ABSTRACT

The purpose of Art 7(1) is to enable the court, in limited circumstances, to apply a mandatory rule which is neither one of the forum nor one of the applicable law, nor one imported into the contract by Arts 3, 5 or 6. Thus, where the applicable law is the law of country A but the facts have a close connection with country B, then a court may give effect to the mandatory rules of country B. The second limb of Art 7(1) requires that the court, in considering whether to give effect to the mandatory rules, shall pay regard to the nature, purpose and consequences of their application or non-application. Thus, to stand a chance of application, the rule must be part of a closely connected legal system and must not only be mandatory in nature but must be one which the system which contains it would apply in the particular case in hand. Even then, the forum has a discretion over whether or not to apply it and, in the exercise of that discretion, should take account of its nature and purpose. Although English courts do not have this power under the Convention, there is some indication at common law that a mandatory rule of the lex loci contractus could be applicable whatever the proper law of the contract165 but there are no unequivocal decisions in favour of the overriding effect of the lex loci contractus. There is more certain authority in favour of a rule of the lex loci solutionis having a say, but the cases turn on illegality by the lex loci and are equally, and more convincingly, explicable in terms of the application of English public policy.166 Presumably, it would have to be something on these lines, or a mandatory rule of one of the contracting parties’ ‘home’ countries to trigger the application of the provision.