FULL TITLE OF TOPIC:
THE IMPLICATIONS OF CONFLICT OF LAWS UPON INTERNATIONAL TRADE AND TRANSACTIONS AND AS OBSERVED FROM A MALAYSIAN CONTEXT – AN OVERVIEW
FULL NAME OF THE AUTHOR:
With regards to the overall scope and issues explained, the following are the matters which are concerned:
a) The issues which have been researched are:
i) The areas of the law concerning international trade and transactions where conflict of laws is apparent. The areas of focus are predominantly the laws of the WTO, the laws of the CISG, intellectual property laws as well as the laws governing international commercial arbitration and from the Malaysian context, the areas researched are conflict of laws in relation to bills of lading, conflict of laws from the perspective of intellectual property laws and the impact of the Competition Act 2010 and the conflict of laws in relation to the Arbitration Act 2005;
ii) The manner in which these conflicts arise;
iii) Whether these conflicts are capable of resolution and if not, the manner of dealing with these conflicts of laws issues.
b) The main findings which have emerged are:
i) For the most part in most of the areas of law which have formed the subject of analysis of the conflicts of laws debate in this thesis, the matter of the conflict of laws is apparent for the fact of the nature of the disputes which have appeared before adjudicating bodies which are of an international nature concerning cross border disputes;
ii) In certain scenarios, the distinct laws of separate legal instruments, legal jurisdictions etc. contain methods by which the process of adjudication is able to bypass addressing the matter of conflict of laws by adopting an alternative manner of adjudication wherein this method is inherent within the applicable laws;
iii) There are many aides available in the form of internationally accepted rules and principles as well as established doctrines to guide in the process of determining the applicable laws where a situation of conflict of laws has arisen;
iv) The difficult and perpetual debate which confronts adjudicators is the determination of the proper laws of the contract. The establishment of this lies at the heart of the conflicts of laws debate;
v) An issue of some degree of sensitivity whenever a situation concerning the conflicts of laws arises is to fairly and on the basis of merit uphold the autonomy of the laws of a certain jurisdiction in prevalence over another;
vi) The cultural differences between different legal systems dictate that it would be challenging to formulate a uniform set of laws which can be internationally accepted by all jurisdictions governing all areas of the law concerning international trade and transactions;
vii) The individual biases and prejudices of the adjudicators themselves can greatly influence the verdict in matters concerning the conflict of laws.
c) The practical implications or recommendations and for whom:
i) The fact that conflict of laws will increasingly become a feature of international trade and transactions with regards to the adjudication process with regards to the settlement of disputes of a cross border nature is inevitable;
ii) In time, more sophisticated methods of adjudication as well as doctrines and approaches would likely evolve to tackle the issue of the conflict of laws which it is envisaged will become increasingly complex corresponding with the significance and volume of international trade and transactions in a more modern world;
iii) It is incumbent that adjudicators are aware of these practical implications as the task of adjudication falls upon them;
iv) It is also imperative that parties entering into international contracts are fully aware at the time of entering into those contracts, the fact that in the event of a dispute, the matter of conflict of laws may be engaged towards the resolution of the dispute.
- 1. CHAPTER 1 : INTRODUCTION AND METHODOLOGY
- Research Background
- Aims And Objectives Of The Research
- Structure And Style Of The Topic of Discussion
- Methods For Data Analysis
- 2. CHAPTER 2 : LITERATURE REVIEWS
- 3. CHAPTER 3 : THE MEANING AND DEFINITION OF CONFLICT OF LAWS
- A Simplistic / Layman Understanding Of Conflict Of Laws
- The Proper Law Of The Contract Explained – Putting The Horse Before The Cart
- Is There An Incumbent Need For A Particular Legal System As Applicable Law?
- The Crucial Element Of The Binding Effect Of A Contract And Its Relation To The Proper Law
- 4. CHAPTER 4 : THE APPLICATION AND IMPLICATION OF CONFLICT OF LAWS IN THE DISPUTE RESOLUTION PROCESS OF THE REGIONAL TRADE AGREEMENTS (RTAs) AND THE WTO
- Conflict Of Laws Arising From The Overlap Between RTAs and the WTO
- When Do Conflicts Of Law Arise?
- Some Suggestions Of Possible Methods Adopted For Resolution Where Conflicts Of Laws Are Apparent
- 5. CHAPTER 5 : THE IMPLICATIONS OF CONFLICT OF LAWS WITHIN THE SCOPE OF THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (CISG) – AN OVERVIEW AND ANALYSIS
- Some Introductory Background On The CISG
- The Conflict Of Laws Within The CISG
- 6. CHAPTER 6 : CONFLICT OF LAWS IMPLICATIONS IN RELATION TO TRANSFERRING RIGHTS OF SUIT UNDER BILLS OF LADING
- A Brief Introduction On The Nature And Function Of Bills Of Lading In General
- The Bill Of Lading As Seen As A Multi-Function Instrument In The Facilitation Of Sea Trade
- The Historical Roots Of The Bill Of Lading Leading To Its Recognition As A Document Of Title
- The Bill Of Lading Operating As A Document Of Title In The Modern Context : Order And Straight Bills / Negotiable And Non-Negotiable Instruments Distinguished
- The Nature Of The Transaction As Being An Impediment To The Transferring Of The Rights Of Suit Under A Negotiable Bill Of Lading – The Privity Of Contract Issue
- The Legal Conundrum Associated With The Transferring Of The Rights Of Suit Under A Negotiable Bill Of Lading Finally Resolved By Statute – The Carriage Of Goods By Sea Act 1992
- The Conflict Of Laws And The Difficulty In Identifying The Statute Of Mandatory Application – Whether Domestic Law Or International Convention Prevails
- The Intricacies Of The Application Of The Conflict Of Laws Theories To The Matter Of Rights Of Suit Under Bills Of Lading Explored
- An Exercise In Semantics – The Process Of Classification And Characterisation
- The Types Of Characterization Explored And Analyzed In Greater Detail – Getting To The Crux Of Conflict Of Laws Theories And Its Application To The Determination Of Rights Of Suit Under The Bills Of Lading
A) The Determination Of The Proper Parties To A Suit
B) The Manner In Which Contractual Rights May Be Effectively Transferred Under The Bill Of Lading
C) The Transferring Of Rights Perceived As A Contractual Matter Under The Bill Of Lading
- Wrap Up And Concluding Remarks On The Matter Of Conflict Of Laws Pertaining To Rights Of Suit Under Bills Of Lading
7. CHAPTER 7 : THE CONFLICT OF LAWS AS SEEN IN THE AREA OF INTELLECTUAL PROPERTY GENERALLY
- Intellectual Property As Defined By The World Intellectual Property Organization (WIPO)
- Introductory Explanation For The Conflict Of Laws Arising In The Field Of Intellectual Property
- Issues Of Conflict Of Laws And The Battle Against Jurisdiction
- The Ground Rules That Apply In Matters Involving The Conflict Of Laws
- Some Cases That Reflect The Application Of The Basic Rule
- Wrap Up Commentary On The Conflict Of Laws As Observed And Noted In The Field Of Intellectual Property Generally
8. CHAPTER 8 : THE IMPLICATIONS OF CONFLICT OF LAWS FROM THE PERSPECTIVE OF INTERNATIONAL COMMERCIAL ARBITRATION (ICA)
- A Brief Introduction To The Concept And Meaning Of International Commercial Arbitration
- Some Fundamentals About The Arbitral Process And Its Relation To The Conflict Of Laws
- The Various Doctrines Applicable To Arbitration And Some Fundamental Principles Of Application
- The Distinct Methods By Which Conflict Of Laws Issues Are Tackled in ICA
- Conflict Of Laws Analyzed From The Perspective Of Substantive Laws And Procedural Rules As Well As Law
- The Notion Of The Principle Of Direct Choice : An Autonomous Choice And Exercise Of Discretion By Arbitrators In The Choice Of Applicable Conflict Of Laws Rules In The Modern Context
- Wrap Up Comments On The Implications Of Conflict Of Laws Norms From The Perspective Of International Commercial Arbitration
9. CHAPTER 9 : THE IMPLICATIONS OF CONFLICT OF LAWS NORMS FROM THE MALAYSIAN CONTEXT ON ASPECTS OF INTERNATIONAL TRADE AND TRANSACTIONS
- General Introductory Remarks
- The Malaysian Conundrum Pertaining To The Conflicts Of Laws As Apparent Under Bills Of Lading
- The Emergence Of New Legislation In Malaysia And Its Impact Upon Intellectual Property Laws From The Perspective Of Conflict Of Laws In International Trade And Transactions
- The Conflict Of Laws and The Malaysian Arbitration Act 2005 – Some Unresolved Matters
10. CHAPTER 10 : AN EVALUATIVE AND ANALYTICAL STUDY OF THE VARIOUS DOCTRINES IMPLICIT IN THE APPLICATION OF CONFLICT OF LAWS NORMS IN RELATION TO INTERNATIONAL TRADE AND TRANSACTIONS
- Introductory Outline
- Ø The General Applicable Concepts Pertaining To The Conflict Of Laws In The Context Of International Trade And Transactions
- Ø The Engagement Of Concepts Pertaining To The Choice Of Law From The Perspective Of International Trade And Transactions
- Ø The Traditional Approach
- Ø The Principle Of ‘Renvoi’
- Ø The Principle of ‘Forum Non Conveniens’
- Ø Overview, Comments And Analysis Of The Various Doctrines Implicit In The Application Of Conflict Of Laws Norms In Relation To International Trade And Transactions
11. CHAPTER 11 : AN EVALUATIVE AND ANALYTICAL OVERVIEW OF THE IMPLICATIONS OF CONFLICT OF LAWS NORMS IN RELATION TO INTERNATIONAL TRADE AND TRANSACTIONS AND AS OBSERVED FROM THE MALAYSIAN CONTEXT ON ASPECTS OF INTERNATIONAL TRADE AND TRANSACTIONS
- A Concise Introduction
- Findings Of Thesis
- Ø The Implications Of Conflict Of Laws Norms From The Perspective Of The Dispute Resolution Process Of The RTAs And The WTO
- Ø The Implications Of Conflict Of Laws Within The CISG
- Ø The Implications Of Conflict Of Laws Norms From The Perspective Of The Transferring Of Rights Of Suit Under Bills Of Lading
- Ø The Implications Of Conflict Of Laws As Seen From The Perspective Of Intellectual Property Generally From The Standpoint Of Litigation
- Ø The Implications Of Conflict Of Laws Norms From The Perspective Of International Commercial Arbitration
- Ø General Overview Of The Implications Of Conflict Of Laws Norms In Relation To International Trade And Transactions
- Ø General Overview Of The Implications Of Conflict Of Laws Norms From The Malaysian Context In Relation To Aspects Of International Trade And Transactions Concerning Bills Of Lading
- Ø General Overview Of The Implications Of The Conflict Of Laws Upon Intellectual Property Rights From A Malaysian Context As Compared To The International Level
- Ø General Overview Of The Implications Of The Conflict Of Laws Upon The Malaysian Arbitration Act 2005 And The Implications Of This Legislation Upon International Commercial Arbitration
12. CHAPTER 12 : REFERENCES AND BIBLIOGRAPHY
13. ACKNOWLEDGMENTS AND CREDIT
CHAPTER 1: INTRODUCTION AND METHODOLOGY
- RESEARCH BACKGROUND
The background for the research in relation to this topic was the subject of conflict of laws and its application to international trade and transactions as well as from a Malaysian context. Most of the material for the research was sourced from the internet and comprised articles written by legal practitioners and legal scholars on the specific areas researched. These were precise areas pertaining to the subject matter written such as the conflict of laws in relation to bills of lading, the conflict of laws in relation to the law of the WTO, the conflict of laws in relation to international commercial arbitration etc..
- 2. AIMS AND OBJECTIVES OF THE RESEARCH
This, ‘The Implications of Conflict of Laws Upon International Trade and Transactions and As Observed From A Malaysian Context – An Overview’ would predominantly be approached from the perspective of doctrinal study wherein the definition of conflict of laws would first be addressed at the outset. Hence, the very essence of conflict of laws would first be explored in detail and once a sound basis for this has been established, only thereafter would the discussion proceed further to explore its implications upon international trade and transactions from various economic and trade perspectives and after having done the same, the discussion will focus upon the conflict of laws as observed from a Malaysian context. Discussions on the implications of conflict of laws upon international trade and transactions will be addressed when discussing its relevance and application in relation to the CISG, WTO, Alternative Dispute Resolution, Intellectual Property, Bills of Lading as a type of shipping document utilized in international trade amongst other areas of the law deemed relevant for discussion and analysis. When broaching the subject matter from a Malaysian perspective, the above-stated areas would be covered with the exception of the CISG. The topic of discussion aims to identify the many areas of the law concerning international trade and transactions and from the Malaysian context where conflict of laws is apparent, the manner in which these conflicts arise, whether these conflicts are capable of resolution and if not, the manner of dealing with these conflicts of laws issues. The fact of conflict of laws itself may perhaps be viewed to connote some degree of controversy in the sense that there is a certain degree of uncertainty involved in the process of evaluating the implications of such conflicts in the laws. It is essentially the fact of this inherent uncertainty that would perhaps encourage analysis and personal opinion about the state of the law as it is whilst contemplating future advancements as having further impact upon these current conflicts in the applicable law.
- 3. STRUCTURE AND STYLE OF THE TOPIC OF DISCUSSION
On the matter of the structure of the topic of discussion, the discussion will include an introduction to the selected topic, its main theoretical framework, definition of core concepts and clear research hypothesis, coherent presentation of results in line with academic standards and naturally, a conclusion. The discussion will comply with the formatting requirements, compulsory style / structure of the dissertation and the required content in the stipulated sequence.
It is proposed that with regards to the style of preparing the discussion, whilst adhering to the proposed format, the discussion would be prepared in a systematic manner wherein the law and ideas would be neatly introduced and discussed. There would be a smooth flow of the same wherein the ideas although distinct, would be linked wherever this would be possible and thereby evidencing familiarity and connectivity which would have the potential of engaging the interest of the readers.
Upon presenting each idea or area of the law and discussing the same, it is aimed that analysis of each area would be embarked upon. This, it is opined, would be a more interesting and engaging style of writing and presenting the information clearly, concisely and coherently.
Whilst it is aimed to write in a simple and easily comprehensible style, where the subject matter appears to be technical in nature, requiring detailed analysis, it is proposed that the intention would be to convey the level of difficulty without over simplifying so as to retain appreciation of the essence of the technical difficulty.
To simplify the task of presenting the material, chapter headings and sub-headings will be used.
It is proposed that a creative style of writing will be used as the idea is for the topic of discussion to be informative as well as very importantly interesting and thought provoking.
- 4. METHODOLOGY
On the matter of the methodology to be adopted in the course of preparing the topic of discussion, the general approach would be such that some basic explanation and introduction to the topic would be necessary at the outset. Hence, an explanation of the meaning of conflict of laws and as to when this may arise would seem to be fundamental as an introduction to the topic as the bulk of discussion would be naturally focused upon this meaning and definition in the first place. In preparing this introduction, current material would be researched from the internet by using key words to specifically search for the relevant information. There would naturally have been articles written by academic scholars, students, academicians, practicing solicitors etc. which may be obtained from online journals or via a search conducted on Google. Part of the material provided by the lecturers during lectures on the specific modules may also be used to the extent where this is relevant.
- 5. METHODS FOR DATA ANALYSIS
The data presented has been analyzed in the manner where a brief introduction to each topic or subject matter has been made followed by factual details of the subject matter and brief comments inserted in the course thereof and finally an analysis of the entire subject matter based upon the facts presented. The data has been analyzed in such a manner that comments have been made on the facts presented as well as personal opinions on the subject matter based upon observation of trends, perceptions supported by justifications as well as anticipated findings. Comparisons have been drawn between the application of conflict of laws to the subject matter discussed from a Malaysian context and that as applied on an international front. Factors such as cultural norms, differences in legal systems, the manner of conducting trade etc. have been presented as distinguishing features in the manner in which the conflict of laws have been applied in the Malaysian context as compared to the international level.
CHAPTER 2: LITERATURE REVIEW
It is incumbent that the topic of discussion also include the theoretical background of the issues researched, definition of the core concepts as well as where applicable, evidence of existing research carried out to date in a similar area. In this part of the topic of discussion, the books and materials used to conduct the research would be listed down. Hence, this would afford an opportunity to list materials that had provided the background on the topic researched or which contained research carried out previously which is sought to be used in the topic of discussion. It would also allow exhibition on the manner in which the research connects to previous academic studies and perhaps draw a comparison of the difference in the methods employed by other researchers.
The various forms of literature sourced in the preparation of this topic of discussion are as follow:
1) Articles by legal practitioners and academic scholars which had been sourced through Google on the internet;
2) Articles on the subject matter researched, sourced from online journals;
3) General information on the subject matter as well as definitions sourced from the Web;
4) Case law and analysis
In the course of researching the material used for the preparation of this topic of discussion, it was discovered that there were articles written by authors on each subject matter singularly and that there were no articles sighted which had tackled the subject matter comprehensively in the precise manner of this thesis thereby conveying a comprehensive analysis of the topic. Hence, it is surmised that the value of the topic of discussion is seen from this perspective as a first attempt to tackle various related subject matter on the topic comprehensively in a consolidated manner.
CHAPTER 3: THE MEANING AND DEFINITION OF CONFLICT OF LAWS
A SIMPLISTIC / LAYMAN UNDERSTANDING OF CONFLICT OF LAWS
What is the notion of conflict of laws? From a very base or elementary perspective, the simple or literal language conveys the meaning of a situation where perhaps what may be deemed to be relevant laws are in conflict or at odds with each other hence resulting in a ‘conflict’ situation of determining the issue of applicability of these conflicting laws i.e. which is to prevail or perhaps the extent to which each would be applicable where two or more laws may be seen to be relevant and applicable.
THE PROPER LAW OF THE CONTRACT EXPLAINED – PUTTING THE HORSE BEFORE THE CART
Hence, in essence what may be established is the fact that choice of law is at the heart of or central to the debate pertaining to conflict of laws (which in some jurisdictions is referred to as private international law). In attempts to put the horse before the cart i.e. following the proper order of explanation leading up to attempting to define the conflict of laws, having stressed the importance of choice of law, it thus becomes incumbent to first analyze the doctrine of the “proper law” or “applicable law of the contract”. It may be stated confidently that it is implicit in any contract that a particular system of law or structure of rules or principles would govern its various aspects. To English common law and to legal systems predominantly premised upon English law, the expression customarily used is “the proper law of the contract”. However, in a vast number of other jurisdictions, the expressions “governing law” or “applicable law” are seen to be more commonly used. The formal expression “the proper law of the contract” had been defined by Lord Wilberforce in the Amin Rasheed Corporation case, as being “the law which governs the contract and the parties’ obligations under it; the law which determines normally its validity and legality, its construction and effect, and the conditions of its discharge.” In a nutshell, the proper law may be stated to encompass the predominant although not necessarily all the legal issues that may arise under a contract; these aspects being the validity and interpretation of the contract, the rights and obligations of the parties to it and the consequences arising from a breach of the contract. The author R. Brown in his written work entitled “Choice of Law Provisions in Concessions and Related Contracts” had the following to state with reference to the relationship between the notion of “proper law” and contract when he stated, “A contract is the creature of its proper law, and it is a reference by the parties to a system of law which is to give life to the contract.” Hence, by this expression it may be noted that a system of law is expressed to breathe life into the autonomous agreement between the parties, being the contract itself.
IS THERE AN INCUMBENT NEED FOR A PARTICULAR LEGAL SYSTEM AS APPLICABLE LAW?
In efforts to explore a probable answer to this question, one looks towards the proverbial postulation which may be seen in the following statements made by Lord Diplock:
“The purpose of entering into a contract being to create legal rights and obligations between the parties to it, interpretation of the contract involves determining what are the legal rights and obligations to which the words used in it give rise. This is not possible except by reference to the system of law by which the legal consequences that follow from the use of those words is to be ascertained.
Contracts are incapable of existing in a legal vacuum. They are mere pieces of paper devoid of all legal effect unless they were made by reference to some system of private law which the obligations assumed by the parties to the contract by their use of particular forms of words and prescribes the remedies enforceable in a court of justice for failure to perform any of those obligations.”
Hence from the above cited postulation by the learned judge, it may be deduced that whilst the terms of the agreement between contracting parties would remain within the autonomous control of the stated parties, however, the enforceability of those terms and the determining factor of prevalence in the event of dispute or disagreement between such contracting parties would necessarily require the governance of some deciding authority being that of private law as usually decided upon at the outset by the contracting parties.
The fact that an international contract may be subject to more than one system of law wherein the governing precepts of a contract may possibly be opted from more than one system of law even to the extent of a mixture of laws from both national as well as non-national systems would clearly illustrate the fact of potential conflicts arising on the issue of applicability of such differing laws of various legal systems.
THE CRUCIAL ELEMENT OF THE BINDING EFFECT OF A CONTRACT AND ITS RELATION TO THE PROPER LAW
From this perspective, the discussion on the conflict of laws focuses upon the autonomy of the parties in having decided the clauses forming the contract as well as the choice of law governing the said contract and the legal system which would have permitted their choice and necessarily from which its binding force is derived. This point can be implicitly illustrated by the Sole Arbitrator, Professor Dupuy in an arbitral award, the Texaco award when he stated:
“…..unless one were to concede that, in the initial stage where the parties are to choose the applicable law, the relevant contractual stipulation may depend solely on their choice, it is necessary to determine the legal system in which the clause designating the applicable law is found and from which that same clause will draw its binding force.”
Hence, it may be observed that a crucial distinction would need to be drawn between the issue of the law governing the existence and validity of the contract and the more basic or fundamental issue of what is the law which allows the parties or which accords to them the liberty to opt for that law in the first place. The customary view dictates that it is the lex fori, a Latin term denoting the laws of a forum (which is a legal term frequently used in the conflict of laws to refer to the laws of the jurisdiction in which a legal action is brought)and more precisely the conflict of laws of the lex fori which decides upon the proper law of the contract. Hence this translates to the conflict of laws rules of the lex fori allowing the parties to opt for the proper law. It is interesting to note that the liberty of the parties to opt stems from a network of conflict of laws rules referred to by some as a “framework of rules”. Professor Lipstein succinctly describes the relationship between choice of law rules and the binding provisions of the legal system of which they form part of when he states that it would be imperative for an international tribunal to be furnished with an outline of some system of laws. Indeed, this is the framework from which the binding nature of the contract originates. The validity and other consequences arising from the contract are established with reference to the proper or applicable law of such contract.
Some scholars may be inclined to assert the vital importance and predominant role that party autonomy possesses as an underlying principle of the conflict of laws wherein resides the binding nature of the contract as well as the proper or incumbent law of the contract. Indeed, in a simplistic manner, it may be observed that the choice of law lies in party autonomy itself and only thereafter, the resolution by the ascertainment of conflict of laws norms. Upon careful scrutiny, one may observe that the Texaco award which in essence postulated the theory of internalization of the contract had its decision rooted upon the principle of conflict of laws implicit in the conflict of laws from the point of the choice of law clause inherent in the agreement. Hence, the conflicts of laws rules remain constant on the matter of the ascertainment of the proper law of the contract. Lord McNair has stated this very perceptively when he had stated the following:
“it [private international law or conflict of laws] is adjectival and its duty is to prescribe rules for the guidance of a tribunal in deciding which system of law it should apply for the solution of a question submitted to it that contains a foreign element and with respect to which it has jurisdiction.”
Hence, from the above discussion, it may be surmised that the role of conflict of laws is to lay down rules to guide a forum of adjudication in making a choice as to the specific system of law which is to apply in resolving a question before it which consists of foreign issues / matters wherein it has the jurisdiction to decide upon those matters. Whilst the aim at heart is ultimately to resolve the matters in conflict, this may not always be easy to achieve.
In the preceding chapters, the implications of conflict of laws upon international trade and transactions will be demonstrated from different individual aspects and perspectives from the point of various aspects of international trade and transactions. These norms are especially visible where the foreign element is predominantly prevalent and the manner of conducting business across jurisdictions and borders in the modern present day certainly has had an impact upon the relevancy of addressing the matter of the conflict of laws.
CHAPTER 4: THE APPLICATION AND IMPLICATION OF CONFLICT OF LAWS IN THE DISPUTE RESOLUTION PROCESS OF THE REGIONAL TRADE AGREEMENTS (RTAs) AND THE WTO
CONFLICT OF LAWS ARSING FROM THE OVERLAP BETWEEN RTAs AND WTO
This chapter essentially aims to address the matter of the application and implication of conflict of laws in view of the materialization of the Regional Trade Agreements which have emerged surrounding the deadlock of the DOHA Round negotiations, hence resulting in greater significance of the situation of conflict in the sense of the clash of laws and areas of jurisdiction between WTO tribunals and RTAs. It is interesting to note that in view of the nature of these agreements which have implications and significance from both the regional as well as the multilateral perspectives, it becomes incumbent for the conflicts arising from the overlap of these agreements to be addressed accordingly. The issue of conflicts of laws arises when addressing the RTAs and WTO as a result of the fact that the WTO treaty negotiators had not foreseen the possibility of probable conflicts of jurisdictions with RTAs. The difficulty faced is in essence the fact that there is no rule of precedence in existence giving effect to one set of norms over the other and hence necessitating some possible suggestions as to the manner in which to appropriately adjudicate in situations where these conflicts arise.
Basically, an RTA may be described to be a Free Trade Area (FTA) or a Customs Union. Some examples of regional RTAs are: NAFTA or MERCOSUR. In recent times, there has been a trend of global RTAs seen to be entered into between trading entities of distinct continents, to cite examples: EU-Mexico and EU-Chile. The present discussion will centre upon the conflicts arising between the members of an RTA which are similarly members of the WTO.
WHEN DO CONFLICTS OF LAW ARISE?
The issue of conflict from the perspective of international law, according to scholars such as Kelsen or Jenks, based upon a rather rigid explanation, would arise ‘if a party to two treaties, cannot simultaneously comply with its obligations under both treaties.' This is in accordance to the definition of the WTO Panel on the definition of conflict. The WTO Panel in the matter of Indonesia-Autos was of the view that a conflict may be perceived to have arisen when two norms were “mutually exclusive”. Another example of a conflict situation identified by the WTO Panel may be witnessed in the comments of the WTO Panel in the matter pertaining to EC-Bananas III wherein the WTO Panel had clearly and perceptively illustrated that a conflict would arise in a situation where “a rule in one agreement prohibits what a rule in another agreement explicitly permits.” This case poses as a fine example of a situation of a direct conflict of the rules as opposed to an overlap and hence would require and answer to the tune of which rule would take primacy or precedence and the relevant justification for this.
SOME SUGGESTIONS OF POSSIBLE METHODS ADOPTED FOR RESOLUTION WHERE CONFLICTS OF LAWS ARE APPARENT
How would a situation of a direct conflict of law be resolved? This would be the type of scenario that would be similar to the example given by the WTO Panel in the European Communities – Regime for the Importation Sale and Distribution of Bananas III (also known in brief as the EC-Bananas III). To illustrate the manner in which such conflicts may arise, an example is given where a norm in an RTA is less strict and rigid of compliance than a WTO norm. Hence, in such a situation, solely adhering to the WTO provision would undoubtedly tantamount to a violation of the RTA or conversely, an infringement of the WTO provisions would still nevertheless result in compliance with the RTA. In such a situation, what would be the determining factor of compliance? Would it necessarily follow that the stricter norm should be complied with or would one be compelled to return to the roots in deciphering the respective intent of each agreement and in the process thereof formulate a presumption against conflict that seems justifiable of compliance and by doing so, avert the conflict?
In another distinct scenario, one looks at the tricky situation where a specific rule in a specific treaty and an exception to that specific rule as contained in another treaty. The natural manner in which one would endeavour to avoid a conflict between the rules arising would be to avoid exercising the option i.e. it would appear that the presumption against conflict would compel the parties to avert opting to exercise the exception. By doing so, however, this would in effect tantamount to defeating the purpose of the exception which would consequently result in the intention and will of the parties to the agreements being curtailed or vitiated, thus affecting party autonomy of choice. Indeed, if the choice to invoke an exception to a rule can so easily be justifiably bypassed as the rationale to avoid a situation of conflict of laws arising, what would be the point of having an exception to a rule in the first place? Thus, it may be observed that in attempts to avoid a situation of a conflict of laws arising, the compelling and overriding need to achieve a presumption against conflict would result in the imperfect or non-ideal situation where the sovereignty or will of the parties to rely upon the exception would be sacrificed.
An interesting case which illustrates the manner in which the case of a respondent party had been defeated when an exception under certain rules had been invoked to justify the exercise of party sovereignty is seen in the dispute involving Canada and the U.S. in Canada – Certain Measures Concerning Periodicals (referred to in abbreviated form as Canada-Periodicals). In this case, the choice of rules under which the appellant had addressed the complaint had in fact enabled the appellant to secure victory in the matter where the respondent party had declined to invoke the exception under another rule which if it had done so, may have allowed it to prevail in the matter. To briefly narrate the facts and circumstances of the matter, it related to a dispute where decision was in favour of the U.S. when the matter was presented before a WTO Panel and the Appellate Body against Canada in a situation where Canada had violated the national treatment obligation by discriminating against split run periodicals originating from the former. The U.S. was seen to have initiated its complaint via the WTO Dispute Settlement Mechanism in view of the fact that the NAFTA rules caters for a cultural industries exemption between Canada and the U.S. and between Canada and Mexico which allowed and sanctioned the Canadian measure. If the situation had been such that the complaint had been initiated under the NAFTA instead, Canada would have had the right to invoke the exemption and in doing so, they could have prevailed in the matter. The facts were such however that Canada opted not to invoke the NAFTA exception in defence to the complaint by the U.S. and hence, consequently lost the case. The manner in which this matter had been decided, in accordance with the views of legal scholars such as Jenks would be in line with the rigid interpretation of conflict of laws wherein it would have been perceived that no situation of conflict of laws would have arisen as Canada had been at liberty to decline the exercise of the right accorded by virtue of the NAFTA rules and hence, adherence with both the NAFTA and GATT agreements simultaneously. However, one postulates that whilst this perception may be accepted from a certain strict perspective it nevertheless does not detract from the fact that exercise of the exception under a certain rule would have resulted in a situation of conflict of laws and that in this particular instance, the exercise of party autonomy by the defending party prevented such a situation from arising, to its ultimate detriment since it lost the case. In this sense, there is seen to have been a mere avoidance of encountering a conflict of laws situation by the adoption of a specific approach and hence avoiding the complications which could have arisen if there had been an actual conflict of laws situation to adjudicate upon. Under the circumstances, where a conflict of laws situation does arise, it would seem to be a challenging task to reach a solution that would be in the interest of both parties without some element of sacrifice or detriment involved.
CHAPTER 5: THE IMPLICATIONS OF CONFLICT OF LAWS WITHIN THE SCOPE OF THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (CISG) – AN OVERVIEW AND ANALYSIS
SOME INTRODUCTORY BACKGROUND ON THE CISG
The United Nations Convention on Contracts for the Sale of Goods (known as CISG in abbreviated form) or alternatively the Vienna Convention is a treaty created to unify international sales law with as many as currently 80 countries (as of September 2013) having been ratified as signatories to the Convention (a clearly significant portion of the world), hence, rendering the stated Convention as a highly successful instrument of uniform international sales law. The Convention was created by the United Nations Commission on International Trade Law (UNCITRAL) and it had been signed in Vienna in 1980. The Convention came into existence as a multilateral treaty on 1 January 1988. A unique and appealing feature of the CISG is the fact that it enables exporters to deter choice of law matters in the sense that the CISG exemplifies “accepted substantive rules upon which contracting parties, courts and arbitrators may rely.” The legislative success of the CISG is partly attributed to its liberal stance of according to Contracting States the choice or prerogative of being exempted from adherence to particular specified articles.
THE CONFLICT OF LAWS WITHIN THE CISG
It is rather ironic to note that although the very heart or purpose of the CISG was aimed at deterring elements of complications and ambiguity resulting from a conflict of laws, nevertheless and yet, these rules of conflict of laws are incumbent in the part played in relation to disputes and matters which the Convention applies to and is concerned with.
The conflict of laws becomes relevant for assessment and consideration within the CISG in instances where the CISG excludes a contract or issue from its ambit hence compelling the adjudicating party to embark upon customary conflicts of laws analysis to establish and identify the governing substantive law. These conflict of laws rules which may be referred to are seen to be accessible from the domestic as well as international arena. In the absence of a contract between the parties, it is customary for the courts to apply the law of the seller’s place of business, however, in a situation where a domestic purchaser initiates suit in a local tribunal against an overseas selling party, a tribunal may very well favour application of the domestic law against that of the foreign seller. To illustrate this point, an example is cited wherein a contract is seen to be devoid of an effective choice of law clause and a U.S. buyer were to initiate a suit in a U.S, court against a foreign seller for damages originating from a breach of implied warranty, a U.S. court may possibly find that the sales transaction bears acceptable connection to the forum and upon this basis apply the Uniform Commercial Code to matters not falling within the purview of the Convention. Further, there may be elements of for example, public policy involved which may have the effect of influencing a tribunal’s choice of law analysis in favour of the law of the forum which in this particular instance is that of the buyer’s law. Hence, this type of uncertainty in applying the conflict rules may have the effect of startling the foreign seller who may find that unfamiliar laws govern his rights and liabilities.
Even in a situation where a tribunal dictates that a contract and the issues concerned therein are within the substantive ambit of the CISG, the matter may still be nevertheless concerned with conflict of laws issues as explicitly evidenced by Article 7(2) which stipulates the following:
“questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law.”
Hence, from the statements above it is evident that although the aspirations of the Convention towards achieving a uniform body of autonomous applicable international sales law seems clearly apparent, nevertheless in realizing certain limitations in those aspirations, there has been suggestion of the manner in which the gaps in the Convention are to be addressed i.e. by reference to conflict of laws norms and rules. This has not been stated impliedly but expressly and thus giving clear recognition to the role, significance and importance of such rules to fill in the acknowledged gaps in the Convention and thus supplementing its role. It is thus implicit that a sort of compromise is achieved between the autonomous role of the Convention and the express sanction to resort to general principles and conflict of laws analysis where the gaps require adjudication.
Upon dissecting the wording of Article 7(2) of the Convention, it is apparent that the incumbent task entailed when a dispute is brought forth for adjudication requires a sequence of analysis in a particular order: At the outset, it is crucial to establish those matters falling squarely within the ambit or governance of the CISG but yet are not clearly settled within its jurisdiction; following this, where a matter of this nature exists, it becomes incumbent to embark upon ‘gap filling’ within the Convention itself by falling back upon “the general principles upon which it is based”; in the third instance, only in the event that an adjudicating party is unable to find such general principles, it would then be in order to embark upon an analysis of the conflict of laws to establish the right law in resolution of the matter.
From the above analysis, it would seem that the Convention falls short of full autonomy and in this sense its flexibility is also seen to be correspondingly curtailed in the sense of evolving and adapting to the ever increasing complex demands of trade and commerce in the international arena, thus depleting its rate of success. To illustrate some of the shortcomings of the CISG, one looks to the validity exception wherein the Convention is unconcerned with the issue of validity and hence compelling this matter to be addressed and adjudicated upon by domestic law, taking account of rules of conflict of laws, also known as private international law. This in turn results in non-standard treatment of matters pertaining to validity when addressed under domestic law conflicts and hence the ensuing uncertainty with regards to the expectations of international trading parties. The order in which the Convention ranks priority when gap filling with regards to the application of rules in spheres outside the ambit of the Convention, is to place greatest significance in the first place to domestic rules and only subsequently the contractual autonomy of the parties’. Hence, it may be observed that when adjudicating on the matter of validity, the greater importance placed upon domestic rules overrides the autonomy of the parties.
It would thus seem that owing to the roots of the CISG wherein it had been formed at a period during which cross-border trade and commerce were merely at the stage of infancy, it could not have been possible at that stage to envisage the rapid and complex development of international commerce at the point at which globalization has advanced it in the present day. It is perhaps safe and fair to state that the drafters had probably been confronted with a magnanimous task of having had the burden of formulating a uniform body of sales law for international purpose and acceptance by Member States and although for the most part aimed at autonomy from an international perspective, there would logically and necessarily have been intention on the part of the drafters to allow the adjudicators at a domestic front to adjudicate upon matters that would as a matters of necessity fall within the purview of Member State domestic autonomy, such matters that would fall under such manner of adjudication are unsurprisingly the potentially controversial parts of a contract that would be influenced by elements such as public policy, type of legal system etc. of a particular Member State and hence these matters would consequently entail analysis of conflict of laws for effective settlement. The result at times may seem surprising or even confounding but that is thus anticipated whenever an analysis of conflict of laws becomes incumbent.
CHAPTER 6: CONFLICT OF LAWS IMPLICATIONS IN RELATION TO TRANSFERRING RIGHTS OF SUIT UNDER BILLS OF LADING
A BRIEF INTRODUCTION ON THE NATURE AND FUNCTION OF BILLS OF LADING IN GENERAL
From the perspective of commerce on an international front i.e. international trade and transactions, the document which is referred to as a bill of lading is of prime importance and significance. Its importance is seen from a contractual perspective with regards to carriage or transportation of goods by sea and when viewed from the perspective of international trade pertaining to the sale of goods, it is seen to be relevant as documentation to be tendered for financing the sale transaction as well as to secure coverage for transportation insurance.
THE BILL OF LADING AS SEEN AS A MULTI-FUNCTION INSTRUMENT IN THE FACILITATION OF SEA TRADE
In the essence of simplicity, the bill of lading may be viewed or perceived as a document which is issued either by or on behalf of a party known as the Carrier of goods by sea voyage to the recipient or party with who a contract has been entered into for the shipment of goods. At the root of the contract lies the promise by the Carrier to transport goods to a destination agreed upon by the parties governed and subject to terms and conditions customarily stipulated upon the reverse side o the bill of lading where delivery would be premised upon the instructions conveyed by the party shipping the goods. For the delivery of the goods, the shipping party will pay to the Carrier the fare known as freight and this is also stipulated upon the bill of lading.
As traditionally acknowledged, the bill of lading is seen to perform three main or predominant functions, being as a receipt for the goods transported by the Carrier; a document evidencing title in the goods and also as a document which evidences or reflects the contract of carriage. Apart from these basic functions, with regards to its contractual nature, it forges a link with third parties (not privy to the contract) wherein it is seen to impose upon these non-contracting parties liabilities arising under the contract as well transferring rights to these non-contracting parties. It is worth noting that the matter pertaining to the conflict of laws implications relates to the aspect of the bill of lading pertaining to it being a documents of title and naturally with this identity, the issue of the transferring of the rights of suit warrants debate and discussion.
THE HISTORICAL ROOTS OF THE BILL OF LADING LEADING TO ITS RECOGNITION AS A DOCUMENT OF TITLE
The evolvement of the bill of lading as a document of title wherein it had not originally been regarded / treated / identified as such, arose as a result of the progress in the way in which international trade began to be conducted wherein traders stopped the practice of accompanying the voyage of goods at sea with their goods in tow which resulted in a situation wherein there arose potential wherein the goods were shipped prior to the identity of the ultimate recipient being established and this thus necessitated this instrument to possess some element of transferability. Transferability in this regard was seen to be in the form of goods being transferred either from the shipper to the shipper’s assignee or to a third party and the third party’s assignees. This element of transferability in all probability as logically speculated may have evolved as a result of alteration in trade practice wherein the identity of the ultimate consignee was unknown and hence the necessity for the bill of lading to also assume a function whereby it is use in an evidentiary capacity to signify entitlement to the goods by virtue of title in the same on account of the fact that the information as to the identity of the ultimate consignee is neither apparent upon the bill nor the ship’s register.
The modern function of the bill of lading as a document of tile is seen to have early links (as early as the eighteenth century) in the renowned case of Lickbarrow v. Mason. This case signified recognition by the courts of a practice of traders of a transfer of a bill of lading wherein the intention of the shipping party (which may also be liable to be changed from that stated upon the bill of lading) to ship goods to an ultimate consignee (undetermined at the point where the goods are shipped) wherein the instructions stipulated upon the bill of lading are to the following effect, ‘shipped by any person or persons to be delivered to order or assigns' enabled title / proprietary rights in the goods to pass to the ultimate consignee / end recipient of the goods. This proprietary function of the bill of lading as implicitly adjudicated upon in Lickbarrow v. Mason gradually evolved to become a part of English Law in recognition of the changing / modernizing face of international commerce, in order to cater to its efficiency in aims to achieve a logical result ultimately whilst preserving the rights of the parties to achieve justifiable outcomes.
THE BILL OF LADING OPERATING AS A DOCUMENT OF TITLE IN THE MODERN CONTEXT : ORDER AND STRAIGHT BILLS / NEGOTIABLE AND NON-NEGOTIABLE INSTRUMENTS DISTINGUISHED
There is an incumbent need for the bill of lading to symbolize the goods being transported as a result of the considerable length of sea voyage generally wherein during the course thereof, ownership in the cargo may change. The learned Lord Justice Bowen in the case of Sanders v. Maclean had succinctly described the integral function of the bill of lading when the goods are in transit during a voyage at sea when he stated the following:
A cargo at sea, while in the hands of the carrier, is necessarily incapable of physical delivery. During this period of transit and voyage, the bill of lading by the law merchant is universally recognized as its symbol; and the endorsement and delivery of the bill of lading operates as symbolic delivery of the cargo. Property in the goods passes by such indorsement and delivery of the bill of lading, whenever it is the intention of the parties that the property should pass, just as under similar circumstances the property would pass by an actual delivery of the goods……..It is a key which in the hands of a rightful owner is intended to unlock the door of a warehouse, floating or fixed, in which the goods may chance to be.
From the above perceptive declaration and description of the somewhat virtual function of the bill of lading, it is evident that the intention of the parties with regards to ownership and the passing of the property in the goods as evident by the act of indorsement upon the bill is crucial for certainty and hence, the apparent risks involved in breach of certain rules of compliance and procedure reflects the resulting detriment that may ensue particularly if the cargo is of substantial economic worth. On the issue of the function of a bill of lading as a document of title, the type of bill which functions as such is the one that assumes the form as an ‘order’ bill wherein it is consigned to a specifically identified and named Consignee or to a party to whom the shipper has instructed or ordered delivery or to a party to whom the shipper has assigned such delivery. This form of the bill of lading also identified as being a ‘negotiable’ instrument, the negotiable character or nature implicit in the fact that it is transferable is the central distinguishing feature as compared the other form of the bill of lading known as the ‘straight’ bill of lading or ‘non-negotiable’ instrument wherein it facilitates delivery of the goods to a specifically named consignee. The element of transferability which is the basis of the distinguishing feature between the two types of bills of lading relates to the passing of property or ownership in the goods and thus is seen to be of a proprietary nature.
The proprietary feature incumbent in relation to possession of the ‘negotiable’ type of instrument is evident in the following rights of the holder of the bill wherein the party in possession of such an instrument can make a claim upon the goods at the point when the goods are discharged from the conveying vessel; the party in physical possession of the bill of lading has the right to transfer title in the goods during the voyage or during transit by making an indorsement upon the bill and the instrument is also capable of being treated or utilized as security for a debt. Hence, from the perspective of international trade and transactions, the multi-function quality of a ‘negotiable’ type of bill of lading is seen to be inter-related and hence, in this manner, would facilitate the complex nature of cross border business wherein it is seen to prove useful to the import and export of goods.
THE NATURE OF THE TRANSACTION AS BEING AN IMPEDIMENT TO THE TRANSFERRING OF THE RIGHTS OF SUIT UNDER A NEGOTIABLE BILL OF LADING – THE PRIVITY OF CONTRACT ISSUE
The difficulty in the transferring of the rights of suit under a negotiable type of bill of lading is seen to arise as a result of the very nature and complexity of international sea trade. To clearly illustrate this complexity, in a customary international trade transaction involving the shipment of goods by sea carriage, there are usually three parties involved wherein the shipper (normally the party selling the goods) transacts with the Carrier for the carriage of such goods to a specific destination wherein the recipient of the goods, is a third party, the Consignee. Matters begin to become complicated when transactions are entered into whilst the gods are still being transported during the voyage at sea, this manner of trading being a normal feature of international trade as it has evolved into the present day, especially with regards to the shipment of bulk cargo such as corn, wheat, rice, flour etc.. This manner of conducting trade would facilitate the resale of goods several times prior to the goods finally reaching an ultimate point of destination (a sort of connected and continuously changing flow of trade) wherein the ultimate Consignee is unable to be ascertained and identified at the initial or inception point of contracting. The nature of transaction is seen to intensify in complexity wherein the ultimate Consignee is not the purchaser of the goods but is instead the party having financed the transaction for instance, a financial institution such as a bank wherein finance was seen to have been provided against a pledge or lien upon the cargo.
Hence, from the above description of the complex manner in which international trade is performed, the impediments arising as a result of the operation of the legal principle of privity of contract become clearly apparent. With reference to the chain of transaction as stated above, the application of the doctrine of privity of contract would effectively bar the Consignee from suing the shipper on the contract of carriage and likewise, the shipper would also not be able to sue the Consignee on the premise that the Consignee was not a party to the contract. Apart from the doctrine of privity, there are several reasons which account for the fact that the law has not evolved to circumvent the problems associated with transferring of rights of suit under the bills of lading. Perhaps one of those reasons is the fact of forseeability i.e. that it would be tough to consider non-proximate Consignees as being a class of third parties to whom the contracting parties (being the shipper and carrier) would have intended to accord benefits of a legal nature. Another reason is the rather curtailed rights of the Consignee with regards to redirection of the goods. Yet another reason is that bills of lading are customarily associated with the transferring of both rights and liabilities, however, naturally with regards to third party recipient of goods, the only concern is in relation to their rights.
Hence, as may be theorized from the discussion above, the operation of the doctrine of privity of contract was incumbent upon the manner in which the bill of lading operated as a negotiable instrument on account of its nature of being a contract of carriage of goods at sea. Yet as a result of the unique and complicated aspects of the manner of conducting international trade and transactions in modern times, the strict application of the doctrine of privity of contract would have resulted in detriment to a third party who although not a party to the contract for the carriage of goods by sea, was nevertheless a sort of beneficiary of the transaction who was quite vulnerable to consequences resulting from the acts of the Carrier or the servants of the Carrier wherein detriment such as damage or loss to the cargo could be sustained but yet, the Consignee would not be able to sue the shipper nor the carrier as the Consignee was not a party to the contract of carriage between the shipper and the Carrier. Hence, arose the need for cleverly drafted statutory intervention to circumnavigate this unfortunate and cumbersome state of affairs where international trade was concerned.