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International contracts

International Business Law

IMBA UPEC - 2016

Marie-Elodie Ancel
Theodore J. Gleason


The subject-matter

Main Issues, Fundamental
Choices, Major Players

02.11.2016 International Arbitration

09.11.2016 Cross-Border Litigation

22.11.2016 Applicable Law

+ 29.11.2016 and 30.11.2016 with Ted Gleason

Mock Case

You are the manager of a European firm (French)

Your firm is about to enter into a contract with a foreign

Agent (or representative): a businessman (or a firm) who undertakes to

promote and develop the sale of his partners (the principal) products.
The agent does not buy these products to sell them on the territory that he
covers. He finds the customers, eventually enters into negotiations with
them and sometimes concludes the sale contracts on behalf and in the
name of the principal.
An agent is an intermediary (a go-between).
At the end, the products are sold (property is transferred and price is due)
between the principal and the customer.
The agent will receive a percentage of the sales he helped to make

Operational and legal viewpoints

Business executives enter into a contract assuming that

it will be fully and quietly performed.

Lawyers (in-house counsels) want to draft a sound,

balanced contract that will not be challenged ex post facto
and including safeguards or appropriate remedies in case
of breach.

Lawyers (litigating lawyers) will try to find a justification

for their client who breached the contract (aim is:
escaping the contract) or a solution for their client who is
suffering the breach of contract (aim is then: enforcing
the contract).

Concerns you must bear in mind

as a legally-aware manager

Is our partner reliable?

Can we trust him?

How solid are his commercial and financial capacities?
Will he represent us (our products) in a satisfactory
Will he do accurate reporting of his activities?

What if not?

Concerns you must bear in mind

as a legally-aware manager

Legal concerns

Under what circumstances the contract will be


Will the contract be valid?

Will it be efficient and enforceable?

How can we be sure of that?

Concerns you must bear in mind

as a legally-aware manager

Judicial concerns

If things go wrong and we have to go to court, which

court should we go to?
If we win the case, what can we do with the judgment
rendered in our favor?
If we lose the case, what will happen?

Who can answer all our questions

especially in an international context?

A lawyer, of course



Characterization of the contract: domestic or


Applicable law

Courts having jurisdiction

Access to arbitration

Recognition and enforcement of judgments or awards

MAIN ISSUES - Characterization

Contract clearly international if:

The other party is established abroad (i.e. not in your country of

establishment), and/or
The contract is to be performed totally or partially in a foreign

Contract possibly international if:

You and the other party do not have the same nationality;
The place of conclusion of your otherwise domestic contract is abroad;
You have chosen a foreign law to govern your otherwise domestic

You have chosen a foreign judge to decide on your otherwise domestic
Your otherwise domestic contract is connected to an international

MAIN ISSUES Applicable Law

Substantive Rules:
on formation, validity, performance, non-performance, remedies,

termination, interpretation of a contract

but also on the legal capacity of a legal/natural person on the
authority granted to an intermediary, or to a business executive

Sources Substantives rules can be provided:

by the legal system of a specific State (or by a combination

of national legal systems) if these legal systems are

entitled to do it
by an international instrument (an international treaty or a
European regulation, e.g.) if this instrument is applicable to
the case



It is a principle of public international law that every State

is sovereign in organizing its judicial system.

Rules of jurisdiction are set by every State to determine

what legal disputes its courts can (or must) adjudicate.
E.g, French courts have jurisdiction if the defendant is
domiciled in France = domicile of the defendant in France is a head
of jurisdiction for French courts.

However this can result in lacunae or overlaps:

If the defendant is bound by a contract to be performed in country X
and if Country Xs courts have jurisdiction because of performance on
their territory, the other party, the claimant, can choose to start
proceedings in France or in Country X.



To avoid or at least to limit these discrepancies, States

can conclude international conventions or European
regulations entailing common (shared) rules of

Sources Rules of jurisdiction can be found:

in national legal systems (every State rules for its own
courts only)
in an international instrument (an international treaty or
a European regulation) if the dispute falls in its scope and
if the instrument takes precedence over national rules
(which it often does).



Arbitration: Many States accept that, at least in

international trade, litigants can resort to a form of private,
flexible, neutral adjudication system.

Sources Arbitration regimes can be provided:

by national legal systems (more or less favorable to
this form of justice)
by international instruments (such as the Geneva
Convention, 1961, signed by 31 European countries).

MAIN ISSUES - Judgments &


Judicial proceedings will result in a judgment, final and binding

Arbitration will result in an award, final and binding
Judgments and awards can be challenged in the country where

they are rendered

They can be enforced in this country, under certain conditions
They can be recognized and enforced in other countries, under
certain conditions

Sources: Rules on Judgments & awards can be found

In national legal systems
in international instruments (such as the New York

Convention on arbitral awards, 1958, signed by 156 States)

or EU regulations (for judgments)

Under many national statutes, European regulations or
international conventions, contracting parties are allowed
to make some fundamental choices:
Arbitration or litigation (and sub-choices)
Ad hoc or institutional arbitration?
Litigation in my country, in your country, or elsewhere?
Domestic law or international law
My law, your law, or a neutral law?
Choosing or avoiding the CISG?
Lex mercatoria?
Unidroit Principles?

(and sub-choices)

Examples of room for manoeuvre

Opting for arbitration
FR Code of Civil Procedure, art.

Uncitral Model Law, art. 19

An arbitration agreement may define

the procedure to be followed in the
arbitral proceedings, directly or by
reference to arbitration rules or to
procedural rules.

(1) Subject to the provisions of this

Law, the parties are free to agree on
the procedure to be followed by the
arbitral tribunal in conducting the

Unless the arbitration agreement

provides otherwise, the arbitral
tribunal shall define the procedure
as required, either directly or by
reference to arbitration rules or to
procedural rules.

(2) Failing such agreement, the

arbitral tribunal may, subject to the
provisions of this Law, conduct the
arbitration in such manner as it
considers appropriate. ()

Examples of room for manoeuvre

Opting for arbitration
FR Code of Civil Procedure, art.
The arbitral tribunal shall decide the
dispute in accordance with the rules
of law chosen by the parties or,
where no such choice has been
made, in accordance with the rules
of law it considers appropriate.
In either case, the arbitral tribunal
shall take trade usages into account.

Uncitral Model Law, art. 28

(1) The arbitral tribunal shall decide
the dispute in accordance with such
rules of law as are chosen by the
parties as applicable to the
substance of the dispute. Any
designation of the law or legal
system of a given State shall be
construed, unless otherwise
expressed, as directly referring to
the substantive law of that State and
not to its conflict of laws rules.
(2) Failing any designation by the
parties, the arbitral tribunal shall
apply the law determined by the
conflict of laws rules which it
considers applicable.

Examples of room for manoeuvre

Choosing the competent court(s)
Brussels I a Regulation, art. 25.1
If the parties, regardless of their domicile, have agreed that
a court or the courts of a Member State are to have
jurisdiction to settle any disputes which have arisen or
which may arise in connection with a particular legal
relationship, that court or those courts shall have
jurisdiction, unless the agreement is null and void as to its
substantive validity under the law of that Member State.
Such jurisdiction shall be exclusive unless the parties have
agreed otherwise. ()

Examples of room for manoeuvre

Choosing the applicable law
Rome I Regulation, art; 3
Freedom of choice
1. A contract shall be governed by the law
chosen by the parties. The choice shall be
made expressly or clearly demonstrated by the
terms of the contract or the circumstances of
the case. By their choice the parties can select
the law applicable to the whole or to part only
of the contract.
2. The parties may at any time agree to
subject the contract to a law other than that
which previously governed it, whether as a
result of an earlier choice made under this
Article or of other provisions of this Regulation.
Any change in the law to be applied that is
made after the conclusion of the contract shall
not prejudice its formal validity under Article 11
or adversely affect the rights of third parties.

The Hague Principles, art. 2 et 3

Freedom of choice & Rules of Law

2.1. A contract is governed by the law chosen

by the parties.
2. 2. The parties may choose a) the law applicable to the whole contract or to
only part of it; and
b) different laws for different parts of the
2.3. The choice may be made or modified at
any time. A choice or modification made after
the contract has been concluded shall not
prejudice its formal validity or the rights of third
2.4. No connection is required between the law
chosen and the parties or their transaction.
3. The law chosen by the parties may be rules
of law that are generally accepted on an
international, supranational or regional level as
a neutral and balanced set of rules, unless the
law of the forum provides otherwise.


States or public entities

States at national level
States at regional level (EU)
States at international level (international treaties, international


professional associations, ICC, academics, academic associations,


Thank you for you attention

Professor Marie-Elodie Ancel
Head of the D.U. Contentieux international des affaires &
LL.M. Contentieux international des affaires approfondi
Scientific coordinator of Lynxlex,
an on-line legal database on EU Private International Law