The Public Policy and Mandatory Rules of Third Countries in International Contracts

Adeline Chong

Lecturer in Law, University of Nottingham

JPrivIntL Vol 2 Issue 1 (April 2006)

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Abstract

Whether the law of a third country, that is, a law that is neither the governing law of the contract nor the lex fori, should be accorded a role in an international contract is a controversial issue. Despite earlier case law where English courts took into account a third country’s laws, the UK entered a reservation against Article 7(1) of the Rome Convention. The proposed Rome I Regulation however contains a successor to Article 7(1), ie Article 8(3). This article considers whether the public policy and mandatory rules of third countries should in principle be applicable in an international contract and how a discretion in favour of such application should be exercised. To that end, this article analyses situations where effect is given to a third country’ laws, with a particular focus on the Rome regime. The common law cases concerning illegality by the lex loci solutionis are also examined to discover principles of general application.

Keywords

Public Policy, Mandatory Rules, Third Countries, Illegality, Lex loci solutionis, Article 7(1) Rome Convention, Party Autonomy