1 For detailed discussion, see Chitty, ch 30; Dicey, Morris & Collins, ch 32.
2 The point is explicitly made in Art 1(1) of Rome I. Rome I replaced the former Rome Convention on the law applicable to contractual obligations (the ‘Rome Convention’), which had effect in the United Kingdom by virtue of the Contracts (Applicable Law) Act 1990. The Rome Convention—which is considered in Ch 4 of the sixth edition of this work—continues to apply to contracts concluded before 17 December 2009, whilst Rome I applies to contracts concluded on or after that date (see Art 28, Rome I, as revised by a corrigendum). Rome I has a number of points of similarity with the predecessor convention, but certain points of difference were felt to give rise to uncertainty, leading the UK initially to opt out of the proposed Rome I arrangements. However, it agreed to accept the new regulation after certain provisions were renegotiated. For the background, see Ministry of Justice, ‘Rome I—Should the UK Opt In?’, Consultation Paper CP05/08, 2 April 2008. For the Commission's original proposal document in relation to Rome I and a discussion of its provisions, see COM (2002) 654 (final), 14 January 2003. On the general subject, see Max Planck Institute for Foreign and Private International Law: Comments of the European Commission's Green Paper on the Conversion of the Rome Convention of 1980 on the law applicable to contractual obligations into a Community instrument and its modernisation (RabelZ, 2004) 1–118. It may be added that, in a contractual context, a system of private international law is designed to ensure that the original intentions of the parties are respected, subject to the mandatory rules and public policy of the jurisdiction in which the proceedings occur. This point will become apparent as the present discussion is developed.
3 By virtue of the Contracts (Applicable Law) Act 1990 (Commencement No 1) Order 1991, SI 1991/707. In passing, it may be added that the Rome Convention came into effect in the year in which the fifth edition of this book was published, and it is thus unsurprising that Dr Mann did not refer to it in detail. His views on the Convention are tolerably clear from remarks contained in ‘Contract Conflicts: A General Review’ (1983) 32 ICLQ 265, where he describes it as ‘one of the most unnecessary, useless and indeed unfortunate attempts at unification or harmonisation of the law that has ever been undertaken’. He was by no means alone in this view (although few expressed it with such clarity), but the English courts have now been working successfully with the European harmonization measures for an extended period, and the passage of time renders it unnecessary to pursue that particular debate.
4 The Report is printed in OJ C282, 31.10.1980, p 1.
5 In this context, it should be mentioned that a number of issues are excluded from the scope of Rome I. In relation to monetary obligations, it should be noted that questions arising under bills of exchange and promissory notes are excluded, to the extent to which those questions arise from the negotiable character of such instruments—see Art 1(2)(d) of Rome I. So far as the English courts are concerned, other conflict of laws issues relating to such instruments would continue to be governed by the Bills of Exchange Act 1882, s 72. Certain types of insurance contract are also excluded from the scope of Rome I: see Art 1(2)(j).
6 See Amin Rasheed Shipping Corp v Kuwait Insurance Co  AC 50 (HL).
7 For a consideration of some of the difficulties which may arise when the parties agree to apply different systems of law to different aspects of the contract, see McLachlan, ‘Splitting the Proper Law in Private International Law’ (1990) BYIL 311.
8 See Vita Food Products Inc v Unus Shipping Ltd  AC 277; Dicey, Morris & Collins para 32–062. See also the ICSID Award (para 94) in Aucoveri v Venezuela (Arb 00/5 Award dated 23 September 2003).
9 Art 4(1)(a) and (b), Rome I. The habitual residence of a contracting party is to be determined as at the date of the contract. For an individual carrying on a business activity, his habitual residence is his principal place of business. The habitual residence of a corporation is its place of central administration. However, if a contract is concluded in the course of the operations of a branch or agency or the contract contemplates performance though such an establishment, then the habitual residence will be the location of that establishment: see Art 19, Rome I.
16 It should be repeated that this observation applies only where the contract contains no express choice of law. Cross-border banking or financial agreements will usually contain such a choice.
17 This position is confirmed by the Giuliano-Lagarde Report. In its commentary on Art 4(2) of the predecessor Rome Convention, the Report notes that a monetary obligation ‘is not, of course, the characteristic performance of the contract. It is the performance for which the payment is due, i.e. depending on the type of contract, the delivery of goods, the granting of the right to make use of an item of property, the provision of a service, transport, insurance, banking operations, security etc which usually constitutes the centre of gravity and the socio-economic function of the contractual transaction’.
18 Thus, where a German publisher entered into a contract with a foreign author, the contract was found to be governed by German law even though the author's fees were payable in a foreign currency—BGHSt, 22 November 1955, 19 BGHZ 110. In the pre-Rome Convention era, the money of account in which an obligation was expressed might occasionally lead to the conclusion that, in the absence of an express choice of law, the parties intended their contract to be governed by the law of the issuing country—see, eg, The Assunzione  P 150 (CA); Rossano v Manufacturers Life Insurance Co  2 QB 352. These authorities can no longer stand in the light of the express provisions of Art 4 of Rome I.
19 In ascertaining the applicable law, it should also be noted that special rules apply in the context of contracts of carriage (Art 5), consumer contracts (Art 6), and individual employment contracts (Art 8).
20 On the type of problem identified in the text, see the discussion on ‘initial uncertainty’ in Ch 5.
21 See in particular, Ch 13.
22 Sixth edition, para 4.11. The views there expressed are also called into question by the ECJ's decision in Case C-133/08, Intercontainer Interfrigo SC (ICF) v Balkenende Oosthuizen BV  3 WLR 24, which suggests that the governing law of a contract should only be ‘severed’ if part of the contract clearly has an independent objective. This test would not be met in the case of the lex monetae, since the financial obligations will invariably be an integral part of the contract.
23 In such a case, Art 4(1) of the Rome Convention provided that ‘a severable part of the contract which has a closer connection with another country may by way of exception be governed by the law of that country’.
24 For a discussion of the ‘incorporation’ of specific rules of a foreign law into a contract governed by English law, see Dicey, Morris & Collins, para 32–088.
25 There is, inevitably, a growing body of case law on this subject—see Dicey, Morris & Collins, para 32R-0.61.
26 Art 10, Rome I. The term ‘material validity’ includes the very existence of a contract, whether it is void for mistake or illegality, whether it is voidable on the grounds of misrepresentation and similar matters. On these subjects, see Dicey, Morris & Collins, para 32R 154–173.
27 Art 11, Rome I. Requirements as to formal validity may include any rule that particular contracts must be reduced to writing. It must be said that the applicable law is a basis, but not the sole basis, upon which formal validity may be judged. On these points, see Dicey, Morris & Collins, para 32R 175–186.
28 Art 12(1)(a), Rome I. Questions concerning the interpretation of monetary obligations will be discussed in detail in Ch 5.
29 Art 12(1)(b), read together with 12(2), Rome I. Once again, questions touching the performance of monetary obligations will be considered in Ch 7. For present purposes, it may be sufficient to note that the laws of one country cannot generally discharge monetary obligations arising under a different system of law. The House of Lords has previously had occasion to remark that an English court order cannot discharge a debt governed by Hong Kong law—see Société Eram Shipping Co Ltd v Hong Kong and Shanghai Banking Corp Ltd  UKHL 30. For earlier cases and discussion of the subject generally see Dicey, Morris & Collins, paras 32–194–32-200.
30 Art 12(1)(c), Rome I. The qualification at the end of Art 12(1)(c) means that questions touching the recoverable heads of damage and remoteness are governed by the applicable law, whilst the qualifications of those damages is governed by the procedural rules of the forum court—see J D'Almeida Araujo Ltd v Sir F Becker & Co  2 All ER 288; Coupland v Arabian Gulf Oil Co  1 WLR 1136. It seems that the Private International Law (Miscellaneous Provisions) Act 1995 adopts a similar rule in the context of the law of tort—see Edmunds v Simmons  1 WLR 1003, although it should be noted that the 1995 Act no longer applies in the sphere now occupied by the Rome II. For further discussion and cases, see Chitty, paras 30.336–30.339.
31 Art 12(1)(d), Rome I. Whether or not a debt has been discharged by some means other than payment must therefore likewise be determined by the governing law and, generally speaking, no other system of law can have any influence upon the question. The Privy Council recently had occasion to consider this point in the context of a contract governed by the laws of Bangladesh—see Wright v Eckhardt Marine GmbH 14 May 2003 (Appeal 13 of 2002). For earlier cases, and a general discussion on the subject, see Dicey, Morris & Collins, paras 32–204–32-209.
32 Art 12(1)(e), Rome I. This provision deals with claims of a restitutionary or quasi-contractual character.
33 See the remarks of Lord Wilberforce in the Amin Rasheed case, n 6.
34 This is one of the consequences of the decision in Libyan Arab Foreign Bank v Bankers Trust Co  QB 728, which will be considered in more detail in Ch 7.
35 See generally the discussion on initial uncertainty in Ch 5. It appears that the same view is adopted in Germany: see Spellenberg, Munchener Kommentar, Art 12 Rome I-VO, para 181.
36 The dominance of the applicable law in this context was recently reaffirmed by the decision in Global Distressed Alpha Fund I Ltd v PT Bakri Investindo  1 WLR 2038, applying Anthony Gibbs & Sons v Societe Industrielle et Commerciale des Metaux (1890) 25 QBD 399 (CA) and the well-known decision in Adams v National Bank of Greece and Athens SA  AC 255 (HL).
37 This seems to be at odds with the notion that, as a harmonizing measure, the Convention should be uniformly interpreted throughout all Member States—see Dicey, Morris & Collins, para 32–197.
38 eg, in determining whether a payment due to be made on a bank holiday should instead be made on the day before or the day after such holiday. If, however, the point is dealt with in the contract itself, then the stated intentions of the parties should prevail over the law of the place of performance.
39 For cases considering the corresponding provisions in the Rome Convention, see Import Export Metro Ltd v Compania Sud Americain de Vapores SA  EWHC 11 (Comm); East West Corp v DKBS AF 1912 A/S  EWCA Civ 83.
42 The point is not entirely clear—see Dicey, Morris & Collins, para 32R-216. Questions of the contractual capacity of individuals are generally, although not entirely, outside the scope of Rome I—see Art 1(2)(a) read together with Art 13, Rome I.
43 See Dicey, Morris & Collins, para 30R-020. Questions concerning corporate capacity and the authority of directors to bind a company are outside the scope of Rome I—see Art 1(2)(f) and (g), Rome I. Questions relating to corporate capacity have occasionally posed significant difficulty: see, eg, National Bank of Greece and Athens SA v Metliss  AC 509 (HL); Haugesund Kommune v Depfa ACS Bank  2 WLR 199.
44 Adams v National Bank of Greece and Athens SA  AC 255 (HL). Even this limited statement must be treated with some care. If a transaction is beyond the capacity of a corporation or has not been properly authorized under the laws of the home State, it may nevertheless be binding upon it if the relevant officials of the corporations had ostensible authority to enter into the contract under the laws which governed it. Questions of this kind are beyond the scope of the present work, but for discussion, see Dicey, Morris & Collins, paras 30–025 and 30–028. The point was considered by the New York Court of Appeals in Indosuez International Finance v National Reserve Bank (2002) NY Int 55.
45 Kleinwort Sons & Co v Ungarische Baumwolle Industrie AG  2 KB 678. Exchange control questions pose particular difficulty, and will receive detailed consideration in Part IV.
46 For an example, see Re Bonacina  2 Ch 394.
47 These are the examples given by the Giuliano-Lagarde Report in its commentary on the equivalent provision contained in Art 7(2) of the Rome Convention, although note that consumer protection laws are now categorized as ‘laws which cannot be derogated from by agreement’, on which see n 49.
48 DR Insurance Co v Central National Insurance Co  1 Lloyds Rep 74.
49 On the subject generally see Dicey, Morris & Collins, paras 32R-131–32-151. It may be noted in passing that exceptions based on mandatory provisions and public policy are to be restrictively construed. In the specific context of exceptions for consumer protection and employment contracts, Rome I uses the expression ‘provisions which cannot be derogated from by agreement’, which is to be more liberally construed for the protection of the weaker party: see Recital (37) to Rome I. The latter expression is used in (i) Art 3(3), which is designed to allow for the application of such rules where an agreement of an essentially domestic nature are subjected to a foreign system of law; (ii) Art 3(4), which allows for the application of EU law in specific cases; (iii) Art 6 dealing with consumer contracts; and (iv) Art 8, concerning individual employment contracts. It is not necessary to consider these provisions in detail for present purposes.
50 On this general subject, see Ch 16.
51 In relation to public policy and contractual obligations, see Dicey, Morris & Collins, paras 32–232–32-239. For a recent case considering the corresponding provision in the Rome Convention, see Duarte v Black and Decker Corp  EWHC 2720.
52 In the context of a contract which infringed exchange control regulations in the UK, see Boissevain v Weil  AC 327.
53 Hope v Hope (1857) 8 DeG M & G, 731; Lemenda Trading Co Ltd v African Middle East Petroleum Co Ltd  QB 448; Tekron Resources Ltd v Guinea Investment Co Ltd  EWHC 2577.
54 Holzer v Deutsche Reichsbahn Gesellschaft (1938) 277 NY 473; Oppenheimer v Cattermole  AC 249 (HL) and Re Helbert Wagg & Co Ltd's Claim  Ch 323.
55 Royal Hellenic Government v Vergottis (1945) 78 Ll LR 292.
56 See the consultation paper mentioned in n 2.
57 Now contained in Art 9(3) of Rome I. Note that the expression ‘overriding mandatory provisions’ used in Art 9(3) has already been considered in para 4.25.
58 As noted earlier, this issue is considered in more depth at para 16.36.