III Choice-of-Law Question, Three Major Developments, and the Need for Harmonization

Subject(s):

International financial law — International monetary law — Choice of law

This chapter focuses on the question of choice-of-law and delineates its common thread within contemporary private law choice-of-law rules. In particular, it demonstrates that despite the variety of names and titles, one can point to three cornerstone developments within the contemporary choice-of-law doctrine, which all can be traced to different degrees of divergence within the various systems. The first development is a relaxation within the classical classification of the subject according to the presence of the so-called ‘foreign element’ in the factual matrix of the case. The second development is the advances of the so-called ‘party autonomy’ principle according to which the parties can agree on the identity of the applied law. Finally, the third development is the advances of the so-called ‘most significant relationship’ (MSR) principle according to which courts are required to assess the factual situation of a case as a whole and to evaluate the significance of the various factors relative to the degree of their connectedness to the particular liability event and the litigating parties. Given the failure of the systems to agree on unification of the substantive law, the chapter then highlights the need for harmonization of choice-of-law relating to negotiable instruments.