NEWSLETTER 09/2008
SETTING OF THE GOVERNING LAW FOR SALES AGREEMENTS IN INTERNATIONAL TRADE
A Polish court or another authority may apply both Polish and foreign law as the governing law for assessment of a legal relationship between the parties if the parties had not selected the governing law.
After the enforcement in Poland on August 1, 2007 of the Rome Convention of 1980 on the Law Applicable to Contractual Obligations, the importance of the act of November 12, 1965 - Private international law regulating the issues of applicability of law in the area of contractual obligations - decreased. (The provisions of private international law are only applicable to contractual obligations not governed by the Convention and to obligations occurring before its enforcement.)
The Rome Convention introduces the freedom of choice of law by the parties to a contract. The parties may select the law for the entire agreement or for a part thereof. In order to further strengthen the autonomy of the parties, they are allowed to select a law other than the law of the country with which it indicates the closest relation, as the governing law. In practice, this means that while concluding a sales agreement of movables, a Polish and a German entrepreneur may point to the French law as the governing law of the contract they conclude.
If the selection of the governing law for a contract is not made, the contract is governed by the law of the state with which it has the strictest relation (EU member states became parties to the Rome Convention on various dates - e.g. the Federal Republic of Germany has been a party to the Convention since November 1, 2006, while the Kingdom of Spain - since September 1, 2007.).
International sales of goods is regulated by the United Nations Convention on Contracts for the International Sale of Goods (CISG) made in Vienna on April 11, 1980. The question, therefore, appears about the relations between the Rome Convention and the Vienna Convention.
When searching for the law applicable to an international sales agreement subject to the Vienna Convention, the priority should go to the provisions of such Convention treated as material standards. The Vienna Convention causes that a sales agreement of goods shall be subject to conventional standardized norms, irrespective of whether the parties new that the states where they are based are parties to the Convention.
Because the Vienna Convention only regulates the conclusion of the sales agreement as well as rights and responsibilities of the seller and buyer thereunder, in other respects valid regulation must be searched using collision standards applicable to them. These include, i.e. issues regarding the terms of validity of the entire agreement or a provision thereof, and effects for the ownership right to the goods sold, as a result of concluding a sales agreement.
In turn, searching for the governing law for a sales agreement subject to the Vienna Convention in states forming parties to the Rome Convention, on auxiliary basis, should occur with observance of its provisions. The Rome Convention can apply to any dispute of entities based in EU member states. Also, Rome Convention will apply to disputes between entrepreneurs based in Community and the ones from third countries. The Convention may also be applied to cases which are not related to the territory of the EU, if the case is resolved by a court of a state bound by the Convention.
As of December 17, 2009, the provisions of the Rome Convention will be replaced with the Regulation (EC) No. 593/2008 of the European Parliament and of the Council of June 17, 2008 on applicable law for contractual obligations (Rome I). The regulation is binding in whole and is directly used in member states according to the provisions of the Treaty establishing the European Community. It is an example of a tendency to replace international standards in private international law in the form of an international treaty by adoption of solutions in the form of standards used directly in the internal legislation of the EU member states.
Anna Zabielska
trainee attorney-at-law
The full text of the article in Polish and German has been published in the legal and tax section devoted to the international trade at the website of the Polish-German Chamber of Industry and Commerce:
http://www1.ihk.pl.impartner.pl/img_upload/files/01.09.Newsletter.DE_1.html
http://www1.ihk.pl.impartner.pl/img_upload/files/02.2009.Newsletter.DE.html
http://www1.ihk.pl.impartner.pl/img_upload/files/01.09.Newsletter.PL.html.html
http://www1.ihk.pl.impartner.pl/img_upload/files/02.2009.Newsletter.PL.html
The Newsletter is published free-of-charge and is designed chiefly for clients of the law firm Mikulski and Partners. The articles are written by lawyers at the firm, but do not constitute legal advice.