LIMITATIONS IN CHOICE OF LAW PROVISIONS—A COMMENT
| Date | 01 July 1977 |
| DOI | http://doi.org/10.1111/j.1468-2230.1977.tb02433.x |
| Published date | 01 July 1977 |
| Author | A. J. E. Jaffey |
LIMITATIONS IN CHOICE
OF
LAW
PROVISIONS-
A
COMMENT
IN
his interesting article,
“
Choice of Law Provisions in Concession
and Related Contracts,’’ Mr. Brown discusses the legal effect of
such a choice of law clause as,
“
This agreement shall be governed
by the law of Atlantis, save where such law is inconsistent with
provisions of this agreement.” The kind of contract under discus-
sion is one between a non-Atlantis mining company and the Atlantis
government, providing for the company’s operations in Atlantis, a
developing country. The rules of Atlantis law which might, in terms
of
the choice of law clause, be inconsistent with the terms of the
agreement would include, as well as rules existing at the time
when the contract was made, rules subsequently introduced by
legislation, such as a statute providing for discharge of the contract
on
expropriation of the enterprise by the Atlantis government, or
one invalidating
a
gold clause. The limiting words are included
in
the choice of law clause with the object of protecting the company
against such legislation. The question of the efficacy of such a
limitation has however a wider importance.
While it must be agreed that the limitation “save where such
law is inconsistent with provisions of this agreement” will not
necessarily preclude the application
of
an inconsistent Atlantis
rule, it is suggested that Mr. Brown goes too far in saying that such
a
limitation is nugatory.
On
the contrary such a limitation could
reasonably be implied in every contractual choice of law clause.
What the parties are saying is that although it is their intention
that their contract should be governed by Atlantis law, it is not
their wish that it should be applied to the extent of nullifying their
agreement
in
whole or in part. Such an attitude by contracting
parties
is
eminently reasonable, for parties contracting in good
faith intend their agreement to be binding. A court should there-
Fore give effect to the limitation in, the choice of law clause,
so
that
a
provision of the law of Atlantis which is inconsistent with a term
of the contract should not be applied
merely
for the reason that the
parties have selected Atlantis law to be the governing law.
There are
no
theoretical obstacles in English conflict to such an
approach.
If
a term of the agreement is held to be valid and opera-
tive, despite a provision of Atlantis law which invalidates or dis-
charges it, it may be asked by reference
to
what domestic law the
term is held valid and operative. Assuming that it is necessary to
identify such a law,2 the following analysis will serve. It is accepted
in
English conflict law that a contract need
not
have a single proper
1
(1976)
39 M.L.R.
625, 638
et
seq.
2
See
(1974)
23
I.C.L.Q.
at
p.
2.
440
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