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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 5:Foreign internationally mandatory rules 135

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Chapter 5: Foreign internationally mandatory rules 135 Chapter 5 Foreign internationally mandatory rules The application of the forum’s internationally mandatory rules despite the existence of a foreign proper law is well established. Whether foreign internationally mandatory rules are to be applied by the forum, however, is still problematic and unsettled. The forum’s interests in applying foreign rules differ substantially from its interests in applying its own law. A judge is generally not bound by the rules of a foreign sovereign,1 unless his own has directed him to do so by means of a statutory conflict rule,2 an international Convention,3 or the common law.4 Therefore, the question is whether de lege lata conflict rules referring to foreign internationally mandatory rules exist, or whether de lege ferenda it is possible and reasonable to develop special conflict rules regulating the applicability of internationally mandatory rules. Or whether, in the alternative, these foreign rules can justifiably be applied according to their own determined scope without any prior choice of law rule of the forum indicating their application? In any event, it is clear that foreign internationally mandatory rules may affect private relationships. Contracts often have connections with a number of legal systems, in which mandatory legislation is enacted with marked effects on the contracts. Violation of the legislation may constitute a criminal offence and result in heavy penalties. It cannot be denied that these mandatory rules have a factual impact on parties’ relationship. The question remains, however, whether the forum shall...

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