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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 2:Party autonomy and mandatory rules 45

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Chapter 2: Party autonomy and mandatory rules 45 Chapter 2 Party autonomy and mandatory rules Party autonomy in substantive private law is the freedom of the parties to choose the rules that will govern their contractual relationship. In private international law it is the freedom of the parties to choose the law of a country to govern their relationship.1 Although party autonomy in private international law is to some extent the counterpart to substantive party autonomy,2 there are nevertheless differences.3 The latter is limited by the ius cogens of a national legal system, ie, the contracting parties are free only with regard to the dis- positive rules.4 The former, however, displaces the dispositive rules and the ius cogens (mandatory rules) of the objective proper law, together with those of the lex fori, in favour of the mandatory provisions of the chosen law. 5 This effect of party autonomy has, however, not always been accepted. In the past academic authors said that party autonomy in international contracts should be restricted to ius dispositivum.6 This so-called ‘secondary choice of law’ or ‘incorporation of foreign law’ (‘materiellrechtliche Verweisung’) means that the choice of law refers to the foreign ius dispositivum alone, and accordingly cannot replace the mandatory rules of the law that would be applicable in the absence of the parties’ choice. Nowadays, however, the concept of party autonomy as ‘primary choice’ or ‘party reference’,7 indicating the legal system that applies to the contract to the exclusion of the mandatory rules...

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