Parágrafo III Régimen de dedicación
PERSONAL ACADÉMICO NO TITULAR
In common usage, the mandatory nature of a rule can be defined as an absolute command which cannot be avoided.
However, the mandatory nature of a rule is interpreted in a number of different ways according to Acquis Communautaire and Acquis International. These different mean- ings are not necessarily referred to by the use of different terms, which adds to the inconsistencies in terminology.
In a traditional interpretation, close to that mentioned above, mandatory rules are those rules which the parties cannot intentionally avoid or limit, whether such rules are domestic or contained in Community or international legislation such as the Principles of European Contract law for example. A second interpretation sees mandatory rules defined as those domestic legal provisions which, under domestic internal law, cannot be avoided by the parties, but which can be set aside in the event of a cross-border contract: this would be an instance of the internal mandatory character being tempered by reason of the international elements of the contract. In a third interpretation, mandatory rules refer to rules of various origins (national, international or supranational) which must apply, irrespective or the law applicable to the contract.
Thus various degrees in the extent to which mandatory rules must be applied could be identified: absolutely mandatory rules, which the parties cannot intentionally avoid (A), domestically mandatory rules, which could be avoided in the case of a cross-border con- tract (B) and absolutely (or externally) international mandatory rules which would apply irrespective of the law otherwise applicable to the contract (C).
A. Traditionally mandatory rules: the absolute command
InPECL, the use of the expression “mandatory rules”2can be found in two provisions:
article 1:102 and article 1:103. We are concerned with the first of these two provi- sions.
The expression is used in article 1:102 (entitled “Freedom of contract”): Parties are free to determine the content of their contract subject to the requirements of good faith and fair dealing and the mandatory rules established byPECL. In order further to define the mandatory character of such rules, paragraph 2 of this article provides that parties may exclude the application of any of the principles, derogate from or vary their effects, except as otherwise provided. Mandatory rules, in this context, therefore means rules
2 On the different meanings of this expression in English private international law, see T.HART-
LEY, “Mandatory rules: a common law approach”, Rec. cours de l’Acad. de dr. intern. de la Haye pp. 342 and following esp. pp. 35 to 349 1997 Vol 266.
which may not be intentionally avoided by the parties. They apply imperatively as an absolute command. Such a command can only arise out of an express provision of the text, since freedom of contract is considered to be the basic rule.
Several rules established byPECLhave a similar mandatory character. Without the word “mandatory” being used expressly, these rules provide that parties may not exclude or limit their application. Mandatory rules therefore means that the relevant rules must apply in their entirety, even against the will of the parties.
The following provisions illustrate this traditional interpretation of mandatory rules. Article 1:201 relating to the duty of good faith and fair dealing provides that parties may not exclude or limit this duty; article 2:105 on merger clauses sets out that the rule according to which if a merger clause is not individually negotiated, it will only establish a presumption that the parties intended that their prior statements, undertakings or agreements were not to form part of the contract may not be excluded or restricted; article 4:118 on the exclusion or restriction of remedies in the event the contract is invalid provides that parties may not exclude or limit remedies for fraud, threats and excessive benefit or unfair advantage, nor can they exclude or limit the right to avoid an unfair term which has not been individually negotiated; article 6:105 provides that where the price or another contractual term is determined unilaterally by one party and that party’s determination is grossly unreasonable, then notwithstanding any provision to the contrary, a reasonable price or other term shall be substituted; article 9:509 allows the parties to agree a payment for non-performance and provides that this sum, despite any agreement to the contrary, may be reduced by the court where it is grossly excessive in relation to the real loss; article 14:601 fixes mandatory maximum (30 years) and mini- mum (1 year) periods of prescription.
In the same vein, article 2 of the Pavia Project provides that parties may freely agree the content of their contract “subject to the limits imposed by mandatory rules, good morals and ordre public, as set out in the present code, under Community law or in the domestic law of the Member States of the European Union”.3The main principle, as in
PECL, is that of freedom of contract. It is of interest to note that the terms referred to are mandatory rules, good morals and ordre public, without any clear indication as to whether this list reflects three different categories or a global concept, and in the case of different categories, how they should be distinguished from mandatory rules. The same list reap- pears in article 30 which defines the lawfulness of the contract and in article 140 relating to the grounds for avoidance.
Article 1.5 of theUNIDROITPrinciples provides that parties may exclude in whole or in part the application of any provision of the Principles or vary the effect of any of their provisions, except where the Principles provide for the mandatory character of a particular provision. The commentary emphasises the principle that the Principles are non-mandatory. As an exception, certain rules set out by the Principles are seen as so important with regard to the “system” instated by the Principles that the parties cannot exclude or limit their application. This is an instance of a traditional approach to man- datory rules: the rules set out in theUNIDROITPrinciples and considered as mandatory cannot be intentionally avoided by the parties. It is likely that these mandatory rules are limited in number. The mandatory character of a rule is in principle expressly stated.
3 On the distinction between ordre public and good morals, see the part of the study dealing with
Indeed, certain provisions are designated as such: article 1.7 relating to good faith and fair dealing – the articles contained in chapter 3 on validity (article 3.19 expressly states that the provisions of the chapter are mandatory except insofar as they relate to the binding force of mere agreement, initial impossibility or mistake) – article 5.1.7(2) relating to price determination – article 7.4.13(2) relating to agreed payment for non-performance – article 10.3(2) relating to limitation periods. However, the mandatory character of a rule can exceptionally be implied. For example, article 1.8 relating to inconsistent behaviour is considered in commentaries as being mandatory; in the same way article 7.1.6 relating to clauses which exclude or limit liability is impliedly mandatory.
The Rome Convention of 19 June 1980 on the law applicable to contractual obliga- tions sets out three different categories of mandatory rules: domestic mandatory rules (articles 3, 5 and 6) – public order rules (foreign or of the forum) – article 7) – and finally, rules which form part of international ordre public (article 16).4The mandatory rules
referred to in articles 3, 5 and 6 are those which cannot intentionally be derogated from by the parties choosing a different applicable law. Such rules are mandatory in a tradi- tional sense. Article 3 refers to a situation in which there is no conflict of laws in the contract: where all the elements of the contract are located in one country at the time of the choice of law, such choice shall not prejudice the application of rules of the law of that country which cannot be derogated from by contract. The mandatory character in this instance has the purpose of avoiding a fraudulent choice of foreign law in a domestic contract with the intention of avoiding the mandatory rules contained in the law with which the contract is most closely connected: the internal mandatory character of such rules must not be set aside because of a formal internationality arising solely out of the choice of applicable law. Articles 5 and 6 set out rules of conflict which protect respec- tively the consumer and the employee. The choice of applicable law is permitted only on the condition that the consumer or the employee is not denied the protection afforded by the mandatory provisions of the law which is objectively applicable. The mandatory character is used here to counter the choice of a law which is less protective for the party seen as the weakest. In these three provisions, mandatory rules mean internal rules the application of which cannot be avoided by the choice of a different law; the mandatory character gives precedence to the rules of a country with which the contract has a particular connection (in article 3, such country is the one in which all the elements of the contract are located; in articles 5 and 6, mandatory rules are those of the law which is objectively applicable).
A number of conventions are optional in their application and such application can therefore be intentionally avoided by the parties. A typical example of this lack of mandatory character is the Vienna Convention dated 11 April 1980 on the international
4 See articles 3.4 and 3.5 of the Proposal for a Regulation on the law applicable to contractual
obligations (Rome I),COM(2005) 650 final 2005/0261 (COD). Article 3.5 refers to mandatory rules of Community law. Article 5 is amended in order to apply, directly and in a fixed way and in its entirety, the law of habitual residence of the consumer. Article 6 relating to the deter- mination of the law applicable to an employment contract is from this point of view, unchan- ged. On this project, see P.LAGARDE, “Remarques sur la proposition de règlement de la Commission européenne sur la loi applicable aux obligations contractuelles (Rome I)”, Rev. crit. 2006.332.
sale of goods5(CISG). The Ottawa Conventions on international financial leasing and
international factoring signed on 28 May 1988 under the patronage ofUNIDROITpro- vide that the parties may avoid its application. Both conventions are not however drafted in the same way. Article 5 of the Convention on international financial leasing provides that the application of the Convention may be excluded only if each of the parties to the supply agreement and each of the parties to the leasing agreement agree to exclude it. In their contractual relationship, the parties may partially derogate from a provision of the Convention or vary its content, except for certain provisions which remain mandatory. In the Convention relating to international factoring, article 3 allows the parties to exclude the application of the rules of the Convention but specifies that such exclusion must necessarily be made as regards the Convention as a whole.
Provisions which protect the consumer in European directives on consumer contracts are mandatory.6 The directive on unfair contract terms7 sets out the model for the
provisions which can be found in a number of subsequent directives.8Article 6.2 of this
directive provides that Member States shall take the necessary measures to ensure that the consumer does not lose the protection granted by such Directive by virtue of the
5 See observations under point B.
6 For completeness, we should mention the mandatory character of the provisions contained in
Community legislation, reinforced byECJcase law, in an area also relating to consumers: that of liability for defective products, covered by the directive of 25 July 1985 (Council Directive 85/ 374 /EECof 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective productsOJL 210 of 7 Aug 1985). In a decision dated 24 April 2002, theECJfound that France had badly transposed the directive into national legislation by providing a higher level of protection than that afforded under the directive (ECJ 25 April 2002, C-52/00, D.2002.2428, J.-C. AULOY and D.2002.2462, note Ch. LARROUMET). The ECJconsidered that the directive could not authorise Member States to maintain a different level of protection than that provided in the directive. The directive is mandatory in that the level of protection which it specifies is the only regime that must be applied on the basis of an obligation of safety. Any different national regime resulting from the transposition of such Community legislation must be set aside.
7 Directive 93/13/EECof 5 April 1993 on unfair clauses in consumer contractsOJ L 995 of
21 April 1993. Directive 85/577 of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premisesOJL 372 of 31 December 1985 provided only in article 6 that the consumer could renounce the rights conferred upon him by the directive.
8 In particular, Directive 97/7/ECof 20 May 1997 on the protection of consumers in respect of
distance contracts (article 12 entitled “binding nature”),OJL 144 of 4 June 1997; Directive 99/ 44 on certain aspects of the sale of consumer goods and associated guarantees of 25 May 1999,
OJL 171 of 7 July 1999 (article 7.1 entitled “binding nature”); Directive 2002/65/ECof 23 September 2002 concerning the distance marketing of consumer financial services (article 12 entitled “imperative nature of this directive’s provisions”). Directive 94/47/ECon the protec- tion of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a timeshare basis dated 26 October 1994,OJL 280 of 29 Oc- tober 1994 provides a protection for the purchaser in different terms by reason of the subject matter of the contract: article 9 provides that Member States should take all necessary measures so that, no matter what the applicable law, the protection of the buyer as provided under the directive applies if the property is situated on the territory of a Member State.
choice of the law of a non-Member country as the law applicable to the contract if the latter has a close connection with the territory of the Member States. The mandatory character of the provisions in the directive which are collectively covered by a reference to the protection granted to the consumer results in the application of a law being prevented if it does not contain equivalent guarantees. This is an instance of the tradi- tional function of public policy in private international law: that of excluding the ap- plication of a law. It may however be relevant to note that this function also applies in internal public policy in that the law of the third country in question was chosen by the parties: the mandatory character of the provisions of the directive results in the intention of the parties not being taken into account.9The public policy of protection is used to
ensure that the consumer is afforded a level of protection seen as necessary. But as pointed out in the directive on unfair commercial practices, this public policy of protec- tion enables a public policy of direction to be maintained, in accordance with which competition within the Internal Market can continue to thrive.10
B. The internal mandatory rules give way:
such rules are set aside in the context of a transborder contract
Article 1:103 of PECLentitled “Mandatory rules” makes use of the term “mandatory” with a different meaning from that used in article 1:102, in order to qualify certain rules which exist outsidePECL: parties may provide that the contract should be governed by
PECLwhere this is permitted by the applicable law and in such case, domestic mandatory rules will not apply. But the parties cannot avoid the application of national, suprana- tional or international rules which apply in accordance with relevant rules of private international law notwithstanding the law applicable to the contract. This mandatory character is therefore of a dual nature: domestic rules although mandatory may be dero- gated from by a reference toPECLwhen this reference is permitted by domestic law. The mandatory character of internal rules therefore disappears in the case of a transborder contract. The rules which remain mandatory are those which are national, supranational and international and which apply notwithstanding the law applicable to the con- tract.11
TheCISGhas, from this point of view, a particular characteristic: it is entirely dis- positive. Indeed, article 6 allows the parties to exclude its application entirely even in cases where it should, in accordance with its own criteria, be applicable, or to derogate
9 See also the observations of J.BASEDOW, “Recherches sur la formation de l’ordre public
européen dans la jurisprudence”, in Le droit international privé: esprit et méthodes, Mél. en l’hon- neur de P.LAGARDE, Dalloz, 2005, p. 55, esp. pp. 58 and 59. On the difficulties encountered regarding the transposition of this provision, seeECJ9 September 2004, C-70/03 Commission v. Royaume d’Espagne.
10 Directive 2005/29 relating to unfair business-to-consumer commercial practices in the internal
market of 11 May 2005,OJL 149 of 11 June 2005. In the preamble, for ex. 1, 3 and 4, reference is made to consumers’ economic interests as well as those of legitimate businesses, even though the legal basis for the directive is stated as being article 95 of theEUTreaty which relates to the establishment and functioning of the internal market.
from any of its provisions.12This would appear to be an instance of traditional mandatory
rules mentioned at point A above. If the parties totally or partially exclude the provisions of theCISG, any issue which might arise in relation to the contract would be resolved in accordance with the law designated by the conflicts rule. However, certain academics take the view that if the parties have agreed to be governed by the law of a contracting State and that State provides a mandatory rule on a particular point within the scope of the Convention, where that rule is contrary to the Convention then it is theCISGwhich should prevail.13For example if the parties have submitted to French law, French man-
datory rules relating to a warranty against hidden defects would loose their mandatory character: France has accepted by ratifying the Vienna Convention to forego, in inter- national sales of goods, its internal mandatory rules in favour of more flexible contractual rules. The mandatory character of internal rules disappears because of the international qualification of the contract.
The notion of mandatory rules is one which is found in conflicts of jurisdiction. It is used in the context of direct competence rules. For example, French cases have estab- lished that a choice of jurisdiction clause is valid so long as the French courts do not claim exclusive jurisdiction.14Regulation 44/2001 on jurisdiction and the recognition
and enforcement of judgments in civil and commercial matters15sets out for instance
certain mandatory rules applicable to consumer contracts, contracts of employment and contracts of insurance, from which the parties may not derogate by a choice of jurisdic- tion clause. (Article 23.5 of the Regulation). The notion of mandatory rules also comes into play with regard to the effect given to foreign judgments: a foreign judgment may be denied any effect if it is found not to comply with public policy (as a matter of law or procedure).
Under international commercial law, public policy is sometimes put forward as the grounds for avoiding internal mandatory rules in favour of favorable material rules adap-