International Commercial Law
International Commercial Law T3 2014
Table of Contents
Topic 1 - Introduction ........................................................................................................................... 2 Topic 2 – International Sale of Goods............................................................................................... 5 Topic 3 – International carriage of goods ....................................................................................... 17 Topic 4 – Letters of credit ................................................................................................................. 22 Topic 5 – International & Regional Trade Agreements ............................................................... 26 Topic 6 – Foreign investment law .................................................................................................... 33 Topic 7 – International Dispute Resolution .................................................................................... 37
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International Commercial Law T3 2014 Topic 1 - Introduction Terminology
Lex causae: the law which under a rule of the conflict of laws governs the question in issue Lex fori: the internal or domestic law of the law district in which the court is situated; the law which a court applies to internal matters, matters with no foreign element, ie. the law of the forum Lex domicilii: the law of the country where a person is domiciled Lex loci actus: the law of the country where an act or transaction takes place Lex actus: the law of the country with which a transaction is most closely connected; or sometimes as meaning lex loci actus Lex loci contractus: the law of the country where a contract is entered into Lex loci solutionis: the law of the country where a contract is to be performed or a debt to be paid Lex loci delicti: the law of the country where a tort is committed Lex loci celebrationis: the law of the country where a marriage is celebrated Lex situs: the law of the country in which the property is situated Ex juris: outside the jurisdiction Comity: the respect which one nation accords to the laws and acts of another foreign nation
Sovereignty in international law: In the international context, sovereignty refers to the power and privilege which can be derived from the nationhood of a country. • •
•
a State has treaty-making power and thus, an international treaty does not bind a country which is not a party to the treaty; there may be special constitutional requirements for effecting an international treaty in some countries, so we must understand how an international convention on international trade or commerce operates in each internal state or territory; and the doctrine of restrictive immunity7 affects decisions in international trade and commerce, because it may or may not be possible effectively to enforce a contract against a State.
Treaty-making in Australia
In Australia, any treaty ‘must be tabled in both Houses of the Commonwealth Parliament for at least sitting days before the Government takes action to bring the treaty into force’. Consideration of any treaty by the Government is accompanied by a ‘National Interest Analysis’ which notes if and why Australia should become a party to a proposed or existing treaty.
Custom: lex mercatoria
Customary law refers to that body of law which has ‘evolved from the practice or customs of [S]tates’. Treaties have replaced and ‘codified’ customs to a large extent, but not entirely. Thus, for customs that have not made their way into treaties, and in relation to those States not party to the treaty codifying the relevant custom, these customs will provide an important source of international law.
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International Commercial Law T3 2014 The importance of conflict of laws
Many (but not all) international commercial disputes raise the issue of conflict of laws. The leading English authority on conflict of laws, Dicey, Morris & Collins on the Conflict of Laws, describes conflict of laws in the following fashion: o The branch of English law known as the conflict of laws is that part of the law of England which deals with cases having a foreign element. By a ‘foreign element’ is meant simply a contact with some system of law other than English law.
Resolving a conflict of laws – in litigation
When a case involving international elements is brought before a domestic court, that court will have to consider the following three questions (which can be considered to be steps in resolving the conflict of laws process): 1. Does it have jurisdiction to deal with the issue involved? 2. If it does, should it exercise that jurisdiction or should it stay the proceeding in favour of a foreign court? 3. If the court has jurisdiction and decides to exercise it, which law should be applied to the dispute? In other words, what is the ‘governing’ or ‘proper’ law of the dispute?
Should the court exercise that jurisdiction:
Australia uses the forum non conveniens test. The test provides that a court with jurisdiction should determine the matter, unless the defendant establishes that the court is a clearly inappropriate forum. o See: Voth v Manildra Flour Mills Pty Ltd. o Held: 1) The alleged tort was committed in Missouri and thus the liability should be determined by the law of Missouri; (2) The action in the Australian court should be stayed as it was clearly an inappropriate forum.
If the court has jurisdiction and decides to exercise it, which law should be applied to the dispute?
Choice of law clauses generally respected by Australian Courts. o Lord Diplock Amin Rasheed; Akai Pty Ltd. No choice of law: “the law itself will choose a law”. o Akai. Test applied is to seek the system with which the parties contract has its ‘closest and most real connection’. This test involves weighing a number of (sometimes competing) connecting factors: o Bonython v The Commonwealth. o Like where was the contract performed? Rome I Regulation,21 - sets out uniform conflict of laws rules specific to international contracts which relevant EU member States were required to apply. The United Nations Convention on Contracts for the International Sale of Goods (CIGS) has its own self-contained conflict of laws rules. This specialised conflict of laws rule negates the need to refer to the ordinary conflict of laws rules of the relevant State concerned.
Identifying a conflict of laws
There is no need to invoke COL method unless there is a conflict of laws. This is determined by considering two issues Which legal systems are possibly relevant to the case? To answer this, the legal systems relevant under any choice of law rule obtaining in the forum must be identified.
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Table of Contents
Topic 1 - Introduction ........................................................................................................................... 2 Topic 2 – International Sale of Goods............................................................................................... 5 Topic 3 – International carriage of goods ....................................................................................... 17 Topic 4 – Letters of credit ................................................................................................................. 22 Topic 5 – International & Regional Trade Agreements ............................................................... 26 Topic 6 – Foreign investment law .................................................................................................... 33 Topic 7 – International Dispute Resolution .................................................................................... 37
1|Page
International Commercial Law T3 2014 Topic 1 - Introduction Terminology
Lex causae: the law which under a rule of the conflict of laws governs the question in issue Lex fori: the internal or domestic law of the law district in which the court is situated; the law which a court applies to internal matters, matters with no foreign element, ie. the law of the forum Lex domicilii: the law of the country where a person is domiciled Lex loci actus: the law of the country where an act or transaction takes place Lex actus: the law of the country with which a transaction is most closely connected; or sometimes as meaning lex loci actus Lex loci contractus: the law of the country where a contract is entered into Lex loci solutionis: the law of the country where a contract is to be performed or a debt to be paid Lex loci delicti: the law of the country where a tort is committed Lex loci celebrationis: the law of the country where a marriage is celebrated Lex situs: the law of the country in which the property is situated Ex juris: outside the jurisdiction Comity: the respect which one nation accords to the laws and acts of another foreign nation
Sovereignty in international law: In the international context, sovereignty refers to the power and privilege which can be derived from the nationhood of a country. • •
•
a State has treaty-making power and thus, an international treaty does not bind a country which is not a party to the treaty; there may be special constitutional requirements for effecting an international treaty in some countries, so we must understand how an international convention on international trade or commerce operates in each internal state or territory; and the doctrine of restrictive immunity7 affects decisions in international trade and commerce, because it may or may not be possible effectively to enforce a contract against a State.
Treaty-making in Australia
In Australia, any treaty ‘must be tabled in both Houses of the Commonwealth Parliament for at least sitting days before the Government takes action to bring the treaty into force’. Consideration of any treaty by the Government is accompanied by a ‘National Interest Analysis’ which notes if and why Australia should become a party to a proposed or existing treaty.
Custom: lex mercatoria
Customary law refers to that body of law which has ‘evolved from the practice or customs of [S]tates’. Treaties have replaced and ‘codified’ customs to a large extent, but not entirely. Thus, for customs that have not made their way into treaties, and in relation to those States not party to the treaty codifying the relevant custom, these customs will provide an important source of international law.
2|Page
International Commercial Law T3 2014 The importance of conflict of laws
Many (but not all) international commercial disputes raise the issue of conflict of laws. The leading English authority on conflict of laws, Dicey, Morris & Collins on the Conflict of Laws, describes conflict of laws in the following fashion: o The branch of English law known as the conflict of laws is that part of the law of England which deals with cases having a foreign element. By a ‘foreign element’ is meant simply a contact with some system of law other than English law.
Resolving a conflict of laws – in litigation
When a case involving international elements is brought before a domestic court, that court will have to consider the following three questions (which can be considered to be steps in resolving the conflict of laws process): 1. Does it have jurisdiction to deal with the issue involved? 2. If it does, should it exercise that jurisdiction or should it stay the proceeding in favour of a foreign court? 3. If the court has jurisdiction and decides to exercise it, which law should be applied to the dispute? In other words, what is the ‘governing’ or ‘proper’ law of the dispute?
Should the court exercise that jurisdiction:
Australia uses the forum non conveniens test. The test provides that a court with jurisdiction should determine the matter, unless the defendant establishes that the court is a clearly inappropriate forum. o See: Voth v Manildra Flour Mills Pty Ltd. o Held: 1) The alleged tort was committed in Missouri and thus the liability should be determined by the law of Missouri; (2) The action in the Australian court should be stayed as it was clearly an inappropriate forum.
If the court has jurisdiction and decides to exercise it, which law should be applied to the dispute?
Choice of law clauses generally respected by Australian Courts. o Lord Diplock Amin Rasheed; Akai Pty Ltd. No choice of law: “the law itself will choose a law”. o Akai. Test applied is to seek the system with which the parties contract has its ‘closest and most real connection’. This test involves weighing a number of (sometimes competing) connecting factors: o Bonython v The Commonwealth. o Like where was the contract performed? Rome I Regulation,21 - sets out uniform conflict of laws rules specific to international contracts which relevant EU member States were required to apply. The United Nations Convention on Contracts for the International Sale of Goods (CIGS) has its own self-contained conflict of laws rules. This specialised conflict of laws rule negates the need to refer to the ordinary conflict of laws rules of the relevant State concerned.
Identifying a conflict of laws
There is no need to invoke COL method unless there is a conflict of laws. This is determined by considering two issues Which legal systems are possibly relevant to the case? To answer this, the legal systems relevant under any choice of law rule obtaining in the forum must be identified.
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