Choice of Law in Contract and Thai Private International Law:

A Comparative Study

By Prasit Pivavatnapanich

Also, tine inferred choice of law cannot be deduced from the place of concluding the contract alone out the learned judges have to neatly take into account other relevant elements, both inside and outside the agreement, such as the domicile of the parties, the currency of money, the legal terms used in the relevant documents etc. The Court ignored these circumstances and, at the same time, it forgot that lex loci contractus, a rigid rule, functions as the final solution were other connecting factors do not work.
Regarding the scope of chosen law, according to article 13. the party autonomy is only applied to two problems, i.e. the conditions and effects of contract. It follows that a questions of a capacity of natural person to conclude a contract is subject to article 10 paragraph one entitled "Status and Capacity of person" By the term of article 10, the capacity or incapacity of person s governed by lex patriae, the law of nationality of such person.

With respect to the problem of the limitation of choosing foreign laws this issue, like other questions, has never been seriously discussed in academic circles. In addition, a Thai court has never ruled on this issue. In dealing with the problem of the imitation of freedom in choosing law according to Thai conflict of laws, the present author think that the chosen law should be connected with the juristic relation of the contract in one way or another. The reason reason support to my opinion is that Thai judges usually tend to employ Thai law. the Civil and Commercial Code, rather than foreign law. Thus, from actual practical reasons we be able to prove and use foreign law conveniently. Thai private internation laws should not allow the contracting parties to choose and pick any system of law on earth as a governing law, rather, the chosen law should be closely linked with same of the contract. i.e., lox loci contractus, lex loci solutionis or the parties, i.e. lex domicilii, lex patriae.

Meaning and Scope of Chosen Law
The meaning of the selection of law as a proper law of contract states parties have the right to choose the appropriate rules of system of laws applicable to their contact(50). Accordingly, the contract is subject to such foreign laws, albeit under some limitations of lex forum(51) i.e. the provisions containing pubic order as well as a precept of morality. The archetype of the principle of party autonomy came from British court. This rule was strongly upheld by common law on the basis of two reasons: the laissez-faire and the intention of the parties(52). The salient feature of the party autonomy. or la loi d' autonomie in French, is that an intention of individual is a main source of applicable law. The important thing to be kept in mind is that the principle of party autonomy in choosing a proper law of contract is only reserved for a contract having international international characters or embodied in foreign element(53), not extending to a normal contract.
In the past in some countries. however, this principle was denied by leading commentators. Mailher de Chassat, a French jurist, pointed out, in 1841, that the volition of private person could not elevate above the law(54). The same line of argument was also extended to Germany soil. Ludvic von Bar and Eranst Zitemann did not support the choice of law in contract selected by the parties. Nonetheless, the German court and several authorities on German private international law, such as Martin Wolff, Leo Raape and Gamillscheg, accented the principle of freedom of contract, allowing the parties to choose a foreign law as an applicable law.
Regarding the scope of the proper law, most practices of courts and scholarly opinions at jurists agree that the chosen law is directly applied to the relevant questions of the contract, such as the formation, the validity, the performance of contract etc(55). But the problem of status and capacity of the parties to conclude a contract and form are subject to other laws(56) i.e. personal law: lex patriae or lex domicile. Looking at the Thai conflict of laws, this problem will not arise because article 10(57) answers the question as to who gas full capacity to enter into legal transaction.

Some Considerations on the Principle of Party Autonomy

1) Renvoi in choice of law In contract As we have seen, most systems of conflict of laws allow parties to choose foreign laws applicable to a contract. The problem is that the such foreign law is only restricted to foreign substantive law, that is to say, foreign civil law or commercial law. Or does ills law embrace foreign conflict of laws? Most leading experts on private international law almost unanimously acknowledge today that the principle of renvoi could not be applied to choice of law in contract(58), widely known as the principle of an exclusion of renvoi. Besides, some conflict of laws rules, such as new German private international law, also deny the renvoi applicable to choice of law in contract(59) and the rule of exclusion is also embodied in article 15 of the Rome Convention(60).
Conversely, Thai private international law does not touch on this matter. Article 4(61) merely mentions the principle of renvoi (remission) Thai legal literatures also do not examine the rue of excision of renvoi in the field of contract.

2) The problem of depecage
One of the difficult problems in the proper law of contract is to decide whether the parties are able to choose more than one system of rules of law applied to the same contract. On the one hard, the proper law of contract can be applied to the contract in whole or in part. This issue is widely known by the French word "depecage"(a scission of contract). The approach toward this problem can be spelled out in three views. First, some conflict of laws, like German, England(62), and conventions, like the Rome Convention(63), obviously accept a concept of the scission of contract. Second, a concept of depecage is alien to the Scandinavian conflict of law rules(64). Third, the Thai private international law, like the Swiss Code on Conflict of Laws 1987(65), is silent on this issue. In Thailand, moreover, no cases law and doctrinal works have dealt with the problem of depecage.

In the Absence of the Chosen Law by the Contracting Parties
As a matter of fact, most international contracts have no expression of choice of law(66). In dealing with default of expressed or implied choice of law, private international law of other countries provide several appropriate solutions to fill such loopholes because any contract cannot exist without governing law. Generally speaking, the methods of solutions drawn from conflict of laws in various practices of states, can be divided into three main schools. The first is the presumed intention

Part 4

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(50) See ALBERT A. EHRENZWEIG. PRIVATE INTERNATIONAL LAW volume Three 15 (1977).

(51) See P.E. NYTH, supra note 33, at 215; Otto Kahn-Freund, supra note 27, at 196; JOHN O'BRIEN supra note 3, at 307-311;

(52) See Ole Lando, supra note 4, at 15.

(53) See Hessel E. Yntema, supra note 38, at 354.

(54) Id at 17.

(55) See ULRICH DROBNIG, supra note 14, at 243;

(56) See Hessel E. Yntema, supra note 38, at 355.

(57) See Article 10 para. 1 of Act On Conflict of Laws B.E. 2481.

(58) See MARTIN WOLFF, supra note 2, at 192; ERNST RABEL, supra note 97, at 387; ULRICH DROBNIG, supra note 14, at 241-242; J.G. COLLIER, CONFLICT OF LAWS 197 (1994).

(59) In pursuance of article 4 paragraph II, it provides that: "To the extent that the parties are entitled to make a choice of the applicable law, they can only choose the substantive rules of a country".

(60) It says that: "The application of the law of any country specified by this convention means the application of the rules of law in force in that country other than its rules of private international law".

(61) It states that: "Whenever the law of a foreign country is to govern and under that law it is the law of Siam which shall be applied, the internal law of Siam governs, and not the Siamese on conflict of laws "

(62) See Hamlyn v Talisker Distillery[1984] AC202; Kahler v MidlandBank[1950]AC24; Forsikringsaktieselskapet Vasta v Butcher[1989] AC 852, HL and CA 2 All ER 488(Hobhouse J); Libyan Arab Foreign Bank v Bankers Trust Co [1988] 1 LR 259. See also DICEY AND MORRIS ON THE CONFLICT OF LAWS, LAWRENCE COLLINS (ed.), supra note 12, at 1206.

(63) According to article 3 (1) reads: By their choice the parties can select the law applicable to the whole or part only of the contract.

(64) See Ole Lando, supra note 4, at 24.

(65) See Switzerland's Private International Law Statute, supra note, at 113.

(66) See MARTIN WOLFF, supra note 2, at 428; ERNST RABEL, supra note 45, at 436; P.E Nygh, supra note 77, at 326.

Originally Published in the Law Journal of Thailand Bar Society On December, 2002