How Do Mandatory Rules Of Law Function In International Civil Litigation? - ARIA Vol. 18 No. 1-2 2007
Bernard Audit - Professor of Law, University of Paris 2.
Originally from American Review of International Arbitration - ARIA
The notion of mandatory rules originates, at least in civil-law systems, in domestic law, where they are contrasted with permissive or default rules; they are the rules which the EC Rome Convention defined as the ”rules of law which cannot be derogated from by contract.” In the context of conflict of laws, the concept of mandatory rules (lois de police) developed to denote the transnational application of a mandatory norm, based on legislative intent, irrespective of the designation of the applicable law through the mediation of a conflict rule. It follows from that description that the concept has limited meaning in those jurisdictions which routinely adopt a unilateral approach or methodology for conflict of laws, focusing on the content and purpose of the competing laws in order to determine their spatial reach. However, this is not so true in the field of contracts, with which we are mostly concerned. There, the widely recognized principle is that the applicable law is the law designated by the parties. Whatever the jurisdiction, a court will be called upon to assess whether the parties’ choice goes against one or more mandatory rules of a State to which the contract is connected, and thus to inquire into its spatial reach.
Mandatory rules are mostly of legislative origin (e.g. usury laws), and it is well known that their number increased in all municipal systems during the last century with the expansion of economic regulation (antitrust legislation, securities and exchange regulation, welfare legislation, etc.). Mandatory domestic rules may also emerge from case law, by way of implementation of the general concepts of ordre public or bonos mores. Finally, one must not forget all the public law rules, notably those whereby a given State regulates its international trade, such as import and export controls, embargoes, and exchange control: such rules are meant to apply irrespective of the law governing a particular relationship.
The application of mandatory rules before national courts is fundamentally different from their application in arbitration in that, save for the rare situation where two foreign mandatory rules are potentially applicable before a disinterested national court, the forum is not neutral regarding the mandatory rule(s) involved. Therefore, one basic distinction emerges in the treatment of the various mandatory rules identified above in judicial practice: namely whether a potentially applicable mandatory rule belongs to the forum law or to a foreign law. Next, a subdistinction within each situation is whether the mandatory rule in question belongs to the normally applicable law or not.