General introduction Party autonomy is one of the important conflict rules under which the parties are free to determine the law applicable to the merits of the disputes, either contractual or non contractual issues in international situations. The French Jurist Dumoulin (1501-1566) was the first exponent of this doctrine that the contracting parties could choose the law that was to govern their agreement. The doctrine of party autonomy was widely accepted as the choice of law rules to govern the contract by most national laws at the end of 19thcentury and has been extended to non contractual areas, such as marriage and family, tort or even property fields since 1950th Century.
In China, the right of parties to choose the governing law was originally recognized, under the auspices of the 1985 Foreign-Related Economic Contract Act. The Parties’ autonomy was reaffirmed in subsequent instruments, viz., the 1986 General Principles of Civil Law (hereafter “GPCL”), the 1987 Supreme People’s Court’s Interpretation on the 1985 Foreign-Related Economic Contract Act, the 1992 Maritime Act, the 1995 Civil Aviation Act, the 1999 Contract Act, and the 2007 Supreme People’s Court’s Interpretation on Choice of Law in International Civil and Commercial Contractual Disputes (hereafter “2007 Interpretation”).etc.
Prior to the Law of the People’s Republic of China on Application of Laws to Foreign-Related Civil Relations (hereafter “The Application Law Act”) which was effective on April 1, 2011, party autonomy was confined to the area of contract in Chinese private international law, Subject to a few exceptions. It was recognized as one of the general principles and as a basis of choice of law in contracts under Chinese law, for both international and interregional disputes.
The Applicable Law Act confirms party autonomy as a general provision and expands the scope of party autonomy to numerous non-contractual areas. Article 3 provides: The Parties may, in accordance with law and in an express manner, choose the law applicable to a civil relationship with foreign contacts. The wording “in accordance with law” indicates that party autonomy may operate only where expressly permitted under the Application law Act. Party autonomy is not a general principle for the whole Act, but a rule detailed by the relevant provisions in the Act, concerning agency, trusts, Matrimonial property, uncontested divorce, moveable properties, contracts, torts, unjust enrichment and negotiorum gestio, as well as intellectual property.
Party autonomy in contractual disputes Party autonomy is the principle choice of law rule to govern contractual disputes. The Application law Act restates this rule in article 41, Parties concerned may choose the laws applicable to a contract by agreement. Where the parties have made no choice, laws of the habitual residence of the party whose performance of obligations best reflects the Characteristics of the contract or other laws having the most significant relationship with contract shall apply. Article 42 and Article 43 are brand new supplemented provisions which make special stipulations on the applicable rules to consumer contract and labor contract. Combined with other effective laws or regulations relating to contractual issues, there are some limitations on the parties’ choices: (1) the applicable law selected by the parties shall be the substantive law in the related country or region, excluding the conflict of law and the procedural law; (2) the parties’ choice, or alteration of their choice shall be made in an explicit manner; (3) the parties’ choice or alteration of choice shall be made prior to the end of court debate of the first instance; (4) the parties’ choice or alteration choice of foreign laws will be ineffective provided the result of application violates the Chinese mandatory rules or public policy; (5) party autonomy will be excluded in some particular contracts which either concerns the Chinese public interests (some Sino-Foreign investment contracts performed in China, e.g. contract on a Sino-foreign equity joint venture enterprise or Contract on a Sino-foreign cooperative joint venture enterprise or Contract on Sino-foreign cooperative exploration or exploitation of natural resources.etc.) or for the purpose of protection of the weak parties, such as consumer contract and labor contract; (6) the applicable law chosen by the parties will only govern the contractual disputes covering the disputes over the conclusion, validity, performance, alteration, transfer, and termination of a contract as well as the liability for breach of the contract.
Besides the general provision of Article 41, Parties’ choices of law will also be respected in some other special contracts under the Application Law Act: Entrustment and Agency by Agreement (Art.16.2); Trust (Art.17); Arbitration Agreement (Art.18) as well as Transfer and License of Intellectual Property Rights (Article 49).
Party autonomy in creditor’s rights beyond contract Although party autonomy was confined to contract prior to the Application Law Act, in some Chinese courts, the sphere of party autonomy was expanded. In numerous cases involving torts and other non-contractual issues, the courts somehow disregarded the respective statutory rules which rejected party autonomy, and sanctioned the choice of law by the parties, thus presenting an example of Chinese judicial practice contra legem. As a response to the judicial reality, the Application Law Act extended the party autonomy to the creditor’s rights beyond contract. Article 44 provides that: Tort liabilities shall be governed by lex loci delicti, provided that where the parties concerned have a common habitual residence, laws of the common habitual residence shall apply. Agreements on the application of laws reached by the parties concerned after the occurrence of tort shall prevail. Article 47 provides that: In the case of unjust enrichment and negotiorum gestio, laws chosen by the parties concernd by agreement shall apply. Where the parties have made no such choice, laws of the common habitual residence of the parties shall apply. In the absence of a common habitual residence, laws of the place of unjust enrichment or negotiorum gestio shall apply.
Different from some European countries, e.g. Article 132 of Switzerland’s Federal Code on Private International Law restricts parties’ choice to the law of the forum, whereas Article 42 of German Introductory Act to the Civil Code requires that parties’ choices shall not prejudice the rights of third parties. There are no specific restrictions on parties’ choice of law in general tort, unjust enrichment and negotiorum gestio except the general limitations (ordre public and lois d’appication imme’diate) on party autonomy. Chinese private international law excluded party autonomy to several particular categories of torts, such as product liabilities (Art.45), Infringement on the rights of personality via internet (Art.46), Tort involving ship (Art.273 of the Maritime Law) and Tort involving aircraft (Art.189 of the Civil Aviation Law). The traditional lex loci delicti was accepted as the primary rule to govern the above particular torts.
Party autonomy in other areas beyond creditor’s rights Affected by both of the theory of status and contractual theory, The 2011 Application Law Act for the first time infused party autonomy into matters involving Marriage and family. The 1986 GPCL provided that once Chinese courts deem themselves possess the jurisdiction over divorce actions, they will always apply Chinese domestic law (lex forum) with the exception of determining the validity of the marriage, which is governed by lex loci celebrationis. The Application Law Act permits the couples concerned to choose the laws of the habitual residence or lex patriae of either party to govern the uncontested divorce; As to the Matrimonial relationship, Article 148 of The 1986 GPCL adopted the law of the country to which the spouse is most closely connected to govern the maintenance relationship of the couple. But a couple may choose to apply either the laws of the habitual residence or lex patriae of either party, or lex rei sitae of major properties, to govern the matrimonial property relationship under Article 24 of the Application Law Act.
Property, including immovables and movables (subject to certain exceptions) is governed by the place where it is situated (lex situs), has become and still be one of the widely accepted principles in modern private international laws. Party autonomy was first introduced to govern movables in the 1987 Switzerland CPIL under which the lex situs is still the general rule to govern general movables under Article 100 and article 101, except the movable property under the contract for sale of goods. Article 104 provides that (1) the parties may submit the acquisition and loss of an interest in movable property to the law of the State of shipment or the State of destination or to the law applicable to the underlying legal transaction;(2)the choice of law shall not be applied against a third party.
Before the Application law Act, there were no statutory conflict rules concerning movables, and the choice of law in this regard was a matter of judicial discretion. Party autonomy was first introduced to the Application Law Act as primary rules to govern the general property rights of movables (Article 37) and the property rights of movables during transportation (Article 38), instead of the widely accepted rule of lex situs. Choice of law by parties to govern movables has long been criticized since the adoption of Switzerland CPIL even the parties’ choice was strictly restricted. The rule of unlimited party autonomy to movables under the Application Law Act was deemed conflict to the basic essence of property and therefore remains to be tested.
Conclusions The expansion of party autonomy under the Application Law Act is in line with the trend in contemporary conflicts law across the globe. Through the expansion, high doses of flexibility are injected into the Applicable Law Act. To a certain extent, the increased autonomy could improve legal certainty and predictability for the parties who select the applicable law. But parties’ choice of law in some non-contractual areas may meet difficulties or challenges and remain to be tested by Chinese judicial practices.
영어초록
General introduction Party autonomy is one of the important conflict rules under which the parties are free to determine the law applicable to the merits of the disputes, either contractual or non contractual issues in international situations. The French Jurist Dumoulin (1501-1566) was the first exponent of this doctrine that the contracting parties could choose the law that was to govern their agreement. The doctrine of party autonomy was widely accepted as the choice of law rules to govern the contract by most national laws at the end of 19thcentury and has been extended to non contractual areas, such as marriage and family, tort or even property fields since 1950th Century.
In China, the right of parties to choose the governing law was originally recognized, under the auspices of the 1985 Foreign-Related Economic Contract Act. The Parties’ autonomy was reaffirmed in subsequent instruments, viz., the 1986 General Principles of Civil Law (hereafter “GPCL”), the 1987 Supreme People’s Court’s Interpretation on the 1985 Foreign-Related Economic Contract Act, the 1992 Maritime Act, the 1995 Civil Aviation Act, the 1999 Contract Act, and the 2007 Supreme People’s Court’s Interpretation on Choice of Law in International Civil and Commercial Contractual Disputes (hereafter “2007 Interpretation”).etc.
Prior to the Law of the People’s Republic of China on Application of Laws to Foreign-Related Civil Relations (hereafter “The Application Law Act”) which was effective on April 1, 2011, party autonomy was confined to the area of contract in Chinese private international law, Subject to a few exceptions. It was recognized as one of the general principles and as a basis of choice of law in contracts under Chinese law, for both international and interregional disputes.
The Applicable Law Act confirms party autonomy as a general provision and expands the scope of party autonomy to numerous non-contractual areas. Article 3 provides: The Parties may, in accordance with law and in an express manner, choose the law applicable to a civil relationship with foreign contacts. The wording “in accordance with law” indicates that party autonomy may operate only where expressly permitted under the Application law Act. Party autonomy is not a general principle for the whole Act, but a rule detailed by the relevant provisions in the Act, concerning agency, trusts, Matrimonial property, uncontested divorce, moveable properties, contracts, torts, unjust enrichment and negotiorum gestio, as well as intellectual property.
Party autonomy in contractual disputes Party autonomy is the principle choice of law rule to govern contractual disputes. The Application law Act restates this rule in article 41, Parties concerned may choose the laws applicable to a contract by agreement. Where the parties have made no choice, laws of the habitual residence of the party whose performance of obligations best reflects the Characteristics of the contract or other laws having the most significant relationship with contract shall apply. Article 42 and Article 43 are brand new supplemented provisions which make special stipulations on the applicable rules to consumer contract and labor contract. Combined with other effective laws or regulations relating to contractual issues, there are some limitations on the parties’ choices: (1) the applicable law selected by the parties shall be the substantive law in the related country or region, excluding the conflict of law and the procedural law; (2) the parties’ choice, or alteration of their choice shall be made in an explicit manner; (3) the parties’ choice or alteration of choice shall be made prior to the end of court debate of the first instance; (4) the parties’ choice or alteration choice of foreign laws will be ineffective provided the result of application violates the Chinese mandatory rules or public policy; (5) party autonomy will be excluded in some particular contracts which either concerns the Chinese public interests (some Sino-Foreign investment contracts performed in China, e.g. contract on a Sino-foreign equity joint venture enterprise or Contract on a Sino-foreign cooperative joint venture enterprise or Contract on Sino-foreign cooperative exploration or exploitation of natural resources.etc.) or for the purpose of protection of the weak parties, such as consumer contract and labor contract; (6) the applicable law chosen by the parties will only govern the contractual disputes covering the disputes over the conclusion, validity, performance, alteration, transfer, and termination of a contract as well as the liability for breach of the contract.
Besides the general provision of Article 41, Parties’ choices of law will also be respected in some other special contracts under the Application Law Act: Entrustment and Agency by Agreement (Art.16.2); Trust (Art.17); Arbitration Agreement (Art.18) as well as Transfer and License of Intellectual Property Rights (Article 49).
Party autonomy in creditor’s rights beyond contract Although party autonomy was confined to contract prior to the Application Law Act, in some Chinese courts, the sphere of party autonomy was expanded. In numerous cases involving torts and other non-contractual issues, the courts somehow disregarded the respective statutory rules which rejected party autonomy, and sanctioned the choice of law by the parties, thus presenting an example of Chinese judicial practice contra legem. As a response to the judicial reality, the Application Law Act extended the party autonomy to the creditor’s rights beyond contract. Article 44 provides that: Tort liabilities shall be governed by lex loci delicti, provided that where the parties concerned have a common habitual residence, laws of the common habitual residence shall apply. Agreements on the application of laws reached by the parties concerned after the occurrence of tort shall prevail. Article 47 provides that: In the case of unjust enrichment and negotiorum gestio, laws chosen by the parties concernd by agreement shall apply. Where the parties have made no such choice, laws of the common habitual residence of the parties shall apply. In the absence of a common habitual residence, laws of the place of unjust enrichment or negotiorum gestio shall apply.
Different from some European countries, e.g. Article 132 of Switzerland’s Federal Code on Private International Law restricts parties’ choice to the law of the forum, whereas Article 42 of German Introductory Act to the Civil Code requires that parties’ choices shall not prejudice the rights of third parties. There are no specific restrictions on parties’ choice of law in general tort, unjust enrichment and negotiorum gestio except the general limitations (ordre public and lois d’appication imme’diate) on party autonomy. Chinese private international law excluded party autonomy to several particular categories of torts, such as product liabilities (Art.45), Infringement on the rights of personality via internet (Art.46), Tort involving ship (Art.273 of the Maritime Law) and Tort involving aircraft (Art.189 of the Civil Aviation Law). The traditional lex loci delicti was accepted as the primary rule to govern the above particular torts.
Party autonomy in other areas beyond creditor’s rights Affected by both of the theory of status and contractual theory, The 2011 Application Law Act for the first time infused party autonomy into matters involving Marriage and family. The 1986 GPCL provided that once Chinese courts deem themselves possess the jurisdiction over divorce actions, they will always apply Chinese domestic law (lex forum) with the exception of determining the validity of the marriage, which is governed by lex loci celebrationis. The Application Law Act permits the couples concerned to choose the laws of the habitual residence or lex patriae of either party to govern the uncontested divorce; As to the Matrimonial relationship, Article 148 of The 1986 GPCL adopted the law of the country to which the spouse is most closely connected to govern the maintenance relationship of the couple. But a couple may choose to apply either the laws of the habitual residence or lex patriae of either party, or lex rei sitae of major properties, to govern the matrimonial property relationship under Article 24 of the Application Law Act.
Property, including immovables and movables (subject to certain exceptions) is governed by the place where it is situated (lex situs), has become and still be one of the widely accepted principles in modern private international laws. Party autonomy was first introduced to govern movables in the 1987 Switzerland CPIL under which the lex situs is still the general rule to govern general movables under Article 100 and article 101, except the movable property under the contract for sale of goods. Article 104 provides that (1) the parties may submit the acquisition and loss of an interest in movable property to the law of the State of shipment or the State of destination or to the law applicable to the underlying legal transaction;(2)the choice of law shall not be applied against a third party.
Before the Application law Act, there were no statutory conflict rules concerning movables, and the choice of law in this regard was a matter of judicial discretion. Party autonomy was first introduced to the Application Law Act as primary rules to govern the general property rights of movables (Article 37) and the property rights of movables during transportation (Article 38), instead of the widely accepted rule of lex situs. Choice of law by parties to govern movables has long been criticized since the adoption of Switzerland CPIL even the parties’ choice was strictly restricted. The rule of unlimited party autonomy to movables under the Application Law Act was deemed conflict to the basic essence of property and therefore remains to be tested.
Conclusions The expansion of party autonomy under the Application Law Act is in line with the trend in contemporary conflicts law across the globe. Through the expansion, high doses of flexibility are injected into the Applicable Law Act. To a certain extent, the increased autonomy could improve legal certainty and predictability for the parties who select the applicable law. But parties’ choice of law in some non-contractual areas may meet difficulties or challenges and remain to be tested by Chinese judicial practices.
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