This regulation is about the applicable law as regards contractual obligations.

When do I have to apply the regulation ?

This Regulation shall apply, in situations involving a conflict of laws, to contractual obligations in civil and commercial matters.

Can I choose the applicable law under this regulation ?

The answer is yes.

The parties have a freedom of choice.

A contract shall be governed by the law chosen by the parties.

The conditions are the following :
 

  • The choice shall be made expressly or clearly demonstrated by the terms of the contract or the circumstances of the case ;

 

  • By their choice the parties can select the law applicable which shall apply to the whole or to part only of the contract ;

 

  • The parties may also at any time agree to subject the contract to a law other than that which previously governed it, whether as a result of an earlier choice made or of other provisions of the regulation.


What if the parties don't choose their applicable law ?

This question is about applicable law in the absence of choice.

There isn’t a single answer because the solutions are different in each type of contracts.

To the extent that the law applicable to the contract has not been chosen, the law governing the contract shall be determined by reference to the following examples :
 

  • a contract for the sale of goods shall be governed by the law of the country where the seller has his habitual residence ;

 

  • a contract for the provision of services shall be governed by the law of the country where the service provider has his habitual residence; 

 

  • a contract relating to a right in rem in immovable property or to a tenancy of immovable property shall be governed by the law of the country where the property is situated ;

 

  • a franchise contract shall be governed by the law of the country where the franchisee has his habitual residence ;

 

  • a distribution contract shall be governed by the law of the country where the distributor has his habitual residence ;

 

  • a contract for the sale of goods by auction shall be governed by the law of the country where the auction takes place, if such a place can be determined;


Where the elements of the contract would be covered by more than one of the above points, the contract shall be governed by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence.

And, where it is clear from all the circumstances of the case that the contract is manifestly more closely connected with a country other than that indicated above, the law of that other country shall apply.

Where applicable law cannot be determined pursuant to the rules above, the contract shall finally be governed by the law of the country with which it is most closely connected.

There are also specific rules for contracts of carriage, consumer contracts, insurance contracts, individual employment contracts.

What is the scope of applicable law ?

The law applicable to a contract by virtue of the regulation shall govern in particular :
 

  • interpretation ;
  • performance ;
  • within the limits of the powers conferred on the court by its procedural law, the consequences of a total or partial breach of obligations, including the assessment of damages in so far as it is governed by rules of law ;
  • the various ways of extinguishing obligations, and prescription and limitation of actions ;
  • the consequences of nullity of the contract.

                                                             Nasser Merabet
                                                                  Attorney