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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 3:Internationally mandatory rules 89

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Chapter 3: Internationally mandatory rules 89 Chapter 3 Internationally mandatory rules The previous chapter dealt with the limitation of party autonomy by the application of mandatory provisions. It has thus been seen that, in various contexts, mandatory rules play a major role when applying the principle of party autonomy. The examination, however, focused on a relatively new trend in the private international law of contracts: While the parties’ freedom to choose the applicable law is unlimited, special conflict rules have been created that limit the effect of the choice of law by the application of mandatory rules of the objectively applicable law. Mandatory rules have thus become a modern tool to limit party autonomy. Although, as was seen these special conflict rules reflect a change from the traditional allocation technique, which was neutral and blind, towards a more result-selecting process, they still operate within traditional choice of law techniques. The technique of ‘alternative connection’ or ‘optional connection’ to a legal system (or to certain rules) based on the so-called ‘more- favourable principle’, is well known to conflict lawyers.1 The following chapters, by contrast, are concerned with the question of when ‘internationally mandatory rules’ are applied in the international law of con- tracts by the court of the forum state: In what circumstances and on what juristic basis? This is an issue that is older in origin, broader in scope, and has a stronger effect on the choice of law process than the one discussed in the previous chapter. In probably...

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