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
HOW DO MANDATORY RULES OF LAW FUNCTION
IN INTERNATIONAL CIVIL LITIGATION?
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."1 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.