Choice of Law in Contract and Thai Private International
Law :
A Comparative Study
By
Prasit Pivavatnapanich
Electronic
commerce, the problem of how to ascertain lex loci contratus, where
the contract has been concluded, is an arduous task.
Furthermore, in the case of concluding a contract between parties at
a distance, common law world and the civil law system perceive this
problem of formation of agreement differently. With regard to acceptance
in response to the offer, for instance, British common law recognizes
the mail box theory, or the postal rule, whereas Germany practice acknowledges
that a formation of contract occurs when an acceptance reaches the offeror(96).
Then, if the parties, who are British and German nationals, file a lawsuit
before Thai court, what is an applicable law, or point of contacts,
in this case? Relying on Australian case law, Professor Nygh proposed
that this conundrum should be solved by resorting to the theory of the
proper law of contract(97).
Fortunately, the same article paragraph two(98) guides
a judge to apply a law where the acceptance reaches the offeror. And
if a judge fails to find out where such acceptance is sent to the offeror,
then, the applicable law is the law where such contract is deemed to
be performed, lex loci solutions. To some extent Thai private international
law relating to the rules governing offer and acceptance follows the
German tradition, rather than British rule. However, hypothetically,
if Thai court adheres to such rules without taking into account other
relevant circumstances, problems will continue to arise.
In addition, it seems obvious that the concept of the closest connection
is alien to the Thai conflict of laws in contract, leaving little room
for using discretion in regard to all the circumstances relevant to
the case in hand. It is worth noting that the characteristics of contracts
continue to be very important. There are a wide variety of contracts
requiring different points of contracts, Thus; it is impossible to lay
down a set of particular connecting factors applying to all types of
contractual agreements. In order to make Thai choice of law in contract
more flexible and meet international standards, it is necessary to allow
a court to rely heavily on the principle of most and real connection,
instead of applying rigid rules.
Party
Autonomy and the Rome Convention
The principle of parry autonomy is not only confined to private international
law of each state but also extends to international contracts, as well.
As a result of a wide variety of conflict of laws rules and uncertainty
of such rules in numerous countries, the international community, thorough
several learned institutions, such as Hague Conference, UNIDROIT etc,
realizes that one of the possible solutions to reduce the risks to the
legal intricate mechanism of private international law is a uniform
or harmonization of conflict of laws or substantive laws. Particularly,
international contracts, like reciprocal contracts, that require a package
of certain rules governing the contract have an international character(99) and usually tend to involve more than one country in one way or another.
This, in turn, makes the task of a judge in pinpointing the suitable
connecting factors linked to a proper law of contract not easy. There
are, thus, several conventions that recognize the free will of the parties
to pick up any law as an applicable law. The following paragraphs are
mainly concerned with choice of law in contract in conventions.
The
Rome Convention
The principle of party autonomy is enshrined in article 3 (1) of the
Rome Convention on the Law Applicable to Contractual Obligations 1980,
widely known to jurists and legal practitioners as the Rome Convention.
The main objective of the Rome Conventions is to unify the conflict
of law rules relating to contractual agreements primarily applied to
the Member of European Economic Community (EEC)(100).
For example, German(101), England(102),
Italy(103) incorporated the Rome Convention into
their conflict of laws. Although other countries outside the European
Union cannot sign and ratify the Rome Convention, it can be applied
in both direct and indirect ways.
Directly, in terms of application of the proper law of contract, this
convention is not only confined to such members of the Rome Convention.
The courts of the member of the Rome Convention. under the principle
of party autonomy, are capable of applying any law, albeit connected
to the rule of law of the Member States, to the legal dispute, irrespective
of nationalities or domiciles of the parties concerned. In so doing,
a plaintiff must file a lawsuit before the courts of the Member States.
On the one hand, to be able to apply the Rome Convention to international
contractual obligations. litigation must be initiated and proceeded
in the jurisdiction of the Member States(104).
Indirectly, many states which are not members of the Rome Convention,
like Switzerland, implemented several rules of the Rome Convention appeared
in their private international law(105).
By virtue of article 3(1 ), it clearly stipulates that "A contract
shall be governed by the law chosen by the parties..." This means
that the Rome Convention allows parties to choose any law in the world
as an applicable law, albeit such law irrelevant to a legal transaction
or parties concerned. There is a caveat, however. The freedom of contracting
parties to select an applicable law is directly subject to a substantive
law, or a commercial law, of one country or more. To the extent that
the lex mercatoria and "general principle of law" are not
be perceived as the proper law of contact(106).
The next question that should be touched on is, in the absence of an
expression of chosen law selected by contracting parties, whether lex
merctoria can be regarded as the applicable law. On this point, Professor
Goldman, an authority of merchant law suggested that courts and arbitrators
should rely on non-national rules in order to fill the lacunae in the
contract(107). But his idea is at odds with the mainstream
of thought of jurists and the Rome Convention that deny lex mercatoria
as a proper law of contract.
Concluding
Remarks
Some legal rules of Thai private international law promulgated for almost
seven decades ago should be amended because they are incompatible with
international standards. Under Thai conflict of laws, whilst the concept
of "the closest relation", or the proper law of contract,
is unknown, the systems of private international law, both common law
and civil law, widely acknowledge such a concept.
In addition, the core of private international law is always conflict
of laws, or so-called choice of law, to the extent that law students
must learn conflict rules and the law of nationality as a connecting
factor as it plays a paramount role in determining which applicable
law corresponds to the problem of personal law and family law. At the
same time, Thai academics as well as learned judges should take into
account theoretical frameworks and basic rules of conflict of laws commonly
used around the world i.e., characterization, renvoi, incidental question,
depecage and so on. Although some parts of French Private International,
Law deal with the subject of the legal status of aliens living in France,
it is not necessary for Thailand to follow in France's footsteps. This
work confirms that the content of Thai private international law rust
focus manly on the conflict of laws as well as the recognition and enforcement
of foreign judgments in Thailand.
With respect to the issue of party autonomy as provided by article 13
paragraph one of the Act on Conflict of Laws 2481 B.E., this law should
be amended in accordance with international standards, In so doing,
the imperative connecting points, namely common nationality and lex
loci contractus, should be superseded by the legal concept of the "real
relationship" or the "closest connection", allowing courts
to weigh up all relevant elements and surrounding circumstances both
outside and inherent to the contract.
Nowadays, with the increase in demand and complexity of international
trade contained in foreign element, Thai enterprises and businessmen,
inevitably, are conducting their business with foreign companies. To
the extent that Thai courts have more opportunity to apply Thai conflict
of laws. If Thailand needs Thai judgments to be recognized and enforced
in foreign counties, such judgments should be decided in conjunction
with rules of private international law.
_______________________________________________________________
(96)
See Article 130 the Burgerliches Gesetzbuch (BGB). See also E.J. COHN,
MANUAL OF GERMAN LAW84 (1968).
(97)
P.E. NYGH, supra note 33, at 222-223.
(98)
It provides that "When the contract is made between persons at
a distance, the place where the contract is deemed to have been made
is the place where the notice of acceptance reaches the offerer. If
such place cannot be ascertained the law of the place where the contract
is be performed shall govern".
(99)
ERNST REBEL, GESAMMELTE AUFSATZE 657 (1967).
(100)
See Gina M. McGuinness, The Rome Convention: The Contracting Parties
Choice, 1 San Diego International Law Journal 127, ff (2000).
(101)
See Peter Hay, From Rule-Orientation to "Approach" in German
Conflicts of law The Effect of the 1986 and 1999 Codifications, 47 American
Journal Comparative Law 633, 635 (1999).
(102)
The United Kingdom implemented the Rome Convention by enacting the Contracts
(Applicable Law) Act 1990, operating in tandem with the common law.
(103)
By virtue of article 57 of the Italy System of Private International
Law (1995), it reads that "Contracttual obligations shall be governed
in all cases by the Rome Convention of 19 June 1980, on the Law Applicable
to Contractual Obligations, as enforced by Law No. 975 of 18 December
1984, without prejudice to any other international conventions, where
applicable". This text can be found in 35 International Legal Materials
760, 778 (1996).
(104)
See JOHN O'BRIEN, supra note 3, at 327.
(105)
See MARIELLE KOPPENOL-LAFORCE (et al) (ed), supra note 3, at 142.
(106)
id. At 144.; See also ADRIAN BRIGGS, THE CONFLICT OF LAWS 159 (2002).
(107)
See FILIP DELY, supra note 10, at 76-77.
