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Application of Mandatory Rules in the Private International Law of Contracts

A Critical Analysis of Approaches in Selected Continental and Common Law Jurisdictions, with a View to the Development of South African Law

Kerstin Ann Susann Schäfer

The application of mandatory rules in private international law of contracts is a controversial topic of growing international concern. Legislatures are increasingly intervening in private contracts in order to protect the economic interests of state, or the interests of vulnerable groups, such as consumers or employees. This thesis addresses two major contexts in which the application of mandatory rules arises, namely the restriction of party autonomy by the application of certain mandatory rules of a law, other than the chosen law, and the application of internationally mandatory rules of the forum, the proper law and, most controversially, of a third country.
Approaches of academic writing, case law, legislature, and treaties in England, Germany and Switzerland are compared and critically analysed. Paying also attention to the legal situation in South Africa, the analysis results to provide guidelines for the application of mandatory rules in private international law of contracts.

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Chapter 1:Introduction and preliminary matters 21

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Chapter 1: Introduction and preliminary matters 21 Chapter 1 Introduction and preliminary matters This thesis is a comparative examination of the application of mandatory rules in the area of the private international law of contracts.1 As will be seen during the course of this study, and as will be briefly noted in the following intro- ductory remarks, this question arises in a number of situations. It prompts fundamental issues that have been debated for many years by academics all over the world. Some of the problems are still not fully settled. I The Problem: Application of mandatory rules in the conflict setting The overriding question that has to be addressed is under what circumstances are mandatory rules to be applied in the private international law of contracts. How do these rules relate to the ordinary choice of law process? Are the rules superseded by the forum’s choice of law rules for contracts, or do they deserve special consideration? The relationship between the rules of private inter- national law that provide for the application of the law of a specified legal system, and rules of a mandatory nature that claim application to the transaction is a controversial matter. The general rule in the private international law of contracts is that the ‘proper law’ governs most aspects of the contract. If the forum’s choice of law rules lead to a foreign legal system, the foreign law is rendered applicable, within the scope of reference of the forum’s conflict rules. This application of...

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