The Scope and Limits of Party Autonomy in International Contracts: A Comparative Analysis

Abstract

Party autonomy, i.e., the notion that parties to a multistate contract should be allowed, within certain parameters and limitations, to agree in advance on which state’s law will govern their contract is now a universal principle — it is accepted in at least 150 countries. However, this virtual unanimity at the level of general principle comes with significant variations in the specifics. Party autonomy is neither conceived nor implemented in the same way in most countries.

The most significant differences involve the scope of this principle and the limitations to which it is subject. For example, various legal systems differ on which contracts and for which contractual — or non-contractual — issues may the parties choose the applicable law, or whether they may choose rules that straddle the line between substance and procedure or rules promulgated by non-state entities.

Likewise, differences exist not only in defining the appropriate public-policy threshold for policing party autonomy, but also on which country’s threshold should perform this role, i.e., whether it should be forum state as such, the state whose law would have been applicable in the absence of party choice, or some combination of the two solutions.

An awareness of these often overlooked differences is essential not only for lawyers who draft multistate contracts, but also for teachers and students of private international law or conflicts law. This Article offers a comprehensive documentation and comparative analysis of these differences.

Keywords: Party autonomy, private international law, choice of law, conflict of laws, mandatory rules, public policy, contracts, multistate transactions

JEL Classification: K10, K12, K20, K33