Teoría de la discriminación en el mercado de trabajo

In a conflicts situation, once an English court has ascertained its competence as to jurisdiction, it proceeds to determine the law governing the dispute. Where a contract containing one or more foreign elements is the subject matter of proceedings in an English court, the difficult and complicated question of ascertaining the applicable law arises. Such difficulty stems from the multiplicity and diversity of connecting factors which can be raised by the facts of the case. For instance, each of the following factors may have arisen in a different jurisdiction: the place where the contract was made; the place of performance; the place of business of the parties; the place of payment; the currency of payment; the domicile or nationality of the parties; and so on. Which of these connecting factors will be considered as the decisive one is the subject matter of this chapter. The weight attached to each of them will depend greatly on the type of contract in question, for example, contract of sale, carriage of goods by sea or insurance, etc, and on the nature of the dispute, for example, validity, illegality, non-performance, or capacity, etc.

The law in this area has undergone fundamental changes. Until relatively recently, the flexible common law doctrine of the proper law of the contract governed most issues. This, however, has been replaced to a great extent by the Contracts (Applicable Law) Act 1990, which came into force on 1 April 1991. This Act implements the EC Convention on the Law Applicable to Contractual Obligations 1980, known as the Rome Convention. TheAct affects contracts entered into only after the date of its coming into force. This means that the common law rules continue to apply to contracts concluded before 1 April 1991. In addition, the common law rules remain relevant in relation to certain contracts which are excluded from the ambit of the Convention, such as certain contracts of insurance, arbitration agreements, and bills of exchange. Hence, the Rome Convention, as implemented by the Contracts (Applicable

Law) Act 1990, will form the main basis of discussion in this chapter, and the common law rules will be examined partly to compare the traditional English approach to that of the Convention, and partly to highlight the continuing relevance of some of these rules in relation to some contractual issues which fall outside the scope of the Convention.

The Contracts (Applicable Law) Act 1990;

countries concerned under the Rome Convention are not limited to Member States. Indeed, Art 2 expressly provides that any law specified by the Convention shall be applied whether or not it is the law of a Contracting State. Furthermore, notwithstanding the provisions of Art 19(2), which states that the Convention does not have to apply when the conflict is solely between the laws of different territorial units within the same State, s 2(3) of the 1990 Act, which accords with the provision of Art 19(1) of the Convention, provides that the Convention shall apply in the case of conflicts between the laws of different parts of the UK.

It must be noted that the phrase ‘contractual obligations’ is not defined in the Convention. In addition, as one may expect, the domestic laws of various Member States are likely to differ as to what types of obligations are

characterised as contractual. A simple example may be that, whilst Italian domestic law classifies an agreement unsupported by consideration as a contract, English domestic law requires consideration to exist before an agreement can be recognised as a contract. What if such an Italian contract were to be the subject of dispute in an English court?Would the English court declare the Italian contract void for lack of consideration? Under the traditional common law rules, this question was considered by the Court of Appeal in Re Bonacina (1912), where the proper law of the contract was applied. It was held that, as the contract was valid by Italian law, it would be recognised and enforced in England. However, as the differences between the laws of Member States can be much more complex than that in the above example, it is expected that the ECJ will interpret this phrase so as to confer on it an autonomous Community meaning in line with Art 5(1) of the Brussels Convention 1968. Matters excluded from the ambit of the Convention

The Convention does not apply to all contractual matters. Article 1, paras (2) and (3) set out a list of issues which are excluded from its scope. These are as follows:

(a) questions involving the status or legal capacity of natural persons, but subject to Art 11;

(b) contractual obligations relating to wills and succession;

(c) contractual obligations relating to rights in property arising out of matrimonial relationships;

(d) family law matters;

(e) obligations arising under bills of exchange, cheques and promissory notes and other negotiable instruments to the extent that the obligations arise out of their negotiable character;

(f) arbitration and jurisdiction agreements;

(g) questions governed by the law of companies and other bodies corporate or unincorporate such as the creation, legal capacity, internal organisation or winding up, and the personal liability of officers and members as such for the obligations of the company or body;

(h) the question whether an agent is able to bind a principal, or an organ to bind a company or body corporate or unincorporate, to a third party; (i) the constitution of trusts and the relationship between settlors, trustees and beneficiaries;

(j) evidence and procedure, but subject to Art 14; and

(k) contracts of insurance which cover risks situated in the territories of the Member States of the EC.

In relation to the latter exclusion, whether a risk is situated within the territories of a Member State is a matter for the court of that State to determine by applying its internal law. The Convention, however, applies to contracts of re-insurance (Art 1(4)). As far as English law is concerned, all the above exclusions will continue to be governed either by the common law rules relating to contract, if and when they are classified as contractual, or by the choice of law rules applicable to whatever classifications they may belong.

As for arbitration and jurisdiction agreements, their exclusion from the scope of the Convention was justified on the ground that the validity of

jurisdiction clauses is covered, to a large extent, by the provisions of Art 17 of the Brussels Convention 1968, and the validity of arbitration clauses is

governed by the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, to which almost all EC Member States have acceded. It does not follow, however, that the substantive contract

incorporating a jurisdiction or an arbitration clause is not covered by the Rome Convention. In fact, according to the Giuliano-Lagarde Report, such clauses may be taken into account when ascertaining the applicable law under Arts 3 and 4 of the Convention.

The applicable law: express and/or inferred choice of law

Like the English common law rules, the Convention makes a basic distinction between the situation where the applicable law is chosen by the parties and the situation where, in the absence of choice, the applicable law is to be ascertained objectively. Similarly, any reference to an applicable law under the Convention is a reference to the domestic law of the country in question, and accordingly the doctrine of renvoi is specifically excluded (Art 15). By virtue of Art 3(1) of the Convention, a contract is to be governed by the law chosen by the parties, provided that the choice is express or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case. Thus, parties are given the freedom to pick and choose the applicable law. This bears close resemblance to the view upheld under the English common law rules, where LordWright held, in Vita Food Products Inc v Unus Shipping Co Ltd (1939), that ‘provided the intention expressed is bona fide and legal and there is no reason for avoiding the choice on the grounds of public policy’, the parties’ express choice would be upheld.

Moreover, according to the last sentence of Art 3(1), which reads that ‘the parties can select the applicable law to the whole or part of the contract’, the parties can choose different laws to govern different parts of the contract.

This clearly allows for ‘dépçage’, that is, the act of severing the contract between different legal systems. Hence, the parties may choose different legal systems to govern different issues in their contract. For instance, they can choose a law to govern the interpretation of the contract and a different law to govern its discharge. In the context of the common law rules, although such a dépeçage did not apply, it had some support. For instance, MacDermott LJ, dissenting, in Kahler v Midland Bank (1950), took the view that dépeçage could be relied upon where unusual and compelling circumstances existed. Also, in Sayers v International Drilling Co (1971), the Court of Appeal held that an exemption clause was governed by the proper law of the contract, whilst the remaining issues were governed by tort rules.

In the absence of an express choice, Art 3(1) stipulates that a choice of law can be inferred, provided that it is ‘demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case’. No guidance as to how such an inference may be determined is given in the Convention. However, the Giuliano-Lagarde Report provides examples of certain factors which may be of assistance to the court’s attempt to infer a choice of law. Such factors may be: a choice of jurisdiction or arbitration clause; a reference to a

particular system of law in the contract; the use of a standard form; and so forth. These factors, however, are not conclusive. They are merely factors to be taken into account. Guidance as to how an implied choice of law may be inferred under Art 3(1) can be found in the recent case of Egon Oldendorff v Liberia Corpn (1996). In this case, a contract was made between a Japanese company and a German company without any express choice of law provision. The contract, however, provided for arbitration in London and was in a well known English charterparty which contained standard clauses with well known meanings in English law. Clarke J held that the contract was subject to Art 3(1) of the Convention. Although the parties had not expressly agreed whether English or Japanese law applied, the plaintiff had demonstrated with reasonable certainty that the parties had intended English law to apply. He stated that (p 390):

In short, having agreed English arbitration for the determination in London of disputes arising out of a well known English language form of

charterparty which contains standard clauses with well known meanings in English law, it is in my judgment to be inferred that the parties intended that law to apply.

By way of analogy, the English common law rules had operated in the past to infer a choice of law on the basis of broadly similar factors. Indeed, Clarke J in the Egon case expressed the view that Art 3(1) was similar to the position at common law and accordingly a similar test could be applied. At common law,

in Miller (James) and Partners Ltd v Whitworth Street Estates (Manchester) Ltd (1970), the use of a standard form was held to be a strong indication pointing to the

law of the country to which such a form owed its origin. Nevertheless, the indication would not be sufficiently strong to infer a choice of law where such a standard form was adopted throughout the world. In this case, the English court would look for other factors which would enable such an indication to be deduced. This was the case in Amin Rasheed Shipping Corpn v Kuwait Insurance Co (1984), where the majority of the House of Lords inferred from the terms of the contract that English law was the applicable law. The plaintiffs, a Liberian company carrying on a business in Dubai, insured a vessel with the defendants, a Kuwaiti insurance company. The insurance policy was a standard Lloyd’s policy, as set out in the Marine Insurance Act 1906. The House of Lords held that the parties intended their contract to be governed by English law. This inference was not, however, based on the ground that the policy was in English form, as such policies had been adopted widely throughout the world, but on

the ground that it was not possible to interpret the policy without recourse to the British Act and to the judicial interpretation of that Act.

Furthermore, English courts adopted the view that, where the parties did not choose a law, but chose a forum, either for litigation or arbitration, then that choice would form a strong indication that the parties intended the law of that forum to govern their contract. However, the importance of this factor would pale into insignificance where other factors pointed to the application of another law. This view may be illustrated by the judgment of the House of Lords in Compagnie d’Armement Maritime SA v Compagnie Tunisienne de Navigation SA (1971), where a shipping contract was made in Paris on an English language printed form containing a clause providing for the settlement of disputes by arbitration in London. Under this contract, the defendants, French shipowners, agreed to carry for the plaintiffs, a Tunisian company, a large quantity of oil over a period of some months from one Tunisian port to another. The freight was payable in French francs in Paris, and French commercial law prevailed in Tunisia. The House of Lords held that French law was the proper law of the contract. Lord Wilberforce stated (p 600) that: …an arbitration clause must be treated as an indication, to be considered together with the rest of the contract and relevant surrounding facts. Always, it will be a strong indication…But, in some cases, it must give way where other indications are clear.

In this case, the contract was made in France, the freight was payable in French francs, the contract was to be performed in Tunisia, a country which applied French law, and the only connection with England was in terms of the arbitration clause. Accordingly, there was a clear balance in favour of French law.

Article 3(2) of the Convention goes on to add that the parties’ choice of law can be made at any time, even after the conclusion of the contract. They can also vary any choice of law that was done previously, provided that the variation of the choice does not prejudice the formal validity of the contract under the rules set out in Art 9, or adversely affect the rights of third parties. This provision enables the parties to have maximum freedom as to when a choice of law can be made. Thus, a choice of law can be made either at the time of contracting, or before or after the conclusion of the contract. Although the parties are free to choose any law, whether or not connected with the contract, this choice is qualified by the rule laid down in Art 3(3) of the Convention which provides:

The fact that the parties have chosen a foreign law…shall not, where all the other elements relevant to the situation at the time of the choice are connected with one country only, prejudice the application of rules of the law of that country which cannot be derogated fromby contract, hereinafter called ‘mandatory rules’.

The effect of Art 3(3) may be illustrated in the following example: suppose that the parties to an entirely English contract containing exemption clauses, choose, for example, Swiss law to govern. Then, by virtue of Art 3(3), the court of any Contracting State which tries the action is required to apply any controls on exemption clauses which are part of English law, such as those contained in the Unfair Contract Terms Act 1977, or in the Employment Rights Act 1996. If a dispute arises as to whether one of the parties has consented to the choice of the applicable law, then according to Art 3(4), the existence and validity of the consent are to be determined in accordance with the provisions of Art 8 in relation to material validity, Art 9 in relation to formal validity and Art 11 in connection with issues of incapacity.

Applicable law in the absence of choice

If the parties have failed to choose a law either expressly or impliedly, then the applicable law will be determined in accordance with Art 4. Paragraph (1) of this Article provides that:

To the extent that the law applicable to the contract has not been chosen in accordance with Art 3, the contract shall be governed by the law of the country with which it is most closely connected.

This is an objective test under which the applicable law is ascertained by looking objectively at the connecting factors. Here, again, as under Art 3(1), there is room for dépeçage, notably provided by the last sentence of Art 4(1) which states that:

Nevertheless, a severable part of the contract which has a closer connection with another country may by way of exception be governed by the law of that country.

This provision, however, only applies in exceptional cases, which means that dépeçage is only intended to operate in very limited circumstances.

By way of comparison, under the traditional English rules and in the absence of a choice of law, either express or implied, English courts adopted a test in favour of the ‘law most closely connected’ with the contract. Note, however,

that there is a slight difference between this test and that employed in the

Convention. The latter refers to the ‘country’, rather than the ‘law’, most closely connected with the contract. Whether this will result in the application of a different test under the Convention remains to be seen (for details on the

importance of this difference, see Stone, The Conflict of Laws, 1995, pp 239–40). Both the Convention and the common law adopt an objective test to ascertain the applicable law.However, the similarities stop here. Whilst Art 4 proceeds to give three rebuttable presumptions for determining the country with which the contract is most closely connected, English common law considered such presumptions to be of little value. In fact, any attempt to use rebuttable presumptions was aborted long ago, towards the end of the 19th century. Article 4(2) provides that:

…it shall be presumed that the contract is most closely connected with the country where the party, who is to effect the performance which is characteristic of the contract, has, at the time of conclusion of the contract, his habitual residence, or, in the case of a body corporate or unincorporate, its central administration. However, if the contract is entered into in the course of that party’s trade or profession, that country shall be the country