Edited by Jürgen Basedow, Giesela Rühl, Franco Ferrari and Pedro de Miguel Asensio
Chapter C.1: Capacity and emancipation
In the absence of the international universal harmonization of private international law norms, traditional differences exist between the private international law relevant rules on capacity and emancipation of the various states.
I. Comparative perspectives
From a substantive law perspective, states usually establish the physiological moment for the acquisition of personality at the birth of individuals and for the acquisition of the full legal capacity at the age of majority. Yet, the age of majority is determined differently: at 18, 19, 20 or 21 years by certain countries or at the attainment of puberty by others. Indeed, states typically retain a lower age of legal capacity in cases of emancipation that is an institution of civil law which makes it possible to advance the age of majority and which may take place by virtue of a voluntary act of the parents or of an authority or by operation of law as a result of a →marriage (Alfred Von Overbeck, ‘Persons’ in Kurt Lipstein (ed), International Encyclopedia of Comparative Law, vol III (Mohr Siebeck 2011) 21–28; Andrea Heldrich and Anton Steiner, ‘Legal Personality’ in Aleck Chloros, Max Rheinstein and Mary Ann Glendon (eds), International Encyclopedia of Comparative Law, vol IV (Mohr Siebeck 2007); Andrea Heldrich and Anton Steiner, ‘Capacity’ in Aleck Chloros, Max Rheinstein and Mary Ann Glendon (eds), International Encyclopedia of Comparative Law, vol IV (Mohr Siebeck 2007); see Council of Europe, Lowering the Age of Full Legal Capacity: Resolution (72) 29 Adopted by the Committee of Ministers of the Council of Europe on 19 September 1972 and Explanatory Memorandum (Council of Europe 1972), recommending ‘Member States to lower the age of majority below 21 years and, if they deem it advisable, to fix that age at 18 years’).
From a private international law perspective, then, the law applicable to personality and to the legal capacity of natural persons regulates the moment of acquisition and loss of personality, the age of majority and emancipation. In the absence of international universal harmonization, while states typically apply the lex patriae to personality, traditional differences exist between states that refer to the lex patriae and those that establish instead the lex substantiae actus as the applicable law to legal capacity. Other traditional differences exist between countries that determine the lex patriae in the law of nationality and those that refer instead to the law of domicile, of residence, of a combination of domicile and residence, or of a specific religious community to which the interested person belongs. These differences may lead to the following difficulties.
When states determine the lex patriae as the applicable law to personality and legal capacity, a so-called →‘dépeçage’ and consequent complex problems of adaptation may arise. In fact, personality and capacity are made subject to laws different from those applicable to the substance of the cases (H Patrick Glenn, La capacité de la personne en droit international privé francais et anglais (Dalloz 1975); Volker Lipp, ‘Verkehrsschutz und Geschäftsfähigkeit im IPR’ (1999) 63 RabelsZ 109; Benedetta Ubertazzi, La capacità delle pesone fisiche nel diritto internazionale privato (CEDAM 2006)).
To avoid these difficulties certain states establish a category of so-called special conditions for personality and capacity for which they derogate to the lex patriae in favour of the lex substantiae actus, by rules such as art 20(2) of the Italian Private International Law Act (Riforma del Sistema italiano di diritto internazionale private, Act No 218 of 31 May 1995, henceforth Italian PILA), according to which ‘the special conditions for personality provided for by the law applicable to a specific case are governed by that same law’ and art 23(1) part 2 of the Italian PILA, according to which ‘where the law applicable to a specific case provides for special conditions regarding the legal capacity, these are governed by the same law’. The category of special conditions for personality and capacity shall include cases of personality and legal capacity to be determined in bilateral relationships, rather than with regard to a single person autonomously considered. Thus, in the category of special conditions for personality and capacity may follow the capacity of a person to inherit (not in general, but rather) from a specific de cuius, or to be adopted (not in general, but rather) by a specific individual (Benedetta Ubertazzi, La capacità delle pesone fisiche nel diritto internazionale privato (CEDAM 2006)).
When states determine the lex patriae in the national law of the interested person, a so-called ‘conflit mobile’ may arise. In fact, for instance with regard to emancipation, this may originate in a marriage, which may result in a spouse acquiring the nationality of the other spouses, whilst simultaneously losing his/her citizenship, and therefore in a change of nationality. Thus, there might be cases where a minor is considered emancipated by the law of his/her new nationality acquired after marriage, whilst the same minor is regarded as non-legally capable by the law of the previous citizenship (or vice versa).
In these cases, the tempus regit actum principle applies, since it is the general rule solving any conflit mobile originating in the application of the national law of natural persons. Thus, the issue of whether the minor is emancipated shall be regulated by the law of the new nationality; this law shall determine the legal capacity concerning acts carried out after the marriage; whilst the legal capacity regarding acts accomplished before the marriage shall be regulated by the national law of the interested spouse at the time of performance of these acts.
IV. Business transactions
When states determine the law applicable to legal capacity of natural persons in the lex patriae, difficulties in business transactions may arise.
1. Validity rules
As it is apparent from the just mentioned art 13 of the Rome I Regulation (→Rome Convention and Rome I Regulation (contractual obligations)), the rules at stake favour not only legal certainty and efficiency of international transactions, but also the validity of international agreements. Therefore, the same rules are referred to as validity rules. Yet, validity rules are nowadays insufficient. In fact, they require parties to be present at the same location while concluding a contract, whereas today transnational business transactions are carried out through the internet or other so-called ubiquity means between persons who are not in the same country.
in a contract concluded between persons who are in the same country, a natural person who would have capacity under the law of that country may invoke his incapacity resulting from the law of another country, only if the other party to the contract was aware of that incapacity at the time of the conclusion of the contract or was not aware thereof as a result of negligence.
2. Principle of non-discrimination
Second, when the →connecting factor of →nationality is applied to legal capacity, it leads typically to discriminations by reason of nationality. Yet, under EU law discriminations are to be considered reasonable when objectively justified. The application of the connecting factor of nationality to the capacity that falls under →personal status seems to be objectively justified, above all, by the need to apply a uniform rule to the personal status of the same person. However, the application of the connecting factor of nationality to the capacity regarding international business transactions does not seem objectively justifiable for the following reasons.
p. 253A first group of arguments consists of all the opportunity reasons that support applying the lex loci to the parties’ capacity to contract when they are both at the same location under the aforementioned validity rules. A second group of arguments consists of the following opportunity reasons:
The provisions regarding negotiating capacity in international transactions that submit it to the lex substantiae actus allow for a uniform determination of the same law applicable to different aspects of the same facts.
The same provisions spare any recourse to the method of adaptation, which is difficult to apply but necessary where the capacity to act is made subject to a law different from the one applicable to the act itself.
In cases where the parties are allowed to choose the applicable law, submitting the capacity considered here to the lex substantiae actus also allows that the capacity regarding the principal transaction and the capacity necessary for the →choice of law are subject to the chosen law. Then, this approach leaves the maximum space possible to private autonomy.
Submitting the here examined capacity to the lex substantiae actus overcomes the traditional difference between states that apply the connecting factor of nationality to personal status (and thus also to capacity) and those that instead use the connecting factor of domicile or residence (→Domicile, habitual residence and establishment). As a result, international harmonization is increased and the way is paved for the introduction of uniform international private international law rules.
The private international law systems of the civil law countries usually subject the negotiating capacity to the lex personae, while common law countries refer to the lex contractus or the lex substantiae actus and generally apply the principal of favor actus (Validity Rule). The common law countries can therefore preserve the agreement or act when the lex contractus or the lex substantiae actus determine that the contractor lacks capacity, whereas the law of the person’s domicile qualifies the person as having capacity. The different orientations of civil and common law can, in the abstract, lead to the application of two different laws to the capacity to negotiate. This can create a situation where one of the laws determines that the person lacks capacity, while the other law determines that the person has capacity; consequently, the agreement or the act that is void in one state is valid in the other. This situation is unsatisfactory. Thus, a uniformly applicable law governing the capacity a party needs to conclude an agreement or to perform an act must be determined. This is especially true when there is a uniform convention that designates a certain law for a special matter and even allows a choice of the applicable law. In such a case, subjecting the capacity to conclude an agreement or to perform an act to the lex substantiae actus seems necessary, as it would oblige all contracting states to apply the same rules to both the act and the capacity to conclude and perform that act, or allow the parties to choose the law that would regulate it. This would maximize the unifying force of the convention itself.
Where the private international law rule applies the lex substantiae actus to maximize the protection provided to the weaker party, the corresponding rules on negotiating capacity in business transactions also subject the party’s capacity to the law that provides the weaker party with the most protection.
Application of national law creates obvious inconveniences with regard to long-distance contracts between persons in different states when one contracting party does not have all the necessary time to trace back the national law applicable to the other contracting party’s capacity to act. It also creates problems in internet contracts, where it is impossible to even identify the nationality of the other contracting party, let alone to trace back the national law applicable to his capacity to act. These inconveniences are countered by a reference to the lex contractus in the rules on negotiating capacity and, a fortiori, when the lex contractus is freely chosen by the parties.
In the hypothesis considered at (vii), the parties have the burden to reasonably inform themselves and to know the different laws applicable to the different elements of the act. This is of course a minor burden when all the elements of the contract are subject to the same legal p. 254provisions. On the other hand, the burden becomes major when the different elements of the contract or act are subject to different laws, which, for example, happens when the law that applies to capacity is different from the law that applies to the substance. Subjecting the capacity to conclude a contract or to perform an act to the lex substantiae actus seems useful from this point of view, as it is successful in helping the parties meet their burdens.
Transnational business transactions are generally governed by the law chosen by the parties. The aforementioned validity rules derogate from the lex substantiae actus or chosen law in favour of the lex loci, but their application requires one of the contracting parties to be unaware of the other party’s capacity. Nevertheless, the party that chooses a law still has the burden of reasonably informing itself beforehand about the law’s content. Consequently, it is possible that one party’s poor knowledge of the (provisions on capacity provided by) foreign law cannot be qualified as a ‘lack of awareness’. Therefore, the rule submitting the negotiating capacity in transnational business transactions to the law of the contractual relationship can rarely be derogated from on the basis of the national and international private international law rules under discussion. Applying the lex substantiae actus to negotiating capacity is therefore the general approach. From this point of view, submitting the capacity to conclude a contract or to perform an act to the lex substantiae actus seems useful, as it (1) broadens the scope of application of the general rule (regarding the submission of negotiating capacity to the lex substantiae actus) and (2) reduces the scope of application of the exception (regarding the submission of negotiating capacity to the lex loci). Accordingly, applying the lex substantiae actus provides legal certainty.
EU law promotes the predictability of jurisdiction. Prorogation clauses allow the parties to choose the competent court. Subjecting the capacity to choose the competent court to the law applicable to the jurisdiction agreement or to the principal agreement in which the jurisdiction clause is included, and thus to a law which is predictable for the parties, serves two very connected functions. First, it allows the parties to pre-determine the validity of their jurisdiction agreement. Second, and following the same line of thought, it allows the parties to pre-determine the jurisdiction of the court seized. Subjecting the necessary capacity to conclude a jurisdiction agreement to the lex substantiae actus is necessary, as it helps to ensure the predictability of the competent court and the ‘effet utile’ of EU law.
Finally, applying the lex substantiae actus to determine capacity with respect to transnational business transactions allows the above-mentioned objectives to be reached, at least in part. Furthermore, such an approach is very helpful and conforms to the development of private international law: hence, all the opportunity reasons discussed correspond to a progressive line of development in national and international private international law rules that tends toward the abandonment of the traditional private international law technique of dépeçage.
So far, the first group of arguments showing that the discriminations arising from the connecting factor of nationality cannot be objectively justified. A second group of arguments consists of all the other opportunity reasons that support applying the lex loci to the parties’ capacity to contract when they are both at the same location. The lex loci has been used to make this determination since the French cassation court’s Lizardi judgment in 1861. This same approach was later adopted by the already mentioned national (for instance arts 23(2) and 23(3) Italian PILA) and international (art 11 Rome Convention (Rome Convention on the law applicable to contractual obligations (consolidated version),  OJ C 27/34), art 13 Rome I Regulation) private international law rules. The Lizardi rule protects the local trader that has no knowledge of either the other party’s foreign nationality or, generally, the foreign law governing that party’s capacity to act. Overall, the Lizardi rule favours the validity of international agreements, legal certainty and, last but not least, the efficiency of international transactions.
Both of the above groups of arguments consider the aforementioned discriminations to be unreasonable to the extent that they arise from subjective connecting factors that lead to inappropriate and unreasonable discrimination and which prejudice the interests of both the public and individual persons. The same arguments p. 255also particularly relate to the balancing of the relevant interests involved. The argument that arises from this balancing is highly significant, as it is well established that when interpreting rules which are placed at a constitutional level (which also encompass the EU principle of non-discrimination outlined above), the jurisprudence of the higher courts typically try to balance the relevant interests.
V. Public policy, mandatory norms and reciprocity
The law applicable to personality and legal capacity shall be derogated by →public policy exceptions and by mandatory norms when it considers individuals incapable of enjoying certain fundamental human rights (→Human rights and private international law). Furthermore, before national judicial authorities, foreigners are considered capable of claiming civil rights only if in their countries of origin nationals of the forum state may claim rights similar or corresponding to the ones claimed by the foreigners in the forum state. This condition is called →reciprocity and shall not concern either foreigners regularly resident in the forum state and benefitting from non-discrimination treatments, or fundamental human rights, which shall be claimed by any foreigner in the forum state (Benedetta Ubertazzi, La capacità delle pesone fisiche nel diritto internazionale privato (CEDAM 2006); Bruno Nascimbene, ‘La capacità dello straniero: diritti fondamentali e condizione di reciprocità’ (2011) Riv.Dir.Int’le Priv. & Proc. 307).
Betrand Ancel and Ives Lequette, Les grands arrêts de la jurisprudence français de droit international privé (Dalloz 2001) 41;
H Patrick Glenn, La capacité de la personne en droit international privé francais et anglais (Dalloz 1975);
Andrea Heldrich and Anton Steiner, ‘Capacity’ in Aleck Chloros, Max Rheinstein and Mary Ann Glendon (eds), International Encyclopedia of Comparative Law, vol IV (Mohr Siebeck 2007);
Andrea Heldrich and Anton Steiner, ‘Legal Personality’ in Aleck Chloros, Max Rheinstein and Mary Ann Glendon (eds), International Encyclopedia of Comparative Law, vol IV (Mohr Siebeck 2007);
Volker Lipp, ‘Verkehrsschutz und Geschäftsfähigkeit im IPR’ (1999) 63 RabelsZ 109;
Bruno Nascimbene, ‘La capacità dello straniero: diritti fondamentali e condizione di reciprocità’ (2011) Riv.Dir.Int’le Priv. & Proc. 307;
Giulia Rossolillo, ‘Capacità [dir. int. priv.]’ (2013) Diritto on line. Enc. Treccani;
Benedetta Ubertazzi, La capacità delle pesone fisiche nel diritto internazionale privato (CEDAM 2006);
Benedetta Ubertazzi, ‘The Inapplicability of the Connecting Factor of Nationality to the Negotiating Capacity in International Commerce’ (2008) YbPIL 711;
Alfred von Overbeck, ‘Persons’ in Kurt Lipstein (ed), International Encyclopedia of Comparative Law, vol III (Mohr Siebeck 2011) 21.