Encyclopedia of Private International Law
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Encyclopedia of Private International Law

Edited by Jürgen Basedow, Giesela Rühl, Franco Ferrari and Pedro de Miguel Asensio

The role and character of Private International Law has changed tremendously over the past decades. With the steady increase of global and regional inter-connectedness the practical significance of the discipline has grown. Equally, so has the number of legislative activities on the national, international and, most importantly, the European level. With a world-class editor team, 500 content items and authorship from almost 200 of the world’s foremost scholars, the Encyclopedia of Private International Law is the definitive reference work in the field. 57 different countries are represented by authors who shed light on the current state of Private International Law around the globe, providing unique insights into the discipline and how it is affected by globalization and increased regional integration. The Encyclopedia consists of three inter-linked pillars, enhanced by sophisticated search and cross-linking functionality. The first pillar consists of A-Z coverage of the scope and substance of Private International Law in the form of 247 entries. The second pillar comprises detailed overviews of the Private International Law regimes of 80 countries. The third pillar presents valuable, and often unique, English language translations of the national codifications and Private International Law provisions of those countries. This invaluable combination represents a powerful research tool and an indispensable reference resource.
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Chapter P.12: Proper law (doctrine)

Alexander Layton and Albert Dinelli

I. Introduction

The term ‘proper law’ has been, and to a reduced extent still is, used in English private international law to refer to the system of law which, as a result of the application of choice-​of-​law rules, is the law which applies to a particular issue or to a particular relationship (→United Kingdom). It was –​ and is –​ frequently used synonymously with ‘governing law’ or, more recently, with ‘applicable law’.

The term ‘proper law’ was most widely used in England to denote the law applicable to a contract; its origins in this context can be traced to the writings of John Westlake (1828–​1913) in the 19th century, to whom the term is attributed (Lord Collins of Mapesbury and others (eds), Dicey, Morris & Collins on the Conflict of Laws, vol 2 (15th edn, Sweet & Maxwell 2012) 1777 para 32-​006).

The meaning of what was described by the term, ‘proper law’, developed, however, over time. The term itself first appeared in an English case in 1922 to explain the choice-​of-​law rule for contract, where the Privy Council cited Dicey’s Conflict of Laws (3rd edn, 1922), in which Dicey had explained that when a contract was made in one country and was to be performed in another, ‘the proper law of the contract, especially as to the mode of performance, may be presumed to be the law of the country where the performance is to take place (lex loci solutionis)’ (Benaim and Co v Debono [1924] AC 514, 520).

That statement of law was later criticized. Indeed, in 1937, again invoking the term ‘proper law’ as the law which the court is to apply to determine the obligations under a contract, the Privy Council explained that ‘English law in deciding these matters has refused to treat as conclusive, rigid or arbitrary, criteria such as the lex loci contractus or lex loci solutionis, p. 1423and has treated the matter as depending on the intention of the parties to be ascertained in each case on a consideration of the terms of the contract, the situation of the parties, and generally on all the surrounding factors’ (Mont Albert Borough Council v Australasian Temperance and General Mutual Life Assurance Society Limited [1938] AC 224, 240).

This reflected a reluctance on the part of English judges to adopt a clear but rigid choice-​of-​law rule for contract and a preference for a rule reflecting →party autonomy. But this was not new. Indeed, as early as 1760, in Robinson v Bland (1760) 97 ER 717, 718; 2 Burr 1077, 1078, Lord Mansfield rejected the previous approach of applying the law of the place of contracting (already by then, in his view, outdated), explaining the ‘law of the place can never be the rule, where the transaction is entered into with an express view to the law of another country, as the rule by which it is to be governed’. As Dicey, Morris and Collins explain, the trend towards recognition of party autonomy as the basis for →choice of law reflected the fact that, increasingly, goods were being bought and sold by people in different countries and, therefore, the place of contracting could be fortuitous, depending on the location of the offeror and offeree, and, indeed, might bear no relationship to the →place of performance (Lord Collins of Mapesbury and others (eds), Dicey, Morris & Collins on the Conflict of Laws, vol 2 (15th edn, Sweet & Maxwell 2012) 1777 para 32-​004). In 1950, the Privy Council, considering what the proper law of a contract was, had said, ‘[o]‌n the assumption that express reference is made to none, the question becomes a matter of implication to be derived from all of the circumstances of the transaction’ (Bonython v Commonwealth of Australia [1951] AC 201, 221). This description of the approach of the common law is consistent with the rule which later came to be refined as the common law choice of rule in England: see, especially, Amin Rasheed Shipping Corporation v Kuwait Insurance Co [1984] AC 50.

More recently, the introduction of the Rome Convention (Rome Convention on the law applicable to contractual obligations (consolidated version), [1998] OJ C 27/​34) and its enactment into English law saw the rise of the term ‘applicable law’ which, at least in relation to contract, is now the prevalent term. (As to an explanation of the ‘applicable law’, and the differences between it and the ‘proper law’, see Anthony Jaffey ‘The English Proper Law Doctrine and the EEC Convention’ (1984) 33 ICLQ 531. Some such differences are explained below.)

The term, ‘proper law’, however, remains used in some circumstances, especially in fields outside the scope of the European instruments of private international law. For a time it was also suggested that there was a ‘proper law’ of tort, and it is also used in other contexts, some of which are mentioned here.

It is perhaps unsurprising, in these circumstances, that there is no definition of the term that may be applied generally, let alone a coherent, unified theory of ‘proper law’ and an entry on the topic runs the risk of being an exploration of choice of law generally, particularly in relation to contract. It is nevertheless possible to identify the use of the term in various areas of private international law.

II. Contract

The common law of England applies to determine the ‘proper law’ of a contract entered into before 1 April 1991. Since then, either the Rome Convention or the Rome I Regulation (Regulation (EC) No 593/​2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I), [2008] OJ L 177/​6) applies (→Rome Convention and Rome I Regulation (contractual obligations)). The former applies to contracts entered into on or after 1 April 1991 and before 17 December 2009; the latter applies to contracts entered into on or after 17 December 2009. As will be seen, there are methodological differences between the inquiry made under the Rome I Regulation (and before it, the Rome Convention) as to the ‘applicable law’ of a contract and the common law’s inquiry as to the proper law. While the ‘proper law’ asks, in the absence of choice, the identity of ‘the system of law by reference to which the contract was made or that with which the transaction has its closest and most real connection (Bonython v Commonwealth of Australia [1951] AC 201, 219), the ‘applicable law’ in those circumstances is determined in accordance with a scheme based on primary principles; exceptions to those principles and rules of displacement for circumstances in which the principles and exceptions do not, or should not, apply. Hence, for example, in p. 1424the absence of choice by the parties, a contract for the sale of goods (→Sale contracts and sale of goods) is governed in principle by the law of the country where the seller has his or her habitual residence (art 4(1)(a) Rome I Regulation) and a contract relating to a right in rem in immovable property is governed by the law of the country where the country is situated (art 4(1)(c) Rome I Regulation). But as an exception to those principles, or if they point one to more than one country, the contract is to be governed by the law of the country of the habitual residence of the party required to give ‘characteristic performance’ (a term previously unknown to the English ‘proper law’ approach) (art 4(2) Rome I Regulation). But a rule of displacement may then apply, in favour of the law of a country which is manifestly more closely connected with the contract (art 4(3) Rome I Regulation), or a default rule which if none of the otherwise applicable rules apply, selects the law of the country with which the contract is most closely connected (art 4(4) Rome I Regulation). Hence the rule of last resort under the Rome Regulation is practically the same as the English common law rule; but the application of the structured rules in the Rome I Regulation is likely in most cases to produce the same answer as the proper law rule. The differences in outcome, rather than methodology, are likely to be exceptions, in practice.

The English common law, which asks what is the proper law of the contract, continues to apply in circumstances excluded from the Rome I Regulation, most significantly in relation to jurisdiction and arbitration agreements. Consequently the interpretation of (for example) jurisdiction or arbitration agreements is still subject to the common law rules, subject, in the case of jurisdiction agreements, to art 25 of the Brussels I Regulation (recast) (Regulation (EU) No 1215/​2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast), [2012] OJ L 351/​1; →Brussels I (Convention and Regulation)).

The concept of the proper law of the contract also applies in other common law jurisdictions such as →Canada and →Australia. Indeed, the English proper law approach derives, at least in part, from Canadian and Australian cases at a time when appeals from those jurisdictions still lay to the Privy Council: see, respectively, Vita Food Products Inc v Unus Shipping Co [1939] AC 277 and Bonython v Commonwealth of Australia [1951] AC 201. In those jurisdictions, the proper law continues to be applied in the manner that can be traced to its English heritage, unaffected by subsequent European developments (Akai Pty Ltd v The People’s Insurance Co (1996) 188 CLR 418, 440).

At common law, the ‘proper law’ of a contract was, or is, the law that governs the interpretation and validity of the contract, the mode of performance and the consequences of breaches of the contract (Compagnie Tunisienne de Navigation SA v Compagnie d’Armement Maritime SA [1971] AC 572, 603; Amin Rasheed Shipping Corporation v Kuwait Insurance [1984] AC 50, 60). In the 11th edition of Dicey and Morris on the Conflict of Laws, vol 2 ((11th edn, Sweet & Maxwell 1987) 1161) it was described as follows: the term ‘proper law of a contract’ means the system of law by which the parties intended the contract to be governed, or, where their intention is neither expressed nor to be inferred from the circumstances, the system of law with which the transaction has its closest and most real connection.

The ‘proper law’ is discerned by asking, successively, whether there is an express →choice of law, whether there is an implied choice, and, in the absence of either of the two previous alternatives, to consider the law with which the contract has its closest and most real connection. In practice, the latter two questions are often elided, largely because the same or similar factors are considered in applying both questions, but they remain conceptually distinct. Thus, ‘[i]‌f it is apparent from the terms of the contract itself that the parties intended it to be interpreted by reference to a particular system of law, their intention will prevail and the latter question as to the system of law with which, in the view of the court, the transaction to which the contract relates would, but for such intention of the parties, have had the closest and most real connection, does not arise’ (see Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50, 61). The focus is, and has been, on the autonomy of persons to determine the law applicable to their own dealings, subject only to mandatory laws of the forum, the public p. 1425policy of the forum and other such exceptions (→Overriding mandatory provisions; →Public policy (ordre public)). In this respect, the proper law rules and the rules of the Rome I Regulation (art 3(1)) are similar, and perhaps even identical.

The most common, and straightforward, manner in which the parties may make the proper law of the contract clear is to provide, as a clause in their written agreement, that they agree that a particular system of law is to apply to the interpretation of, and to any dispute in relation to, the contract (→Choice of law; →Party autonomy). Most obviously, a simple statement that the ‘contract shall be governed by X law’ will suffice.

If there is no express choice, the court will look to see whether there is an implied choice of law. Various factors have been identified in the English judicial authorities as demonstrating such a choice. A choice of the jurisdiction of a particular country, or arbitration in that country, often, but not always, brings with it an implied choice to apply the law of that country. But the other terms and the nature of the contract, as well as the general circumstances of the case, may also inform whether there is an implied choice.

The proper law’s search for an express or implied choice, although traditionally seen as two conceptually distinct phases in the contractual choice-​of-​law methodology has been described as being ‘but species of the one genus, that is concerned with giving effect to the intention of the parties’ (Akai Pty Ltd v The People’s Insurance Co (1996) 188 CLR 418, 440).

In the absence of a choice (whether express or implied), in order to find the ‘proper law’, the court asks which system of law has the closest and most real connection with the contract. That law may be discerned by reference to, for example, where the contract was made, the →nationality or residence of the contracting parties and the →place of performance of the contract, with such factors being given the degree of weight which is appropriate in all the circumstances.

As noted above, where there was no express choice of law, the determination of the ‘proper law’ by reference to either the implied choice of the parties or the ‘closest and most real connection’ often requires regard to be had to the same matters. The difference was said to be that, in relation to the former, the relevant inquiry is what the imputed intention of the parties was (namely, what would they have said as to the choice of law if they had been asked at the time) while, in relation to the latter, one objectively (and irrespective of the parties’ intention) decides which system of law has the closest and most real connection (see The Komninos S [1991] 1 Lloyd’s Rep 370, 374). The contrast is between contractual interpretation and application of a rule of law.

But what is applied by an English court when it applies the ‘proper law’? It means the law so chosen or that with which the contract has its closest and most real connection, but excluding the choice-​of-​law rules of that country’s law. That is, the parties’ legal rights in respect of their contractual relationship are to be determined by the ‘proper law’, namely the rules of domestic law of the relevant country, excluding any →renvoi.

III. Tort

Since 1 January 2009 the choice-​of-​law rule for tort in England, as in the rest of the European Union, is determined by the rules in the →Rome II Regulation (non-​contractual obligations) (Regulation (EC) No 864/​2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-​contractual obligations (Rome II), [2007] OJ L 199/​40), except for a limited range of matters which fall outside its scope as defined by art 1, notably defamation. As explained elsewhere, this involves the application of the rules found in art 4 of that Regulation. Put simply, the general rule is that the law applicable to the tort or delict is the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur. There are exceptions: first, if the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country, the law of that country applies; and second, where it is clear from all the circumstances of the case that the tort is manifestly more closely connected with a country other than that which the general rule identifies, or which applies by application of the preceding exception, the law of that country applies.

But (again) it has not always been so. Before the Rome II Regulation came into effect, the p. 1426choice-​of-​law rules in English law for most torts were those laid down by the Private International Law (Miscellaneous Provisions) Act 1995 (c 42), which came into effect on 1 May 1996 and which largely follow the recommendations of the Law Commission (Consultative Memorandum No 62, 1984). This Act provided for the lex loci delicti as a general rule, but contained a displacement rule which weighed conflicting factors if they made it ‘substantially more appropriate’ for another system of law to apply to any given issue (→United Kingdom). This law, which was itself subject to exceptions and qualifications, notably the exclusion of defamation, replaced the previous common law rule, although the latter retains a vestigial applicability for cases outside the subject matter scope of both the 1996 Act and the Rome II Regulation. The common law rule also continues to apply in various common law countries which follow English law (for example, in Bermuda), although its acceptance in major common law jurisdictions is much more limited than in the case of the proper law of contract.

It is in the context of the common law choice-​of-​law rules for tort, that there had been reference to a ‘proper law’ of tort. Indeed, John Morris, one of the most famous writers on private international law in England, advocated the adoption of such a ‘proper law of the tort’. He wrote that the proper law of tort would enable a court to choose ‘the law which, on policy grounds, seems to have the most significant connection with the chain of acts and consequences in the particular situation’ before it (John Morris, ‘The Proper Law of a Tort’ (1951) 64 Harv.L.Rev. 881, 888). It underlies the approach of some of the United States courts on this question (eg, Wilcox v Wilcox, 133 N.W.2d 408 (Wis. 1965); Freund v Spencer, 260 N.Y.S.2d 149 (N.Y. Sup. Ct. 1965)).

But this approach was never embraced by the English courts. Indeed, by the time the 1996 Act was passed, the so-​called rule of ‘double actionability’ had been developed as the relevant English rule: the alleged wrong must have been actionable if committed in England and must not have been justified by the law of the place where it was done (Phillips v Eyre (1870) LR 6 QB 1). To some extent this involved a compromise between the two competing possible rules, namely the →lex fori (law of the forum) and the lex loci delicti (the law of the place of the tort). The double actionability rule was approved in 1970 by the House of Lords in Boys v Chaplin [1971] AC 356, but with an exception such that ‘a particular issue between the parties may be governed by the law of the country which, with respect to that issue, has the most significant relationship with the occurrence and the parties’. In that exception, one finds aspects of Morris’ theory of the ‘proper law of tort’. That is, in determining whether an issue may be governed by another law, one is to have regard to whether an issue has more significant connections with another law.

In Boys v Chaplin, it had been argued that the English common law should adopt the ‘proper law of the tort’. The existence of a ‘proper law of contract’ was called in aid, as was various United States authority. But it was rejected by the House of Lords. Indeed, the United States authorities were said to have led to uncertain results and the analogy of the ‘proper law of the contract’ was not useful since the parties to a contract usually have the opportunity to choose the law beforehand. Lord Donovan went so far as to say that reference to public policy, as was encouraged by the ‘proper law of the tort’ was ‘to mount an “unruly horse”’.

Unlike its contractual brother, the tortious ‘proper law’ rule never assumed support in the English courts, save that its underlying rationale could be seen in the so-​called flexible exception to the double actionability rule.

IV. Unjust enrichment

At common law, before the Rome II Regulation, the obligation to restore the benefit of an enrichment obtained at another person’s expense was governed by the ‘proper law’ of the obligation (see generally Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32; Dimskal Shipping Co SA v International Transport Workers Federation [1992] 2 AC 152) (→United Kingdom). The proper law of the obligation was discerned by asking, first, whether the obligation arose in connection with a contract. If so, the proper law was the law applicable to the contract. If the obligation arose in connection with a transaction concerning land, its proper law was the law of the country where that land was situated (namely, the lex situs). If it arose in other circumstances, the p. 1427proper law was the law of the country where the enrichment occurred.

V. Marriage

A further area in which one sees reference to the ‘proper law’ is in the common law rule applicable to the validity of a →marriage contract or settlement. The Rome I Regulation specifically excludes from its operation rights in property (→Property and proprietary rights) arising out of a matrimonial relationship. It falls then to the common law. In principle, there is no reason why the ‘proper law’ of the (marriage) contract should not be determined by the common law rules identified above in relation to contract, which applied before the advent of the Rome Convention and, later, the Rome I Regulation, and which continue to apply where the Regulation has no operation. But the subject matter of a marriage contract is obviously different from the generality of contracts which are within the scope of the Rome I Regulation. So, while the common law will still look to whether there is an express or implied choice of law, in the absence of a reason to the contrary, the ‘proper law’ of a marriage contract or settlement is the law of the matrimonial domicile (see, eg, Duke of Marlborough v Attorney-​General [1945] Ch 78).

VI. Trusts

Until the advent of the Hague Trusts Convention (Hague Convention of 1 July 1985 on the Law Applicable to Trusts and on their Recognition, 1664 UNTS 311) (→Hague Conference on Private International Law; →Trust), which was given the force of law in England from 1 August 1987 by the Recognition of Trusts Act 1987 (c 14), a trust was also said to have a ‘proper law’, being the law that applies to determine the rights and obligations of the trustees and beneficiaries of the trust (→United Kingdom). Unlike a contract, which is an inter parties agreement, a trust created by settlement is not the subject of an agreement from which the ‘proper law’ is to determined. But the principle as to the determination of the ‘proper law’ of the trust is relevantly identical. It was determined by asking whether the settlor had expressly or impliedly chosen the system of law which was to govern the settlement, and if not by finding the law with which the trust has the closest or most real connection. The Hague Trusts Convention, by arts 6 and 7, applies the same test, albeit referring, as with the European instruments, to the ‘applicable law’.

VII. Other instances of the ‘proper law’

The use of the term ‘proper law’ can also been seen in suggestions for law reform in diverse areas of →choice of law. The editors of Dicey, Morris & Collins suggest, for example, that, at common law, a possible rule for determining the uniformly applicable rule for the assignment of intangible things could be achieved by a ‘proper law of the underlying obligation’ (Lord Collins of Mapesbury and others (eds), Dicey, Morris & Collins on the Conflict of Laws, vol 2 (15th edn, Sweet & Maxwell 2012) 1357 para 24–​053). That is, rather than focussing on the choice-​of-​law rules for contract, or for those governing the right to which an intangible relates, the authors suggest the possibility of formulating a ‘proper law’ by reference to which a dominant role is ascribed to one such law, which then becomes the proper law applicable to the underlying obligation.

Further, in some cases, one finds reference to the ‘proper law’ as being the equivalent of the lex causae, namely the law which applies to the particular cause of action, or particular issue. For example, in Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association [1966] 1 WLR 287, 330, Diplock LJ explained that ‘[t]‌he proper law governing the transfer of corporeal movable property is the lex situs’. When used in this context, it is intended to be a reference to the applicable law; it does not, in contradistinction to the common law choice-​of-​law rule for contract, seek to identify rules by which to determine the applicable law.

VIII. Conclusion

The term ‘proper law’ is encountered in different contexts in private international law. Its prevalence in English law is declining now that many areas are governed by European instruments where the term is not found. While it is not possible to find an overarching theme in the use of the term, its use, particularly in the context of common law choice-​of-​law rules, remains an important one.

p. 1428Literature

  • Lawrence Collins and others (eds), Dicey and Morris on the Conflict of Laws, vol 2 (11th edn, Sweet & Maxwell 1987); Albert Venn Dicey and Arthur Barriedale Keith, Conflict of Laws (3rd edn, Sweet & Maxwell 1922);

  • Anthony Jaffey ‘The English Proper Law Doctrine and the EEC Convention’ (1984) 33 ICLQ 531;

  • John Morris, ‘The Proper Law of Tort’ (1951) 64 Harv.L.Rev. 880.