 1989, IPRspr. 1989 no. 72: British cashier working
under English collective agreement on pay on a ferry flying the
German flag on voyages between Dutch and British ports;
application of German law against unfair dismissal declined;
German law of the flag state was avoided by escape clause
• Enforcement of national labour law rules as overriding mandatory
provisions? Definition by Art. 9(1) Rome I: the difficult delineation
between public interest and protection of the weaker party;
mandatory contract law may be covered in some cases, ECJ 23 Nov
1999, joined cases C-369/96 and C-376/96 (Arblade)
• Borderline to be drawn under the principle of proportionality by
ECJ
Basedow 86 / 96
Countervailing state measures:
employment contracts (V)
• Posting of workers: the dilemma between social protection and
economic efficiency
• Illustration by ECJ 18 Dec 2007, case C-341/05 (Laval un partneri):
under Art. 8 Rome I, Latvian law would likely have governed, subject
to overriding mandatory provisions or public policy
• EU Dir. 96/71 on the posting of workers as an overriding
mandatory provision, but putting only the host Member State under
an obligation, not the country of origin; here (in Latvia), the Swedish
high-standard labour law provisions are overriding mandatory
provisions of a third state, which may, but need not be given effect
Basedow 87 / 96
Protection of foundational principles:
Imperative norms
• Foundational principles
-- collective goods, e.g. currency, cultural heritage, competition;
public production and protection against private challenge
-- essentials of the social model: mix of protection of the weaker
and of public values; ECJ 9 Nov 2000, case C-381/98 (Ingmar)
-- ethical foundations, in particular in family matters and as a
weapon against medical and scientific progress: the example of
surrogate motherhood: Cass. 6 April 2011, Gaz.Pal. 2011, 1181,
but see ECHR 26 June 2014 (Mennesson v France, no. 65192/11)
• Legal tools: imperative norms
-- public policy, positive and negative
-- lois de police and overriding mandatory provisions
-- a dubious distinction: which criteria?
Basedow 88 / 96
Identification of imperative norms (I)
• Explicit scope rules: Art. 3(1) French Cc: territorial application;
GWB § 130(2): effects doctrine; definitions of US Fair Labour
Standards Act; are scope rules contained in substantive law conflict
rules, or are they subject to choice of law?
• Scope in the absence of explicit scope rules – relevant questions:
-- what is the purpose of the foreign law and of corresponding
domestic law?
-- how essential is the purpose of the domestic law?
-- how is the trend of legal development in a comparative view? Is
the foreign or the domestic law following this trend?
-- how close is the link between the facts of the pending case and
the forum state?
-- Which are the practical effects?
Basedow 89 / 96
Identification of imperative norms (II)
• The political character of the task
• Judicial review in federal entities
-- US: abstention of the Supreme Court: Allstate Insurance v Hague,
449 U.S. 302 (1981)
-- EU: legal review exercised by ECJ under basic freedoms, Union
citizenship: ECJ 14 Oct 2008, case C-353/06 (Grunkin & Paul)
• Outside federal entities: a need for judicial self-containment in
light of a trend emerging from comparative law and of the
consequences the enforcement of imperative norms may have on
the parties of the pending case
Basedow 90 / 96
International standards
as imperative norms
• International standards: fundamental rights and human rights
• Checking the compatibility of choice-of-law rules with human
rights; Germ. Const. Ct., BVerfG 22 Feb 1983, IPRspr. 1983 no. 56
• Checking the compatibility of foreign law with human rights as
specifications of domestic public policy/ordre public
• Enforcement of human rights irrespective of a proximity relation
of the case with the forum state? The example of the islamic talaq
(repudiation)
• Conclusion: no unqualified rejection of foreign legal institutions on
the account of human rights, but a search for fine-tuned solutions
Basedow 91 / 96
Respecting foreign imperative norms:
foreign currency law (I)
• Imperative norms of the forum state and concurrent jurisdiction:
troublemakers in private international relations
• Efforts at containment and the respect for foreign imperative
norms: currency, cultural property, competition law as examples
• Basics on international currency law: lex causae and lex loci
executionis serving private interests, lex monetae inspired by the
public interest
• Art. VIII(2)(b) IMF Agreement 1945: “Exchange contracts which
involve the currency of any member and which are contrary to the
exchange control regulations of any member maintained or imposed
consistently with this agreement shall be unenforceable in the
territories of any member.“
Basedow 92 / 96
Foreign currency law (II)
• Basic messages
-- no rejection of foreign currency law as foreign public law or
as contrary to the forum state‘s public policy
-- duty to respect foreign currency law
-- no proximity relation with state of currency required
• Impact beyond the scope of IMF Agreement
• Is Art. VIII(2)(b) a bilateral conflict rule? Currency laws of the lex
fori and of other member states are not entirely equal; the provision
is rather one of double unilateralism
Basedow 93 / 96
Protection of foreign cultural objects (I)
• What are “cultural“ objects? Definitions in social science, by the
UNESCO Convention 1970, the Institut de droit international, the
UNIDROIT Convention 1995
• Cultural objects and other assets: valuation by a group beyond
the material or utility value
• Prevailing political objective: removal from cross-border trade
and immobilization of cultural objects, Arts. XX GATT and 36
TFEU; numerous national restrictions
• Consequence: for many cultural objects trade becomes illicit and
is pushed into a – well-organized – international black market
Basedow 94 / 96
Protection of foreign cultural objects (II)
• Illicit export of cultural objects and the post-exportation lex situs
on bona fide acquisition: assistance to the laundering of stolen art
• Are the export restricions respected as foreign overriding
mandatory provisions, Art 9(3) Rome I, in the courts of the
importing state? Little evidence
• The solution lies in substantive law: UNESCO 1970 requiring
export certificates; UNIDROIT 1995: restitution of illegally exported
cultural objects, but no conflict rule; similarly in the EU Dir. 93/7; only
at the request of the state of origin, not in private litigation
• From lex situs to lex originis? Institut de droit international 1991,
Art. 90 Belgium
Basedow 95 / 96
General conclusion
• Private international law and social change – from closed to open
societies
• A change of perspective – from public to private ordering
• Multifarious forms and expansion of private arrangements into
new areas of the law
• Public regulation: different forms, addressees and purposes
• Paradigm Europe: from the law governing external private relations
to the private law of global home affairs
Good bye
Au revoir
Auf Wiedersehen