BASIC CONCEPTS

Foreign Law in Common Law Courts

A. Substance and Procedure
1. English private international law makes a hard distinction between substance and procedure. The substantive
rights of the parties to an action may be governed by a foreign law, but all matters pertaining to procedure are
governed exclusively by the law of the forum.

2. The idea behind this distinction is to put the parties on an even footing.
To take an old example, an English creditor who sued his debtor in Scotland could not insist on trial by jury, nor, in
the converse case, could a Scottish creditor suing in England refuse the intervention of a jury, on the ground that in
Scotland, where the debt arose, the case would have been tried by a judge alone.

3. The problem is off course , that substance and procedure is so intimately related that the “purpose” of the
principle might often be at crosshairs with the outcome.
Illustration
Leroux v Brown
An oral agreement was made in France by which the defendant, resident in England, agreed to employ the plaintiff,
resident in France, for a period that was longer than a year. The contract was valid and enforceable by French law,
which was the law by which it was to be governed, but had it been an English domestic contract it would, though
valid, nevertheless have been unenforceable under the Statute of Frauds ( that at that point of time provided that no
action should be brought on certain contracts except if it is evidenced by a note or memorandum signed by the party
to be charged or by his lawfully authorized agent). An action brought in England for its breach failed on the ground
that the statute imposed a rule of procedure which was binding on all litigants suing in England.

Thus a procedural rule ended up undermining a substantive right, which is the antithesis of English private
international law.
3. It is a fine line between substance and procedure . Only a general definition of procedure exists in
law , namely
“Lush LJ: “The mode of proceeding by which a legal right is enforced, as distinguished from the law
which gives or defines the right, and which by means of the proceeding the court is to administer the
machinery as distinguished from its product.”
Poyser v Minors (1881) 7 QBD 329 at 333

4. However this substance and procedure cannot be relegated to clear-cut categories. There is no
preordained dividing line between them which can be discovered by logic alone.
5. Test given by Scarman J in Re Fuld’s Estate (No 3) [1968] P 675 at 695.
“When is a question one of substantive law? When is a question merely one of evidence or procedure? I attempt no
general answer to these questions; for answer can only be made after an analysis of the specific questions calling for
decision, its legal background and factual context…………..”

“The crux of the matter is: Why is the distinction between substance and procedure made in private international
law? The answer presumably is: For the convenience of the court. The court, when faced with a conflict of laws
problem, though bound to apply the law selected by the choice of law rules, cannot be expected to import all the
relevant rules of the foreign law. To apply, for instance, the foreign rules concerned with such matters as service of
process, evidence and methods of enforcing judgments would be not only inconvenient but impracticable.
Nevertheless, the overriding policy is to apply the foreign substantive law, and if this will be defeated by a slavish
adherence to the domestic distinction between substance and procedure, the court should consider whether in the
circumstances such adherence is necessary”. Cook, Logical Bases Of The Conflict Of Laws , 344, 352 and
356
“It is not everything that appears in a treatise on the law of evidence that is to be classified
internationally as adjective law, but only provisions of a technical or procedural character— for example
rules as to the admissibility of hearsay evidence or what matters may be noticed judicially.”
Mahadevran v Mahadevran (1964) P233 at 243

Thus it is a purposive reading and contextual reading.

Illustration of how English courts read it.
Monterosso Shipping Co Ltd v International Transport Workers’ Federation (1982) 3 All ER 841
The plaintiff, a Maltese company, owned a ship which was managed by a Norwegian company with Norwegian
officers and a Spanish crew. The defendants were an international federation of trade unions with whom the plaintiff
had purported to enter into a collective agreement in 1980. However, the defendants “blacked” the ship when it
started a regular run between Swedish ports, because the Swedish seamen’s union objected to the use of a Spanish
and not a Swedish crew. The plaintiff claimed damages for breach of the 1980 collective agreement, and the issue
was raised of whether the law governing the agreement was English or Spanish. The Court of Appeal held that it
was Spanish; but the court also had to consider whether to give effect to section 18 of the Trade Union and Labour
Relations Act 1974, which declared that a collective agreement “shall be conclusively presumed not to have been
intended by the parties to be a legally enforceable contract unless the agreement . . . states that the parties intend
that the agreement shall be a legally enforceable contract”.
It was argued by the defendants that this section was procedural in effect so that an English court should apply
the section irrespective of the law governing the contract.
The Court of Appeal held that section 18 was to be classed as substantive and not procedural
Reason Lord Denning :-
“It seems to me that the true distinction is between the existence of a contract (which is substantive law)
and the remedies for breach of it (which is the procedural law). The right course is to analyse the statute
and see whether it negatives the existence of a contract or not. If there is no contract, but the statute says
it cannot be enforced (except in writing or within a stated period) that is procedural law. It is governed
by the lex fori. In this present case, as I construe s 18 of the 1974 Act, it negatives the existence of any
contract at all.”
B. Particular Instances
1. The local law determines who can sue and be sued as parties to the action. The case law on this
question is not very consistent. For example, the English court held in Banque Internationale de
Commerce de Petrograd v Goukassow [1923] 2 KB 682 that a dead person cannot be a party to an
action even though this was possible under the lex causae. However, if a foreign entity has legal
personality under the law where it was established, it can be a party to English proceedings. Thus, in
Bumper Development Corp. v Commissioner of Police for the Metropolis [1991] 1 WLR 1362 an
Indian temple that was "little more than a pile of stones" under English law but has legal personality
under Indian law was entitled to sue.

2. All questions of evidence to determine the admissibility and probative value of evidence and
whether a witness is competent, are dealt with under the lex fori, except that presumptions, both
rebuttable and irrebuttable, are usually rules of substance.

3. Article 22(2) of the Rome II Regulation, provides that acts intended to have legal effect may be
proved by any mode of proof recognized by the law of the forum or by any of the laws governing
the formal validity of the act, provided that such mode of proof can be administered by the forum.
3A. In Europe Council Regulation (EC) No 1206/2001 guides taking of evidence in civil and commercial matters.
Inter alia it allow sa court in one Member State (the requesting court), in accordance with its own law, to take
evidence directly in another Member State (the requested court), if accepted by the latter State and subject to such
conditions as the requested court may determine.

3B. Under this European scheme each Member State is required to designate a “central body” to assist in the
operation of the European scheme, but it is expected that the transmission and execution of requests for the taking
of evidence generally should be made directly and by the most rapid means possible between the courts of the
Member States.

3.C Outside the EU the English Courts would be guided by the Hague Convention on the Taking of Evidence
Abroad in Civil or Commercial Matters (the Hague Convention) 1970 . Within Europe the EC regulation takes
precedence.
4(a). India is also a signatory to the Hague Convention 1970. It establishes methods of co- operation for
the taking of evidence abroad in civil or commercial matters. The Hague Convention was concluded on 18
March 1970, and came into force on 7 October 1972. India ratified the Hague Convention on 7 February 2007.

4(b) The Hague Convention 1970 uses permissive non-mandatory language.

4© The Hague Convention, which applies only between state parties, provides for the taking of
evidence:-
(i) by means of letters of request; and
(ii) by diplomatic or consular agents and commissioners.

4(d) Article 1 of the Hague Convention authorises a judicial authority of one state party (the requesting
state) to request the central authority (constituted under Article 2) of another state party (the state
addressed), by means of a letter of request, to obtain evidence, or to perform some other judicial act that is
intended for use in judicial proceedings in the requesting state.
4(e). Article 3 sets out the material particulars that need to be specified in the letter of request. In
order to expedite and facilitate execution, the Hague Convention provides an option to allow the participation
of members of the judicial personnel of the requesting state, the parties and/or their representatives in
executing the letter of request (Article 8). The requesting authority may also request the use of a special
method or procedure for execution of the letter of request, provided that it is not incompatible
with the law of the state addressed or impossible to perform (Article 9).

4(f) A letter of request has to be executed ‘expeditiously’ and can be refused only in specific cases
as provided under Article 11 and 12 of the Hague Convention, which broadly covers three instances:
(i) when the person to be questioned or who is asked to disclose documents asserts a privilege or
duty to refuse to give evidence under either the law of the requesting state or the law of the state addressed;
(ii) when the execution of the letter of request does not fall within the functions of the judiciary of the
state addressed; and
(iii) when the state addressed considers that its sovereignty or security would be prejudiced
4(g). Article 23 of the Hague Convention specifically provides that a contracting State could make a
declaration "that it will not execute Letters of Request issued for the purpose of obtaining pre-trial discovery of
documents as known in Common Law countries."
Contracting States which have executed a declaration under Article 23 are:
Argentina, Australia, Bulgaria, China, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary,
India, Italy, Lithuania, Luxembourg, Mexico, Monaco, Netherlands, Norway, Poland, Portugal, Romania, South
Africa, Seychelles, Singapore, Spain, Sri Lanka, Sweden, Switzerland, Turkey, Ukraine, United Kingdom,
Venezuela

4(h) India took the view that no enabling legislation is required because section 78 and Order 26, Rule
19 to 22 of the CPC already provides the enabling architecture.

4(i) Rule 21 of Order 26 provides that a commission under Rule 19 may be issued to any court within the
local limits of whose jurisdiction the witness resides or where the witness resides within the local limits of
ordinary original jurisdiction of the High Court to any person to whom the court thinks fit to execute the
commission. Lastly, Rule 22 of Order 26 deals with issuance, execution and return of commissions and
transmission of evidence to foreign courts.
4(i) The Governments stance was tested in Aventis Pharmaceuticals Ind & Aettersm Technology v
Dr Reddy Laboratories [2009] ( High Court of Andhra Pradesh) and Upaid Systems Ltd v Satyam Computer
Services & anor [2009 ( High Court of Delhi) . In both cases the Letter of Request was enforced by the High
Courts but the Delhi High Court held that Order 26 allows the enforcement of such requests independent of
the Convention.

SO THE ISSUE OF THE NEED FOR AN ENABLING LEGISLATION REMAINS OPEN

5. Limitation used to be a problem area of English law. Until 1984, English law was committed to the
view that statutes of limitation, if they merely specified a certain time after which rights could not
be enforced by action, affected procedure and not substance. (Black Clawson International v.
Papierwerke Waldoff-Aschaffenburg AG (1975) AC 591 @ 630). However post England’s
ascension to the Rome Convention on Contractual Obligations and the 1982 Law Commission,
presently, limitation is guided by the law that guides the substantive issues. (applies both to actions
and arbitrations)

6. However there are some limitations to the application of this rule, namely :-
(a) It is for English law to determine the time at which the limitation period stops running
against the claimant, eg when he commences litigation —to do otherwise might involve the English
court in detailed matters of foreign procedure.
(b) For similar reasons, the English court will ignore foreign rules as to the interruption
of the running of the period because of the absence of a party from the jurisdiction.
6. In the U.S., statutes of limitations would normally be considered procedural, but most states have
enacted so-called borrowing statutes, which "borrow" the statute of limitations for the cause of
action from the state in which the cause of action arose.

7. Priority of creditors: It has consistently been held that the order in which property in the possession
of the court is distributable among creditors must be governed by English law. The priority of
creditors in such a case is a procedural matter that is determinable by the law of the forum; though
it does not necessarily follow that the forum’s rule as to priorities should be the same in an
international claim as in a purely domestic case. The Halcyon Isle [1981] AC 221; distinguish
priority of assignees of intangible movables

8. It is possible to enforce rights before an English court of rights not known to common law but not
remedies , if they are unknown to common law.
EG: Phrantzes v Argenti, [1960] 2 QB 19 .
By Greek law, a father was obliged to establish a dowry for his daughter on her marriage, the amount of which
depended, inter alia, on his finances, the number of his children and the social position of himself and his son-in-
law. If a father failed to fulfill this obligation, his daughter, and she alone, had a cause of action to compel him to
enter into a dowry contract not with herself, but with her husband.
The English court held that in principle the right in hands of the daughter shall be enforceable but the remedy
cannot be given for two reasons.

First, there was no remedy at common law appropriate to enforce the exact right vested in the plaintiff by Greek
law, namely, “a right to obtain an order condemning someone to enter into a contract in a particular form with a
person not even a party to the proceedings”.

Secondly the daughter did not have a right to a specific sum of money but a generic right which can only be
assessed by a domestic court.
9. In English law post the decision in Miliangos v George Frank (Textiles) Ltd. [1976] AC 443.
damages can be paid in foreign currency. This rule is however limited to to claims such as
those with which we are here concerned, ie, to foreign money obligations, sc. obligations of
a money character to pay foreign currency arising under a contract whose proper law is
that of a foreign country and where the money of account and payment is that of that country, or
possibly of some other country, but not of the United Kingdom.
C. Foreign law in common law courts
1. A court which adjudicates a case, is required to sets of questions: question of fact and question of law. In
a case having some foreign element that some set of questions usually arise. i.e., the question of law, and
the question of fact.

2. The common law countries take the view that the question of foreign law is a question of fact in the same
manner as any other question of fact. In determining the question of fact, the parties may prove is by
evidence, oral, documentary or of expert witnesses and the burden of proving the foreign law lies
exclusively on the parties.

3. The established rule is that knowledge of foreign law even of the law obtaining in some other part of the
common law world, is not to be imputed to an English Judge. It is presumed that a foreign law , unless
shown to the contrary by a party pleading it, is different from a English rule.
4. If the party pleading the foreign law cannot satisfactorily prove it the case shall be decided according to English
substantive law , regardless of English conflict of law rules.

5. Before 1972 it was an established rule of English private international law that a rule of foreign law could not be
proved by citing a previous decision of an English Court where the same foreign rule was at issue, or by production of
books in which in which it was contained, or presenting a copy of the text of foreign law. The position has changed
with Civil Evidence Act 1972. Section 4 of the said Act the courts in England can admit in evidence a the decision of
any English court on a point of foreign law. The opposite party can prove as a question of fact that the “foreign law “
has changed.

It is questionable , if the principle of s.4 of the Civil Evidence Act can be read in Indian law being a statutory
rather than common law principle.
6. However under English law the following need not be proven as question of fact.
When a statute expressly provides that the particular foreign law shall be judicially noticed;
When the foreign law is noticed as a notorious fact;
When the foreign law is determined by a rule of English law.
When the English courts hear appeal from colonies and dominions, they take judicial notice of the law of these
countries;
When the foreign law is admitted, it need not be proved;
When both the parties request the court to decide the matter without the proof of foreign law, the foreign law
need not be proved.
Under some exceptional cases, the court many apply foreign law without proof.
6. Witnesses who can prove foreign law : In English law a question of foreign law is usually proved with the
statement of expert witnesses who are usually judges and lawyers of that country. However this is not a
strict rule- a Roman Catholic bishop was allowed to testify to the matrimonial law of Rome, since
knowledge of its provisions was essential to the performance of his official duties. But the mere academic
knowledge has been held not to be sufficient to make a person a competent witness.

7. Now Section 4 (1) of the Civil Evidence Act, 1972 lays down that “in civil proceedings a person who is
suitable qualified to do so on irrespective of whether he has acted or is entitled to act as legal practitioner”
in the foreign country.
8. The Indian law accepts the English position that is set out in s.45.
45. Opinions of experts. –– When the Court has to form an opinion upon a point of foreign law or of science, or art, or as
to identity of handwriting, 2 [or finger impressions], the opinions upon that point of persons specially skilled in such
foreign law, science or art, [or in questions as to identity of handwriting] [or finger impressions] are relevant facts.
Such persons are called experts.

9. Though India has no provision analogous to s.4 of the Civil Evidence Act case law has often held to the
contrary. For example in Suganchand Bhimkimchand v. Mangibhai Gulabchand (1942) Bom.185 the Bombay
High Court held that the opinion of the highest court of the foreign country is the best evidence of law of that
foreign country.

10. The other relevant sections are s.57. IEA, , 38 and s. 84 of the IEA.
10.
38. Relevancy of statements as to any law contained in law-books. –– When the Court has to form an opinion as to a
law of any country, any statement of such law contained in a book purporting to be printed or published under the
authority of the Government of such country and to contain any such law, and any report of a ruling of the Courts of
such country contained in a book purporting to be a report of such rulings, is relevant.

74. Public documents. –– The following documents are public documents: ––

(1) documents forming the acts or records of the acts ––
(i) of the sovereign authority,
(ii) of official bodies and tribunals, and
(iii) of public officers, legislative, judicial and executive, 3
[of any part of India or of the
Commonwealth], or of a foreign country;
(2) public records kept 4
[in any State] of private documents.
Facts of which Court must take judicial notice. –– The Court shall take judicial notice of the
following facts: ––
[(1) All laws in force in the territory of India;]
(2) All public Acts passed or hereafter to be passed by Parliament 1 [of the United Kingdom], and all local
and personal Acts directed by Parliament of the United Kingdom] to be judicially noticed;
(3) Articles of War for 2 [the Indian] Army [Navy or Air Force];
(4) The course of proceeding of Parliament of the United Kingdom, of the Constituent Assembly of India, of
Parliament and of the legislatures established under any laws for the time being in force in a Province or in
the States;]
(5) The accession and the sign manual of the Sovereign for the time being of the United Kingdom of Great
Britain and Ireland;
(6) All seals of which English Courts take judicial notice: the seals of all the [Courts in [India]] and of all
Courts out of [India] established by the authority of [the Central Government or the Crown Representative];
the seals of Courts of Admiralty and Maritime Jurisdiction and of Notaries Public, and all seals which any
person is authorized to use by [the Constitution or an Act of Parliament of the United Kingdom or an] Act or
Regulation having the force of law in 6
[India];
(7) The accession to office, names, titles, functions, and signatures of the persons filling for the
time being any public office in any State, if the fact of their appointment to such office is notified in [any
Official Gazette];
(8) The existence, title and national flag of every State or Sovereign recognized by 10[the
Government of India];
(9) The divisions of time, the geographical divisions of the world, and public festivals, fasts and
holidays notified in the Official Gazette;
(10) The territories under the dominion of 10[the Government of India];
(11) The commencement, continuance and termination of hostilities between 10[the Government
of India] and any other State or body of persons;
(12) The names of the members and officers of the Court, and of their deputies and subordinate
offices and assistants, and also of all officers acting in execution of its process, and of all advocates,
attorneys, proctors, vakils, pleaders and other persons authorized by law to appear or act before it;
(13) The rule of the road 11[on land or at sea].
In all these cases, and also on all matters of public history, literature, science or art, the Court may
resort for its aid to appropriate books or documents of reference.
If the Court is called upon by any person to take judicial notice of any fact, it may refuse to do so unless and until such
person produces any such book or document as it may consider necessary to enable it to do so.
D. EXCLUSION OF FOREIGN LAW
1. Under the English private International Laws, the application of otherwise applicable foreign law may be
excluded under the following heads :
(a) Foreign law is against the public policy;
(b) Foreign law is penal law;
(c) Foreign law is revenue law; and
(d) Mandatory rules.

2. Public policy
(a) According to Graveson, “Public Policy” is an indefinite concept which indicates those matters regarded by
Parliament or the court as clearly of fundamental concern to the State and Society at large.”

(b) Public policy is not the policy of a particular government. It cannotes some matter which concerns the public
good and public interest. The principles governing public policy must be and are capable, on proper occasion of
expansion or modification.
2 © According to Cheshire, “ The conception of public policy is, or should be, narrowed and more limited in private
international law than in the internal law. A transaction that is valid by its foreign lex causae should not be nullified on
this ground unless its enforcement would offend some moral, social and economic principle so sacrosanct in English
eyes as to require its maintenance at all costs and without exceptions.”

(d) Public policy has been applied in the following areas.

(i) International relations: In De Wutz v. Hendricks [ (1824) 2 Bing 314], the English Court refused to enforce a
contract made in England for a loan of money intended to assist a rebellion by subjects of a friendly State.
(ii) Trading with an alien enemy : In Dynamit v. Rio Tinto Co., [1918) AC 292], the House of Lords said that English
Courts will not give effect to any act of transaction which will result in giving comfort or assistance to the
enemy in times of war.
(iii) Contracts in restraint of trade : In Rousillon v.Rousillon [(1880) 40 ChD 351], the English Court had to consider
the validity of a French contract alleged to be in a restraint of trade. Although the particular contract was upheld
and the dicta of Fry J, made it clear that a contract, though made abroad, would not be enforced on the ground of
public policy if it was restraint of trade according to English Law.
3. English notions of justice and morality: A contract or other transaction which is objectionable in English
eyes on the ground that it is contrary to English ideals of justice and morality shall not be enforced. There are three
main areas of concern.
(i) Contracts tainted with what English law would consider immoral in a sexual sense will not be enforced even if
the lex causae consider it innocuous.
(ii) Acts contrary to English ideals of justice: Justice in this connection at times bears a wider meaning of natural
justice and applies particular in the recognition and enforcement of foreign judgment.
(iii) Foreign Confiscation and requisition an of property : With regard to the recognition of title to property based
on a foreign confiscatory decree, English Court generally adhere to the territorial concepts confiscatory decree,
English Court generally adhere to the territorial concepts of State Power i.e. that a foreign state has authority
to deal with all matters within its territory, but (apart from questions of the personal law) not beyond. A decree
will, therefore, be recognized in England it deals only with property or persons, including corporations, within
the territorial jurisdiction of the enacting State. It will not be recognized or given effort to in relation to
property, outside the territory or control of the foreign power as the date of the decree.
4. Penal law : ‘Penal law’ is a which imposes punishment for an offense against the State or some division thereof.
A penal law is equivalent to criminal.
Huntington v. Attrill, [1893] A.C. 150
It arose from an action by the appellant in an Ontario Court upon a judgment of a New York Court against the respondent under
sec. 21 of New York State laws of 1875, c. 611, which imposes liability in respect of false representations, the latter pleaded that
the judgment was for a penalty inflicted by the municipal law of New York, and that the action, being of a penal character, ought
not to be entertained by a foreign Court.
Mr. Justice Street, who tried the case, being of opinion that the enactments of sect. 21 were strictly punitive and not remedial,
dismissed the action with costs. The judges of the Appeal Court were equally divided in opinion, the result being that the appeal
taken from his decision was dismissed.
Before the Privy Council: The question is what is “penal” ?
(i) Penal in a objective , international sense and not merely penal within the meaning of the law of the forum.
(ii) Nothing can be considered to be penalty unless it is recoverable at the instance of the state or of an official duly assigned, or
of a public informer. An action by the latter is regarded as an actio popularis pursued, not in his individual interest, but in the
interest of the whole community.
(iii) Adopts the US Supreme Court decision in Wisconsin v. the Pelican Insurance Company 127 U. S. (20 Davis) 265 “An action
by the latter is regarded as an actio popularis pursued, not in his individual interest, but in the interest of the whole
community”.
4. A court in common law does not execute foreign penal law ( though in Huntington the law was considered to
be remedial and not penal in character.)

5. Foreign revenue laws: Traditionally a court in common law does not execute foreign revenue laws, nor does it
take notice of it. ( Holman v Johnson (1775) 1 Cowp 341

(a) Revenue law is defined as a any non contractual payment to the state ( taxes , fees etc)

(b) In deciding whether a claim is indeed pertain to foreign revenue laws, the court must look into substance over
form. English courts would not allow even an indirect application of the foreign revenue laws.
In Rossano v Manufactuerer
4. A court in common law does not execute foreign penal law ( though in Huntington the law was considered to
be remedial and not penal in character.)

5. Foreign revenue laws: Traditionally a court in common law does not execute foreign revenue laws, nor does it
take notice of it. ( Holman v Johnson (1775) 1 Cowp 341

(a) Revenue law is defined as a any non contractual payment to the state ( taxes , fees etc)

(b) In deciding whether a claim is indeed pertain to foreign revenue laws, the court must look into substance over
form. English courts would not allow even an indirect application of the foreign revenue laws.

PTO
In Rossano v Manufactuerers Life Insurance Company (MLI) (1963) 2 QB 352

The plaintiff an Egyptian national bought insurance from the defendant Canadian company (MLI) with branches inter alia in
Egypt. The policies prescribed the mode of payment as by banker’s demand draft on London ‘on New York’ ie, the situs of the
debt was not Egypt.
When the policies matured, Rassano brought an action in England claiming the money due under them. Meanwhile garnishee
orders had been served upon MLI’s Egyptian branch by the Egyptian tax department in respect of tax alleged to be due by
Rassano and that payment to Rossano would expose MLI to the risk of having to pay the money twice.
The main defense was that MLI was not liable to pay Rossano such sums as doing so would amount to indirect enforcement of
Egyptian revenue laws.
The Queen’s bench relied refused recognition of the validity of the garnishment orders, saying that recognition of those orders
would offend against the well-settled principle that an English court would not enforce a foreign revenue law.

However one must remember that there is a distinction between non-enforcement and non recognition. While an
English court would do the former it would take cognizance of the latter. (Ragazzoni v Sethia ( 1956) 2 QB 490)
6. Mandatory rules: Mandatory rules of the forum are those rules of lex-fori that override the lex-causale
(a) Mandatory rules have been described by the Law Commissions as domestic rules which “are regarded as so
important that as a matter of construction or policy they must apply in any action before a court of the forum,
even where the issues are in principle governed by a foreign law selected by a choice of law rule”. Law Com
Working Paper No 87 (1984), Scot Law Com Consultative Memorandum No 62 (1984), para 4.5.

(b) Article 9(1) of the Rome I Regulation on the law applicable to contractual obligations according to which
“overriding mandatory provisions are provisions the respect for which is regarded as crucial by a country for
safeguarding its public interests, such as its political, social or economic organization, to such an extent that
they are applicable to any situation falling within their scope, irrespective of the law otherwise applicable”.

(c) An example of English mandatory rules is provided by the controls on exemption clauses contained in the
Unfair Contract Terms Act 1977; the Act itself stipulates that, in certain circumstances, these controls shall
apply despite the parties’ choice of a foreign law to govern the contract. Another example of English mandatory
rules is provided by the Employment Rights Act 1996; the Act provides that the governing law of the
employment contract is immaterial for the purposes of the Act; the exact territorial scope of this employment
legislation is left to be determined by the courts.
6 (d) There are certain circumstances in which an English court is compelled to apply even foreign
mandatory rules. The statutory rules on choice of law for trusts and contracts provide for the application of
foreign mandatory rules.

(e) The function of the public policy exception is to negate foreign law, which is manifestly incompatible
with fundamental principles of the forum. Overriding mandatory rules are superimposed on the law
applicable to the contract to protect an interest that is regarded as fundamental by – usually – the forum state.
END SLIDE 3 End