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ACCA Applied Skills · Corporate and Business Law (Global) · International trade, international legal regulation and conflict of laws

A court in Country M is asked to apply the law of Country N, chosen by the parties, to a contract. Under N's law the contract would be valid, but enforcing it would require conduct that is a serious breach of M's fundamental public policy. What is the most likely outcome in M's court?

The court may refuse to apply the offending foreign law. Under the public policy exception in conflict of laws, a forum court need not apply even a validly chosen foreign law where doing so would breach its fundamental public policy, so party autonomy has limits.

  1. AThe court may refuse to apply the part of N's law offending public policyCorrect
  2. BThe court must apply N's law without exception because the parties chose it
  3. CThe court must transfer the case to Country N
  4. DThe court must apply the law of the claimant's nationality

Explanation

The public policy exception allows a forum court to decline to apply foreign law that conflicts with its fundamental public policy, even where the parties chose it. Party autonomy is therefore not absolute. Nothing obliges transfer to N or use of the claimant's nationality.

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