A re-examination of the conflict rules governing the validity of international contracts
Author: Prince Obiri-Korang
Affiliations: BSc LLB (Cape Coast), PLT LLM LLD (Johannesburg). Postdoctoral Research Fellow, Research Centre for Private International Law in Emerging Countries, Faculty of Law, University of Johannesburg.
Source: Journal of Comparative Law in Africa, Volume 7 Issue 2, p. 41 – 59
Generally, under choice of law, the issue of uncertainty associated with the determination of the governing law of international contracts is quite clear. The level of this uncertainty, however, increases when dealing with questions about which law governs the validity of such contracts. Like other areas of private international law, matters concerning validity present several unique challenges both in theory and in practice, making it the most complicated topic in private international law literature. In fact, the uncertainty in this area has led to a situation where different rules are applied by different states, without taking into consideration the link that should exist between the state whose law becomes applicable and the function that the law is expected to serve – determining the validity of a contract. This article attempts to contribute to existing literature on choice of law questions regarding the validity of international contracts and also provides solutions, based on the underlying principles of private international law of contract that effectively address the uncertainty in this area of law. The article submits that the law that governs the validity of an international contract must, at all times, be one that has a legitimate interest in matters concerning the legality or otherwise of such contracts. In this regard, the article strongly opposes the theory that the parties’ intention determines the law that governs the validity of their contract. After a careful examination of literature and landmark judicial decisions in both civil law and common law jurisdictions, the article concludes that the lex loci solutionis is the appropriate law to determine matters relating to the validity of international contracts.