ACCA Applied Skills · Corporate and Business Law (Global) · International trade, international legal regulation and conflict of laws
Alpha Ltd, based in Country X, signs a supply contract with Beta Inc, based in Country Y. The contract states that any dispute will be decided according to the law of Country Z, with which neither party has any connection. Under the general approach of private international law, how will the choice of Country Z law most likely be treated?
The express choice of Country Z law will usually be respected, because private international law generally upholds party autonomy in choosing the governing law, even without a connection to the parties, subject to public policy and mandatory rules.
- AIt will usually be respected as the parties' express choice of governing law, subject to limits such as public policyCorrect
- BIt will be void because the chosen law must be the law of one of the parties' countries
- CIt will be ignored and the law of the seller's country will always apply
- DIt will apply only if both parties' courts separately approve it in advance
Explanation
Most legal systems give effect to the parties' express choice of governing law (party autonomy), even where the law has no link to the parties, subject to public policy and mandatory rules. The claim that the law must be one of the parties' own is not a general rule.
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