Global trade relations continually pose new challenges to international law. In case of a dispute, it is often necessary to first determine which law applies.
International law holds significant importance in a global world. When legal disputes arise between contracting parties from different countries, private international law plays a crucial role in determining which law applies to a particular legal dispute, explains the commercial law firm MTR Rechtsanwälte.
For cross-border contracts, the initial question is which national law applies. The parties have the option to agree on a choice of law when drafting the sales contract. If such an agreement is omitted, the so-called Rome I Regulation applies to contracts concluded after December 17, 2009. This is valid for contracts between EU member states as well as contracts with third countries.
According to Article 4(1) of the Rome I Regulation, for contracts for the sale of movable goods, the law of the country in which the seller has their principal place of business applies. For proprietary rights in immovable goods, the law of the country where the immovable good is located applies.
For international sales contracts, there is also the question of whether the UN Sales Law (CISG) applies. The CISG is a United Nations convention on international sale of goods. It can be applicable if the contracting parties have their places of business in different countries that have ratified the agreement. More than 90 countries have signed the convention, including the most important trading partners.
However, the UN Sales Law is not comprehensive. It does not, for example, regulate the important aspect of limitation periods in producer liability. Furthermore, the contracting parties can declare significant parts of the UN Sales Law as inapplicable. Caution is advised with such clauses. For instance, if it is contractually agreed that German law should apply, this does not exclude the CISG as it is part of national law. Therefore, the UN Sales Law must be explicitly excluded to prevent it from being applied.
Moreover, in the UN sales contract, one must ensure whether pre-formulated terms and conditions become part of the contract.
It usually remains a case-by-case question as to which legal system is applicable. Lawyers experienced in international law can provide advice.
