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Governing law vs. local law i.e. is FW really protected when „neutral” law is agreed?

Governing law vs. local law i.e. is FW really protected when „neutral” law is agreed?. February 7, 2013. Governing law vs . local law. Definitions: governing law law agreed in the contract for the purpose of its interpretation.

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Governing law vs. local law i.e. is FW really protected when „neutral” law is agreed?

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  1. Governing law vs. local lawi.e.is FW really protected when„neutral” law is agreed? February 7, 2013

  2. Governing law vs. local law Definitions: • governing law law agreed in the contract for the purpose of its interpretation. • local law law applicable to the place where goods/services are delivered and also, for simplicity, law of purchaser’s country. • neutral law governing law different than law of registered seat of contractor or purchaser and not local law. Introduction Slawomir Gorecki

  3. Governing law vs. local law UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York 10th of July 1958 • Important: Article V, Clause 2 letter(b): „Recognition and enforcement of an arbitral award may also be refused if the competent authority if the country where recognition and enforcement is sought finds that: […] The recognition or enforcement of the award would be contrary to the public policy of that country.” Slawomir Gorecki Legal basis

  4. Governing law vs. local law Governing law Swedish, as per governing law contract CP 4.02 compliant. Local law Romanian: OLOL/Consequential Damages release not fully enforceable: • Possibility to claim (under tort) civil damages in case of criminal liability (right to choose legal basis: contract vs. tort). Civil rules used by criminal court. • In such proceedings contractual limitations will not be effective. • In case of torts there is an exclusive jurisdiction Romanian law even if such torts arose in connection with the agreement – no arbitration possible. Court enforcing the award may refuse its enforcement. • Crimes (and torts) may also be committed against contracting party. • Negligence will be enough to trigger criminal liability. Negligence is defined also as inability to foresee the result of action while the perpetrator should have foreseen such result taking into account perpetrator’s features (e.g. professional character etc.) • Crime in question: destruction of assets by negligence – if value above ~ 60 000 EUR. Slawomir Gorecki CaseStudy: Romania

  5. Governing law vs. local law • If governing law is different than local law simple CP 4.02 check of governing law may not be enough to sufficiently protect FW. • Governing law different than local law may not be sufficient to prevent applicability of local law in all matters between the contact parties. • Even if FW obtains tribunal award in its favour it may become unenforceable under local law. • Local law as governing law may be easier to enforce but will require comprehensive external legal review and involvment in negotiation if no FW counsel is familiar with this jurisdiction. PS If local law is different than law of registered seat of the client, CP 4.02 check may be even more complicated – local law and law applicable to client’s seat law may require cross checking in addition to governing law. Slawomir Gorecki General Conclusions

  6. www.fwc.com

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