Choice of Law in Contract and Thai Private International
Law:
A Comparative Study
By
Prasit Pivavatnapanich
of
the parties. The second is rigid rule. The third, and perhaps most significant
of all, is the closest connection theory.
1)
Presumed intention of the parties
In the absence of expressed choice of law, courts must carefully take
into account other relevant elements contained in the contract such
as the language, legal terms, the arbitration clause etc. By so doing,
courts are able to elicit or phantom the inferred intention of contracting
parties. Interestingly, although the arbitration cause is regarded as
a very persuasive factor, such clause is not decisive indicia to ascertain
implied choice of law(67).
To be able to understand the parties's choice of law deduced from pertinent
circumstances, the following case law will throw light on how to localize
the proper law of contract. In Yoshizawa and other v. Deutsche Lufthansa
AG, the Tokyo District Court determined the applicable law of international
employment contract(68). In this case, the contracting
parties did not agree to include an expression of governing law. The
plaintiffs, who were employees, held Japanese nationality. The defendant
was an airline company incorporated under German law and it headquarter,
siege social, was situated in Germany, so such airline had German nationality(69).
But a representative was located in Japan. Each employee concluded an
employment contract in Frankfurt. Also, Rights and duties of employees
were subject to German Labor Law and their salaries were paid in German
marks. In 1947, the defendant began to provide an Additional Payment
to Japanese flight attendants based at Haneda Airport in Tokyo, because
of difference in the benefits between the Japa-based and German-based
flight attendants. Sixteen years later, the defendant decided to stop
paying the Additional Payment. Hence, the plaintiffs sued the defendant
before the Japanese court and they contended that the governing law
was Japanese, the place where they performed their routine work.
The Tokyo District Court ruled that the Tokyo's office played a secondary
role. After taking in to account all relevant circumstances, the court
went on to reach a conclusion that nothing in these circumstances enables
the court to infer the choice of Japanese law.
2)
Rigid rules(70)
Several countries, except for the Anglo-Saxon system of law(71),
rely upon the peremptory rules to single out a governing law when a
court is directly faced with the problem of default of proper law in
contract. From a comparative point of view, the inflexible rule, or
closed conflict of laws rules(72), can be reflected
in numerous forms. First, the lex loci contractus is primarily deemed
to be the rigid rule that was widely employed in European nations in
the nineteenth century(73) and this rigid connecting
point was also used by French courts in the twentieth century(74).
According to the Thai conflict of laws rules, in the case of failing
to indicate the expressed as well as inferred proper of contract, deliberately
or not deliberately, and if the contracting parties do not share the
same nationality, then, the lex loci contractus is perceived as a last
resort to fill the gap(75).
Second, the lex loci solutions, the place of specific performance, is
designed to fill a loophole. As a result of the legacy of Savigny(76),
German private International law relied heavily upon this imperative
rule (77). Peculiarly, in the absence of a clause
of an explicitly chosen law, Greek law was seen as the presumed place
of performance, in turn, Greek courts applied Greek law to cases in
question(78). It is difficult for a judge to employ
this rule if a contractual obligation is a bilateral contract, not a
unilateral contract. On this point, according to Savigny's view, such
contract is subject to each place where the bilateral obligations are
expected to be performed by each debtor(79). This
rule, like lex loci contracts, was strongly criticized by several writers (80).
Third, the common nationality of the parties is also conceived as a
rigid connecting point. It the parties share common nationality, a court
will apply such law that both hold such nationality to the contract,
The Italian private international law(81) and Thai
conflict of laws(82) firmly adhere to this rigid rule,
for example. Conversely, in the practice of British court, the rule
of common nationality of the parties does not play an important role
in ascertaining the proper law of contract(83).
It is very interesting to point out that the domain of an application
of lex situs, under Thai private international law, is very comprehensive.
To the extent that lex situs becomes a paramount rule applied to all
legal matters relating to immovable properly no matter now it concerns
law of patrimonial property between husband and wife, law of things,
law of obligation, law of succession. To put it more simply, lex situs
governs all realm of immovable property. Needless to say, it is convenient
for Thai judges to apply lex situs to all problems concerning immovable
things.
In contrast to Thai rules of conflict of laws, German private international
law resorts to lex domicilii applicable to the problem of succession
of both moveable and immovable things. Also, the Swiss code on conflict
of laws as to inheritance law adopted the same position, namely, that
the estate of a person who has a last domicile aboard is subject to
lex domicilii(84).
3)
The closest connection theory(85)
In default of chosen law, the contemporaries of private international
law, both common law and continental law, have recognized the principle
of "the closest or real connection". Besides being well established
in many domestic laws as well as case law, the Rome Convention also
adopted this rule laid down in article 4(1) and it will be discussed
later.
The legal concept of "the closest connection" is not new;
it was originally proposed by Friedrich Carl von Savigny, the greatest
German jurist of all time. When lawyers mention the name of Savigny,
most lecturers and students think of the school of thought widely known
as the Historical Law School founded by him. Note that, apart from the
notion of volksgeist, the concept of "the seat", Sitz in German,
has been widely accepted among leading scholars from Europe and
Part
5
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(67)
See A.E. ANTON, supra note 13, at 270.
(68)
Tokyo District Court, Judgment, October 1, 1997; Rodo Hanrei 70[1998].
This decision is available at The Japanese Annual of International Law
[No. 43, 2000], at 212-216.
(69)
With respect to granting nationality to corporations, generally, continental
law system adopts a principle of the place of real management, or a
seat theory, whereas common law strongly adheres to an incorporated
rule. See ULRICH DROBNIG, supra note 14, at 265-266; GEORGES R. DELAUME,
supra note 36, at 31.
(70)
See ALBERT A. EHRENZWEIG and ERIK JAYME, PRIVATE INTERNATIONAL LAW vol.
Three 33-38. (1977).
(71)
On this issue, professor Nygh opines that Anglo-Commonwealth courts
have never shown enthusiasm for peremptory rules. See Peter E. Nygh,
supra note 77, at 327.
(72)
See FILIP DE LY, supra note 10, at 74-75.
(73)
See Ole Lando, supra note 56, at 54; P.E Nygh, supra note 77, at 326.
(74)
See GEORGES R. DELAUME, supra note 36, at 122.
(75)
See Article 13 para. 1.
(76)
See ERNST RABEL, THE CONFLICT OF LAWS VOLUME TWO 462-463 (1947).
(77)
See Ole Lando, supra note 70, at 2.
(78)
Before the enforcement of new Civil Code, the place of carrying out
contractual obligations, lex loci solutionis, was employed by Greek
courts. At present, the old rule has been replaced by a new rule called
the proper law of contract as provided by article 25 of the Civil Code
of 1940 that came into effect on February 23, 1946. See ALBERT A. EHRENZWEIG
(et al), AMERICAN-GREEK PRIVATE INTERNATIONAL LAW 71(1957).
(79)
See ERNST RABEL, supra note 45, at 466-467.
(80)
Id. At 467-472.
(81)
See Article 25 of the Italian Civil Code Chapter II Applicable of the
Law in General (Translated by MARIO BELTRAMO, GIOVANNI E. LONGO &
JOHN HENRY MERRYMAN) (1969). Article 25 states that "Law governing
obligations. Obligations arising from contract are governed by the national
law of the contracting parties, if common to them; otherwise by that
of the place in which the contract was made. In any case, the different
intention of the parties controls".
(82)
See Article 13 paragraph one of the Act on Conflict of Laws (B.E. 2481).
It states that: "…If such intention, express or implied, cannot
be ascertained, the law applicable is the law common to the parties
when they are of the same nationality."
(83)
MARTIN WOLFF, supra note 2, at 437.
(84)
See Article 91 (1) of Federal Statute on Private International Law 1987.
It provides that "The estate of a person last domiciled abroad
is governed by the law determined by the conflict of laws rules of the
country of domicile".
(85)
See Mathias Reimann, supra note 1, at 522 et seq (1999); Luo Junming,
Choice of Law for Contracts in China. A proposal for the Objectivization
of Standards and Their Use in Conflict of Laws, Indiana International
and Comparative Law Review (1996) at.445 et seq
