Lex Portus (Nov 2022)
Primary Connecting Factors Considered by South African Courts to Determine the Applicable Law of International Contracts on the Sale of Goods
Abstract
Issues on choice of law are sometimes very complex, and the resulting outcome may be determinative of most litigations. This is especially true where the litigation concerns cross-border transactions involving states with diverse laws and di erent legal traditions. Thus, it is important for parties to be able to accurately predict the applicable law of their international sales contract in advance to enable them to plan the activities relating to their contracts with certainty. The existence of uncertainty with regard to the applicable law in most legal systems especially at common law makes it difficult for contracting parties to plan or resolve disputes that may arise from their commercial contracts, either by themselves or by the court. This situation is an unpleasant one which presents an undesirable state of affairs to the business world. At common law, although it is true that the legal certainty required with respect to the applicable law of international commercial contracts can be achieved by a choice of law clause, it should be noted that most of such contracts do not contain this clause. This article attempts to contribute to existing literature on choice of law for contract in South Africa and also provide solutions, based on the underlying principles of private international law of contract, that effectively address the uncertainty in this area of law. To achieve its task, the article examines the various connecting factors considered by the South African courts in determining the applicable law (also, the proper law or governing law) of international contracts in situations where the parties do not insert a choice of law clause in their international contracts for sale of goods. The factors considered in this regard include the place of conclusion of contract, domicile, habitual residence and place of performance. These factors, in most situations, serve as the primary connecting factors considered by the courts in arriving at an answer with regard to the objective proper law/applicable law of an international sale contract (and other international commercial contracts) in South Africa. Further, the article examines why it is important for South African courts, and common law courts in general, to even go through the exercise of determining the applicable law in matters of international commercial disputes and not simply rely on the lex fori in dealing with such litigations (since, a lex fori approach might be much easier).
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