Antropometría y ergonomía (Coriat, 2003)

The public policy exception is a principle that provides an additional ground for a forum court not to apply the otherwise applicable national substantive law. As Lew points out, ‘public policy reflects the fundamental economic, legal, moral, political, religious and social standards of every extra-territorial community (…) and covers principles and standards, which are so sacrosanct as to require their maintenance at all costs and without exemption’.⁸⁴ The public policy exception bars the application of the designated national substantive law, if it contradicts the policies of the State that enforces it.⁸⁵ In this way, the public policy exception operates as a principle that produced the so-called negative effect, since relying on it, a forum court can refuse to apply any national substantive law or recognise any judgment delivered by a court sitting in another State.⁸⁶ Usually, the law of the forum would be applied instead.⁸⁷ The public policy exception is enshrined in Union secondary legislation that unifies national choice-of-law rules. For instance, Article 21 of the Rome I Regulation, Article 26 of the Rome II Regulation and Article 12 of the Rome III Regulation provide that the application of the law designated by the relevant choice-of-law rule may be refused if it is manifestly incompatible with the public policy of the forum.

84 Julian D M Lew, Applicable Law in International Commercial Arbitration: A Study in Commercial Arbitration Awards (Oceana Publications 1978) 532.

85 Jacob Dolinger, ‘World Public Policy: Real International Public Policy in the Conflict of Laws’

(1982) 17 Texas International Law Journal 167, 167.

86 ibid 169.

87 Michael Forde, ‘The ‘Ordre Public’ Exception and Adjudicative Jurisdiction Conventions’

(1980) 29 International and Comparative Law Quarterly 259, 260.

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There is no consensus in the academic literature as regards the difference between mandatory rules and the public policy exception. Some argue that these are two different principles.⁸⁸ Several arguments are put forward in this respect. First, the rationale and the starting point of these principles differ.⁸⁹ The public policy exception centres on the result of the application of the designated national substantive law to a cross-border relationship. It usually applies after the designation of that law pursuant to the relevant choice-of-law rule.⁹⁰ In contrast, mandatory rules express the imperativity of a domestic regulation, having no attention paid to the content of the designated national substantive law.⁹¹ Therefore, in essence, they are applied prior to the designation of the national substantive law at issue. Others, however, assert that the application of mandatory rules is a specific manifestation of a State’s public policy.⁹² For advocates of this approach, public policy consists of ‘laws of immediate application whose observance is essential for safeguarding the political, social and economic organisation of a country’.⁹³ Public policy is comprised of mandatory rules that include a State’s most basic notions of morality and justice’.⁹⁴ Internationally recognised principles, such as the principle of party autonomy, equal treatment of parties, non-discrimination, good faith, and human rights, are also emphasised in

88 Thomas G Guedj (n 63) 680.

89 ibid.

90 ibid.

91 ibid, see also Frank Vischer (n 7) 102.

92 Michael Forde (n 87) 259.

93 Yyes Derains, ‘Public Policy and the Law Applicable to the Dispute in International Arbitration’

in Pieter Sanders (ed), Comparative Arbitration Practice and Public Policy in Arbitration (ICCA Congress Series 1987) 228.

94 Mark A Buchanan, ‘Public Policy and International Commercial Arbitration’ (1988) 26 American Business Law Journal 511, 513.

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this respect.⁹⁵ Notwithstanding the possible differences between the rationale underpinning mandatory rules and the public policy exception, both exclude the application of the otherwise national substantive law.

It was demonstrated earlier that unless there are objective justifications, the designated national substantive law cannot be applied, if it imposes discriminatory treatment contrary to Article 18 TFEU or the Treaty free movement provisions. Giving effect to the principle of equal treatment could, thus, lead to the application of the otherwise applicable national substantive law being refused. From a choice-of-law perspective, this outcome might resemble the one that occurs when a forum court gives effect to the public policy of the forum.

Both the principle of equal treatment and the public policy exception result in the rejection of the application of the designated national substantive law. The application of both requires scrutiny of the effect of the applicable law in a case at hand. A particular rule is caught by the principle of equal treatment, if it is discriminatory on grounds of nationality or movement. Similarly, the application of the law that manifestly contradicts the public policy of the forum is rejected. In addition, both appear to apply at the final stage of the actual application of the designated national substantive law, rather than at the stage involving the process of the selection or formulating of that law, as it is the case with mandatory rules.⁹⁶ With regard to the principle of equal treatment, this seems to be the case particularly when indirectly discriminatory treatment on grounds of nationality is

95 Laurence R Fenelon, ‘Applicability of Foreign Mandatory Rules in International Arbitration’,

<http://www.rcmck.com/business-publications/foreign-mandatory-rules-in-international-arbitration/> accessed 18 September 2011.

96 Michel Tison (n 61) 371.

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at issue. The mere application of a rule appears to be necessary in order to establish its indirectly discriminatory effect.

However, in addition to their similarities, one could also point out the differences between the principle of equal treatment and the public policy exception. The rejection of the applicable law relying on the public policy of the forum usually leads to the application of the law of the forum. In contrast, one can hardly envisage such an outcome with respect to the principle of equal treatment. This is based on the fact that the principle of equal treatment does not contain an implicit reference to a particular national substantive law that always becomes applicable whenever one has recourse to it.⁹⁷ Furthermore, using Lew’s words,⁹⁸ the public policy exception serves to protect ‘the fundamental economic, legal, moral, political, religious and social standards’ of the forum. The principle of equal treatment, in turn, ensures free movement in the Union.⁹⁹