Choice of law
(Правовое руководство по составлению строительных контрактов)
The parties may, within certain limits, choose the legal rules which are to govern their mutual contractual obligations (paragraphs 1 to 3). In the absence of a choice, uncertainty as to those rules may arise from two factors. The courts of several countries may be competent to decide the disputes between the parties. Since each court will, apply the rules of private international law of its own country, there may be several possible systems of private international law which could determine the law applicable to the contract. Secondly, even if it is known which system of private international law will determine the law applicable to the contract, the; rules of that system are sometimes too general to enable' the applicable law to be determined; with reasonable certainty (paragraphs 4 to 6).
The parties may therefore wish to provide in the choice-of-law clause that the law of a particular country i& to govern their contract. Some difficulties may arise if the parties choose the general principles; of law or the principles common to some legal systems as the law applicable to their contract, instead of the law of a particular country (paragraph 9).
In many cases, the parties may wish to choose as the applicable law the law of the country where the works is to be constructed. In some cases, they may wish to choose the law of the contractor's country, or of a third country (paragraph 11). In the case of countries where there are several legal systems applicable to contracts (e.g., some Federal States), it may be advisable to specify which one of those systems is to be applicable (paragraph 12). Certain factors may be relevant in making a choice of law (paragraph 13).
Even in eases where the rules of private international law permit the parties to provide that the legal rules of different legal systems are to apply to different rights and obligations under the contract, it may be preferable to choose a single legal system to govern all the rights, and obligations (paragraph 14). If the parties wish the law applicable to the contract to consist of the rules existing at the time the contract is entered into, unaffected by later change? to those rules* they may expressly so provide. Such provisions will, however, be ineffective if the changes have a retroactive character which is mandatory (paragraph 15).
Different approaches are possible to drafting a choice-of-law clause. One approach may be merely to. provide that the contract is to be governed by the chosen law. Another approach may be to provide that the chosen law is to govern the contract, and also to include an illustrative list of the issues which are to be governed by that law. Yet another approach may be to provide that the chosen law is to govern only the issues listed in the chosen law (paragraph 16).
If several contractors are to participate in the construction, it is advisable for the purchaser to choose the same law as the law applicable to the contracts concluded by him with all the contractors. It is also advisable for the contractor to choose that same law as the law applicable to all contracts concluded by him with sub-contractors and suppliers (paragraph 19).
The parties may wish to note the possible application to a works contract of the United Nations Convention on Contracts for the International Sale of Goods, and to make appropriate provision for that possibility (paragraphs 20 and 21).
In addition to legal rules applicable to the contract by virtue of a choice of law by the parties or by virtue of the rules of private international law, certain mandatory rules of an administrative or other public nature in force in the countries of the parties may affect certain aspects of the construction. The parties should take those rules into account in drafting the contract (paragraphs 2 and 22). Certain of those rules concern technical aspects of the works to be constructed, others prohibit or restrict exports, imports, the transfer of technology and the payment of foreign exchange, and yet others impose customs duties and taxes on activities connected with the construction of the works (paragraphs 23 to 25).