In Europe, there was a conception that the parties could not disregard the lex loci contractus and choose their own rules when entering into contract, but this trend did not resist the increasing of international trading, which required the appliance of a common set of rules.[3] On the American side, the judiciary supported the party autonomy,[4] while part of the doctrine leaded by Joseph Beale held that the choice of law was a matter of sovereignty beyond parties’ choice.[5]However, throughout the time the mentality was changing and currently, although not binding, the theory is broadly applied.
As one can see, sovereignty has been closely related to the choice-of-law issue, and the modification of its perception throughout the time directly affects the party autonomy acceptance. The growths of market economy systems as well as democracy have transformed the traditional concept of sovereignty from a state’s power into people’s power.[6]Thus, currently the idea of parties controlling their own agreements without direct interference of the State is acknowledged.
Certainly, however, the parties do not have unlimited autonomy. Both European and American legal orders impose restrictions on this power, although in distinct ways. In US, for example, the chosen law will only be enforced if it has a substantial connection to the parties or contract,[7] whereas in Europe this exigency does not exist.[8]
Conversely, there are limitations arising equally in both systems, as the fact that the parties’ choice is restricted to a state law (not allowing the choice of general principles)[9] and the precedence of protective laws as in consumer[10] and employment[11] contracts in detriment of the chosen rules, due to the imbalance of the bargain power within contract.
All in all, one can conclude that, despite the differences amid US and Europe, economic power brings them together. In fact, part autonomy is currently an important ‘component of the liberal model of market regulation’, [12] which can be noticed in Rome I, in Restatement (Second) and in most part of the commercial treaties worldwide. It is a trend empowering the parties to a contract, therefore, avoiding problems arisen from State intervention in the choice-of-law.
[1] Ole Lando, Contracts, III-24 in International Encyclopedia of Comparative Law 3 (Kurt Lipstein, 1971).
Charles Dumoulin is acclaimed the father of the concept, even though Savigny contributed substantially to the dissemination of the doctrine.
[2] Mo Zhang, 'Party Autonomy and Beyond: An International Perspective of Contractual Choice of Law' [2006] 20 Emory International Law Review 511, 547.
[3] G. Ruhl “Party Autonomy in the Private International Law of Contracts: Transatlantic Convergence and Economic Efficiency” (2007) 3 CLPE Law Research Institute Research Paper Series 1, 6.
[4] London Assurance v. Companhia de Moagens do Barreior, 167 U.S. 149, 17 S.Ct. 785, 790 (1897).
[5] Joseph H Beale, A Treatise on the Conflict of Laws in G. Ruhl “Party Autonomy in the Private International Law of Contracts: Transatlantic Convergence and Economic Efficiency” (2007) 3 CLPE Law Research Institute Research Paper Series 1, 7.
[6] R.A. Brand ‘Balancing Sovereignty and Party Autonomy in Private International Law: Regression at the European Court of Justice’ (2005) 25 University of Pittsburgh School of Law Working Paper Series1, pt IV.
[7] Restatement (Second) § 187 (2)(a); Uniform Commercial Code § 1-105 (1).
[8] In practice this difference between US and European systems is minor, since it is possible to cure the inexistence of substantial connection showing that the choice was reasonable. Furthermore, the American courts are not so strict regarding this requirement, as one can see in Evans v Harry Robinson Pontiac-Buick, Inc. (1999) 336 Ark. 155 and Hodas v Morin (Mass. 2004) 814 NE2d 320.
[9] Trans Meridian Trading Inc v Empresa Nacional de Comerzialicion de Insumos 829 F.2d 949, 953-54 (9th Cir 1987).
[10] America Online Inc v Superior Court ("Mendoza"), 90 Cal. App. 4th 1 (2001).
[11] Wright v Martek Power Inc 314 F. Supp. 2d 1065 (U.S.DC Colorado 2004).
[12] Horatia Muir Watt, 'Party Autonomy in international contracts: from the makings of a myth to the requirements of global governance' (2010) 6 European Review of Contract Law 250, 254.
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