Are you in conflict with a foreign party? Do you want to submit it to the court? Then it is important not only to know which court is competent, but also which law applies. Every country has its own legal system with its own rules and laws. The applicable law is decisive for the outcome in court.
Determine applicable law yourself
The parties may themselves include in the agreement which law applies in any disputes. Does your Polish supplier decide that Polish law applies, and do you agree to it? Then Polish law applies. Often both parties want the law to apply from their own country. In most cases, the party with the strongest bargaining position has the final word. However, it may also be decided to include a country where both parties are not established.
What if nothing has been agreed?
If neither party opts for a choice of law in the contract, the law applicable to the agreement will be determined based on international treaties and European regulations. The main rule (with EU countries except the United Kingdom and Denmark) is that the law of the country of the party that performs the main service applies. For example, in a sales contract the law of the country of the seller applies and in the case of an agency agreement the law of the country of the agent.
Vienna Sales Convention
In the case of international purchase agreements, the Vienna Sales Convention is usually applicable, with the right of the country of one of the parties additionally. This applies to purchase agreements between companies that come from a country affiliated with the Vienna Sales Convention. Worldwide, many countries are affiliated to the Vienna Sales Convention.
Applicable law and competent court
In addition to the applicable law, it is also important to record which court is applicable. These are two different things. It may happen that the German court has jurisdiction, but that Spanish law is applicable. The German judge must then judge the case under Spanish law. It is usually not desirable for a judge to apply the legislation from another country. That is why it is important that the agreement also specifies which court has jurisdiction and which law applies.
Do you have an international dispute, and do you want to know which law applies? Or do you want to record the applicable law in your contract? Please contact us. Our specialists in private international law always give you clear and honest advice.