Choice of Law in Contract and Thai Private International Law:

A Comparative Study

By Prasit Pivavatnapanich

England to America Savigny's genius was vividly demonstrated in his most well - known treatise named System des heutigen romischen Rechts. In volume eight pertaining to private international law. Savigny pointed out that every juridical relation e.g. the conditions of marriage, liability for own act, forms of will, ownership of immovable property, had its own "seat" functioning as an indicia of a proper law of a case. The doctrine of the most real connection was also fully supported by Westlake, a British lawyer. According to Westlake, a contract should be governed by the law with which such contract has the most real connection(86).
The next major issue needed to be explored and explained is the antagonism between the requirements of a certainty, predictability and a flexibility in indicating the proper law by taking into account other pertinent conditions. By and large, there are two doctrinal camps that uphold and oppose such theory. The former group seeks to maintain the legal certainty and predictability of international transactions by rejecting the freedom of a court to consider other relevant facts, This view also criticizes the notion of most real connection as being so ambiguous that the parties are incapable of predicting the final outcome of their legal transactions. Moreover, one might feel that the task of a judge relying on the closest connection theory is primarily perceived as guesswork.
By contrast, the antagonistic approach takes the view that, in reality, an objection to relevant elements and a strict adherence to rigid rules contained in written law alone possibly leads to an undesirable outcome. By way of compromising between certainty and private interests, the permission of a court to move away from inflexible rules to look at other circumstances which function as contributor factors in relation to particular contracts is an appropriate solution for diluting rigid rules. The latter method has been supported by the Norwegian Supreme Court because Norway lacks a code of private international law, to the extent that the main source of Norwegian private international law comes from customary law and Hague conventions. Hence, by this method, it enables courts to seek to an equitable solution(87).
In order to reduce the Scylla of uncertainty and Charybdis of vagueness of the closest connection theory(88), the draft men of the, Rome Convention proposed the rebuttable of presumptions(89). The following presumptions are prescribed in article 4(2). It provides that " ...the pace where the party who is to effect the performance which is characteristic of the contract, at the time of conclusion of the contract, his habitual residence, or, in case of a body corporate or incorporate, its central administration". However, in all cases relating to immovable property or a right to use immovable property under article 4(3), the place where the immovable things is located, lex situs, plays a central role in determining the connecting factor. This guidance, however, was criticized because of the difficulty in localizing appropriate point of contacts by courts.
Currently, it goes without saying that, by the end of the twentieth century, most rules of private international law in numerous countries tended to deviate from certainty and predictability toward flexibility, enabling courts to go beyound rigid rules. It means that the closest connection theory has peen widely used by courts and is apparently embodied in many statutes, in both the European and non-European hemispheres viz. the British common law(90), the Switzerland's Private International Law Statute (1987) (91), the American conflict of laws (92), the Chinese private ntp'ratln, al law (93).

Thai Practices Concerning In Default of the Chosen Law

According to Thai conflict of laws article 13 paragraph one (94), when the intention of the parties either express or implied, cannot be found or ascertained. The law common to the contracting parties is governing law if both parties hold the same nationality. Obviously, this connecting factor is conceived as the imperative rule. With respect to this point, some member of the legal committees drafting the Thai conflict of laws rules. such as Mr. Rene Guyon. Mr. Sent Pramoj, opined that the rule of common nationality is deemed to be a presumption of intention of contracting parties(95), submitting themselves to the law of common nationality of the parties. Such opinion is debatable and should be analyzed. We cannot equate the imperative rule of common nationality with the presumption of intention whether such presumption is rebutable or irrebutable. Especially, in the case of the parties holding the same nationality accidentally at the time of concluding a contract, it is very hard to presume that the parties intended to accept their common nationality as the implied intention of the parties. Furthermore, the common nationality alone, usually, is rot closely connected to the transaction and the parties. For instance, a seller has a domicile in German and a buyer has a domicile in Thailand. The place of specific performance is carried out in Germany. The currency of money is paid n Deutsche mark. This agreement incorporates an arbitration clause, submitting any disputes to the German court. Both hold the same nationality, namely, Swiss. In this case, such contract has more significant relations to Germany than Switzerland. It is gravely unjust for the parties if Thai courts apply Swiss law as a governing law to the contract merely on the grounds that they have the same nationality. Instead, Thai courts should scrupulously weigh up other relevant elements, such as the terms and conditions appeared in the contract, the arbitration clause. the place where the performance is discharged etc, in order to know what is the presumed intention of the parties.
For these reason, the rule of common nationality is not viewed as the presumption of the intention of contracting parties rather it is viewed as an imperative rule.
In the case of different nationalities, the applicable law is the law of the place where the contract has been concluded, widely known as the Roman maxim lex loci contractus. It is interesting to note that the content of such article and the Italian private international law relating the absence of chosen law is quite similar.

After closely considering article 13 mentioned above, the nature of Thai private international law looks very rigid. Possibly, an application of such correcting factors to an international contract leads to a tangled dilemma. At first glance, article 13 has several drawbacks. For example, if Thai courts are incapable of ascertaining the expressed or implied choice of law, and the parties do not share the same nationality, then, the applicable law is the law where the contract has peen concluded. But if such country has no relevant law applicable to such contract, what is the appropriate solution for a Thai judge to use in solving this problem? On top of that, with the advent of advanced technology and widely used Internet as an

Part 6

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(86) See ERNST RABEL, supra note 45, at 436.

(87) See SYMEON C. SYMEONIDES (ed), supra note 15, at 319-322.

(88) Some lawyers realize that concept of "the closest and real relationship" may lead to an uncertainty. See FILIP DE LY, supra note 10, at 75.

(89) See Friedrich K. Juenger, supra note 11, at 200.

(90) See DICEY AND MORRIS ON THE CONFLICT OF LAWS, LAWRENCE COLLINS (ed.) supra note 64, at 1191.

(91) By the term of article 117, it states that: "If no law has been chosen, a contract is governed by the law of the country most closely connected with it". See PIERRE A. KARRER and KARL W. ARNOLD, supra note 67, at 114

(92) See Section 188 of the Second Restatement of Conflict of Laws. It stipulates that: Law Governing in Absence of Effective Choice by the Parties.
(1) The rights and duties of the parties with respect to an issue in contract are determin by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principle stated in 6.

(93) See Article 145 (2) of the General Civil Law cited by Luo Junming, supra note 85, at 446

(94) It states that: "…If such intention, express or implied, cannot be ascertained, the applicable law is the law common to the parties when they are of the same nationality, or, if they are not of the same nationality, the law of the place where the contract has been made".

(95) See Travux preparatories of Act on Conflict of Laws (B.E. 2481) On 10 May B.E. 2481.

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