IACCM Contract Management Forum

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2019-07-28 06:49:22


For Agreement between the Parties of differnet origin , the aurgument starts up on Jurisdiction and governing law for the AGreement. while both the Parties are interested in proposing law of their respective country to be made applicable to the AGreement, I want to know whether there is any list of prioritised or ranked Jurisdiction/ Govering law like World bank ranks each country a ranking for " ease in doing business" and almost 190 countrites are listed. For example, I propose indian law and other Party would prefer Laws of Singpore to be governing law. Can parties choose England and wales as nuetral or any other preferred law.
 •   2019-08-30 18:01:18
In the US, Texas or New York are largely considered "neutral territory" whereas in Europe, until very recently UK law was considered neutral. I think that may change with the recent political upheaval.
 •  Ministry of Defence  •   2019-10-04 08:50:59
Or try international trade law?

 •  Legal and Commercial Training Limited  •   2019-11-05 09:40:02
In the case of one party proposing Indian law and the other proposing Singapore law, the parties may well choose the law of England and Wales as both Indian law and Singapore law are based upon English and Welsh common law. (Note that there is no such concept as "UK law" as one commentator has suggested below).

However, a party should consider a wide range of factors before proposing a particular governing law and should weigh up the legal and commercial advantages and disadvantages of all the options.

One factor may be the degree of certainty that a contract will be interpreted in a particular way. English law adheres to the doctrine of binding precedence. Some legal systems do not. This could lead to significant uncertainty as to how the law will be applied.

In English law, it may be perceived that the courts allow a greater degree of freedom of contract. Subject to certain exceptions, freedom of contract in English law means that commercial parties are completely free to make disastrous bargains. This illustrates the comparative reluctance of the English courts to interfere on policy or other grounds to rewrite the parties' contracts for them.

For example, in English law it is possible, provided very clear wording is used, to include an exclusion clause that excludes any and all liability whatsoever, even for a deliberate breach of contract. And there is still no recognition of a duty of good faith being applied generally to commercial agreements (but watch this space!). This may or may not be an advantage to you but it remains the case that the courts are likely to give effect to the wording of the contract without imposing their opinions as to what does or does not amount to good faith.

And you may wish to consider the approach of a particular legal system to particular clauses.

For example, in English law, a liquidated damages clause will be subject to the clarification set out recently by the Supreme Court with a subsequent judgment, applying that test, indicating that a freely-negotiated LD clause is likely to be upheld subject to the requirements set out by the Supreme Court. Under UAE law, such a provision would be subject to Article 390(2) of the Civil Code and either party may apply to the court to adjust the agreed amount of compensation so it is equal to the loss. If Indian law were to apply, we would have to consider the effect of section 74 of the Indian Contracts Act 1872.

English law will also recognise an asymmetric jurisdiction clause.

And it may be that the choice of law clause will be reflected in the choice of jurisdiction. So, English law and the English courts. If the choice of courts is to reflect the choice of law, it may well be the consideration should be given to the efficacy of the court system and the technical expertise and other qualities of the judges.

Lots to consider.
 •   2020-07-16 13:42:29
Another couple of points to consider:
(1) How fast disputes can be resolved in that jurisdiction, whether through the courts or by arbitration.
(2) Intellectual property protections - ensure that any jurisdiction utilised provides sufficient protections.
Replies: 4
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