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

Halden Plc, a company in Country P, contracts with Orsin Ltd in Country Q. The contract chooses the law of Country Q. Country P has a mandatory statute that protects commercial agents and applies regardless of the chosen law. Halden's agent sues in Country P's courts for the statutory payment. What is the most likely outcome?

The court may apply its own mandatory statute despite the choice of Country Q law. Overriding mandatory rules of the forum limit party autonomy, so the chosen law does not always prevail, and a choice of law does not force a transfer of the case.

  1. AThe court will ignore its own statute because the parties' choice of law always prevails
  2. BThe court may apply its mandatory statute as an overriding rule despite the choice of Country Q lawCorrect
  3. CThe court must transfer the case to Country Q because of the chosen law

Explanation

Party autonomy is limited by overriding mandatory rules of the forum, which apply whatever law the parties chose. So the choice of law does not always prevail. A choice of governing law does not oblige the court to decline jurisdiction or transfer the case.

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