Applying a Rational Choice Technique to Assess the Legitimacy and Choice of Law in International Contracts

Abstract

One of the most important features of private international law is the principle of choice of law in international contracts, which gives parties the ability to choose the legal framework that will apply to their contractual connection. In cross-border transactions, this autonomy fosters efficiency, predictability, and business certainty.  It is not absolute, though, as public policy considerations and the forum state's necessary laws frequently limit or supersede party preference. Recent research emphasizes the increasing conflict between preserving national regulatory objectives and upholding party autonomy, especially in fields like electronic commerce, employment contracts, and consumer protection. The Hague Conference of Private International Law recently adopted a new soft-law document known as The Hague Principles on Choice of Law for International Contracts, which is the subject of this article. Only "commercial" relationships—specifically, contracts involving consumers and employment—will be subject to the Principles.  Because of this, the Principles take a firmly pro-non-state standards position, which is one example of their liberal approach to party autonomy. If a contract's "commercially" alone would eliminate the unequal negotiating power that distinguishes consumer and employment relationships, then such a liberality would be acceptable, if not suitable. The paper discusses the difficulties presented by new forms of international trade, looks at recent advancements in the theory of party autonomy, and investigates the restrictions placed by laws and overriding mandatory regulations. In the end, the study emphasizes the necessity of more international collaboration and standardization to strike a balance between contractual freedom, justice, and regulatory goals in the globalized economy.