CNUDMI - Principles on Choice of Law in International Commercial Contracts

Hague Conference on Private International Law Permanent Bureau Churchillplein 6b 2517 JW The Hague The Netherlands w+31 70 363 3303  +31 70 360 4867 secretariat@hcch.net www.hcch.net Principles on Choice of Law in International Commercial ContractsPrinciples on Choice of Law in International Commercial ContractsPublished by

The Hague Conference on Private International Law Permanent Bureau Churchillplein, 6b 2517 JW The Hague The Netherlands

+31 70 363 3303 +31 70 360 4867 secretariat@hcch.net www.hcch.net

© Hague Conference on Private International Law 2015

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any way or by any means, including photocopying or recording, without the written permission of the copyright holder.

ISBN 978-94-90265-28-1

Printed in The Hague, The NetherlandsTable of Contents

Foreword 7

Development of the Principles on Choice of Law in International Commercial Contracts 9

List of Participating Experts 13 Principles on Choice of Law in International Commercial Contracts 17

Preamble 17 Article 1 Scope of the Principles 17 Article 2 Freedom of choice 18 Article 3 Rules of law 18 Article 4 Express and tacit choice 18 Article 5 Formal validity of the choice of law 18 Article 6 Agreement on the choice of law and battle of forms 18 Article 7 Severability 19 Article 8 Exclusion of renvoi 19 Article 9 Scope of the chosen law 19 Article 10 Assignment 20 Article 11 Overriding mandatory rules and public policy (ordre public) 20

Article 7 Severability 19 Article 8 Exclusion of renvoi 19 Article 9 Scope of the chosen law 19 Article 10 Assignment 20 Article 11 Overriding mandatory rules and public policy (ordre public) 20 Article 12 Establishment 20

Commentary on the Principles on Choice of Law in International Commercial Contracts 21

List of abbreviated sources 21 Introduction 23 Choice of law agreements 23 Nature of the Principles 24 Purpose and scope of the Principles 24 Content of the Principles 25 Envisaged users of the Principles 26 Preamble 27 Article 1 Scope of the Principles 28 Introduction 28 Rationale 29 Limitation to commercial contracts 29 Exclusion of consumer and employment contracts 304 TABLE OF CONTENTS Internationality 31 Ascertainment of internationality 32 Irrelevant factors 33 Article 2 Freedom of choice 35 Introduction 35 Rationale 36 Freedom of choice 36 Partial or multiple choice of law 36 Timing and modification of the choice of law 38 No connection required 39 Article 3 Rules of law 40 Introduction 40 Generally accepted on an international, supranational or regional level 40 A neutral and balanced set of rules 41 Trade usages 42 Unless the law of the forum provides otherwise 42 Gap-filling 42 Article 4 Express and tacit choice 43 Introduction 43 Choice of law generally 43 Express choice of law 43 Tacit choice of law 44 Tacit choice of law appearing clearly from the provisions of the contract 44 Choice of court clause and tacit choice of law 45 Arbitration clause and tacit choice of law 46 Circumstances indicating a tacit choice of law 46 Level of strictness of the criterion for the existence of a tacit choice of law 47 Modification of a choice of law 47 No choice of law 47

Arbitration clause and tacit choice of law 46 Circumstances indicating a tacit choice of law 46 Level of strictness of the criterion for the existence of a tacit choice of law 47 Modification of a choice of law 47 No choice of law 47 Article 5 Formal validity of the choice of law 48 Introduction 48 No requirements as to form of choice of law 48 Substantive rule of private international law 49 Relationship with other provisions dealing with formal validity 49 Agreement to the contrary 50 Article 6 Agreement on the choice of law and battle of forms 51 Introduction 51 Application of the law purportedly agreed to 51 Choice of law in standard terms 52 Choice of law in conflicting standard forms (battle of forms) 52 a) Situations presenting a false conflict: Article 6(1)(b), 1st part 53 b) Situations presenting a true conflict: Article 6(1)(b), 2nd part 54TABLE OF CONTENTS 5 General issues 55 The Principles and the CISG 55 Limited exception clause 57 Article 7 Severability 58 Introduction 58 Parties’ choice of law treated as separate from the contract to which it applies 58 Scope of the rule 59 Severability / separability as a widely recognised rule 59 Parties’ choice of applicable law not “contested solely on the ground that the contract to which it applies is not valid” 60 Defect affecting both the parties’ choice of law agreement and the main contract 60 Article 8 Exclusion of renvoi 61 Introduction 61 Exclusion of renvoi 61 Express inclusion of private international law rules 63 Article 9 Scope of the chosen law 63 Introduction 63 Particular areas 64 Formal validity 66 Article 10 Assignment 66 Introduction 66 Identification and application of the Principles to resolve issues raised by assignments 68 International precedents 70

Article 9 Scope of the chosen law 63 Introduction 63 Particular areas 64 Formal validity 66 Article 10 Assignment 66 Introduction 66 Identification and application of the Principles to resolve issues raised by assignments 68 International precedents 70 Related issues 70 Article 11 Overriding mandatory rules and public policy (ordre public) 70 Introduction 70 The relationship of Article 11 to the principle of party autonomy 72 The relationship between overriding mandatory provisions and public policy (ordre public) 72 Overriding mandatory provisions of the law of the forum 73 Overriding mandatory provisions of another law 75 Public policy (ordre public) of the forum 77 Public policy (ordre public) of a State the law of which would be applicable in the absence of a choice of law 79 Arbitral tribunals and public policy (ordre public) and overriding mandatory provisions 80 Article 12 Establishment 80 Introduction 80 Rationale 81 The notion of establishment 81 Time at which a company’s “establishment” is to be determined 81Foreword

I am delighted to preface this publication of the Principles on Choice of Law in International Commercial Contracts (the “Hague Principles”), the first normative soft-law instrument developed and approved by the Hague Conference on Private International Law.

In addition to the 12 articles of the Hague Principles and their P reamble, this publication includes the Introduction to the Principles, which describes the general framework, nature, purpose, structure, and scope of the Hague Principles. This publication also includes the article-by-article Commentary, an interpretative and explanatory tool for the better understanding of the Hague Principles.

At their core, the Hague Principles are designed to promote party autonomy in international commercial contracts. By acknowledging that parties to a contract may be best positioned to determine which set of legal norms is most suitable for their transactio n, party autonomy enhances predictability and legal certainty – important conditions for

At their core, the Hague Principles are designed to promote party autonomy in international commercial contracts. By acknowledging that parties to a contract may be best positioned to determine which set of legal norms is most suitable for their transactio n, party autonomy enhances predictability and legal certainty – important conditions for effective cross-border trade and commerce. At the same time, the Hague Principles also set balanced boundaries to party autonomy and thus may provide a refinement of the concept where it is already accepted. In essence, the Hague Principles may be considered to be an international code of current best practice in relation to party autonomy in international commercial contracts.

Work on the Hague Principles started in 2006, when the Council on General Affairs and Policy of the Hague Conference invited the Permanent Bureau to prepare a feasibility study on the development of an instrument concerning choice of law in international contracts (a succinct overview of the development of the Hague Principles follows below at p. 9). In 2009, the Council invited the Permanent Bureau to set up a Working Group, composed of experts in the fields of private international law, international commercial law and international arbitration law, with a view to developing a draft non-binding instrument on choice of law in international commercial contracts. Under the excellent chairmanship of Mr Daniel Girsberger (Switzerland), the Working Group met at regular intervals between 2010 and 2012 a nd developed the 12 articles of the future instrument. Then, in November 2012, a Special Commission meeting was held to review the draft articles. The Commission approved them and tasked the Working Group with also developing a commentary. Thanks to the efforts of several experts who took on the primary drafting of different parts of the Commentary, and to further discussions within the Working Group, work on the full “package” (Introduction, Preamble, Articles, Commentary) was completed in 2014. On 19 March 2015, the Members of the Hague Conference formally approved the Hague Principles.8 FOREWORD The Hague Principles are not formally binding; they provide a comprehensive blueprint to guide users in the creation, reform, or interpretation of choice of law regimes at the

in 2014. On 19 March 2015, the Members of the Hague Conference formally approved the Hague Principles.8 FOREWORD The Hague Principles are not formally binding; they provide a comprehensive blueprint to guide users in the creation, reform, or interpretation of choice of law regimes at the national, regional, or international level. The Hague Principles have already proven their usefulness in early 2015, when they served as a model to the legislator of Paraguay in promulgating a law on the Law Applicable to International Contracts.

The Permanent Bureau hopes that other jurisdictions will follow this pioneering initiative, reaffirming the usefulness of the Hague Principles as an inspiring international standard, which has, as a further most encouraging sign of their approval by the int ernational legal community, received UNCITRAL’s endorsement in July 2015.

The development of the Hague Principles represents a truly collective effort. The extraordinary commitment, dedication, and sheer hard work of each member of the Working Group and of the experts who participated in the 2012 Special Commission meeting was instrumental to seeing this project come to fruition. The active participation of a select group of Observers enriched and contextualised the drafting process over the years (a list of participating experts can be found below on p. 13) . Above all , Mr Daniel Girsberger played a key role as the Chair of both the Working Group and the 2012 Special Commission meeting. His wise guidance throughout the years, with the assistance of Ms Marta Pertegás as the lawyer with primary responsibility for this project at the Permanent Bureau, was essential to the completion of this important Hague instrument.

On behalf of the Permanent Bureau, and personally, I wish to extend my sincere and deep appreciation to all the members of the Working Group and all other experts who were involved in the development of the Hague Principles. Thanks should also go to the many colleagues and interns of the Permanent Bureau for their important contributions to this project. While they are too numerous to be listed here, they all know they belong to the growing community of “Hague Principles Ambassadors” from around the world.

involved in the development of the Hague Principles. Thanks should also go to the many colleagues and interns of the Permanent Bureau for their important contributions to this project. While they are too numerous to be listed here, they all know they belong to the growing community of “Hague Principles Ambassadors” from around the world.

I am confident that this publication will help with promoting, disseminating, and applying the Hague Principles around the world.

Christophe Bernasconi | Secretary General

Hague Conference on Private International LawDevelopment of the Principles on Choice of Law in International Commercial Contracts

June 2006

The Special Commission on General Affairs and Policy of the Conference decides to invite the Permanent Bureau to prepare a feasibility study on the development of an instrument concerning choice of law in international contracts. The study should consider in particular whether there is a practical need for the development of such an instrument.1

January 2007

The Permanent Bureau circulates questionnaires addressed to Member States and stakeholders in the field of international commercial arbitration to examine the practical need for the development of an instrument concerning choice of law in international contracts.2

March 2007

On the basis of the responses of the different target groups, the Permanent Bureau conducts a series of feasibility studies. Their purpose is not only to provide an overview and an analysis of existing instruments,3 with a special focus on international arbitration,4 but also to foreshadow any problems or shortfalls of a future instrument relating to choice of law in international commercial contracts.5

1 Conclusions adopted by the Special Commission on General Affairs and Policy of the Conference (3-5 April 2006), Prel. Doc. No 11 of June 2006, point 2. 2 Questionnaire addressed to Member States to examine the practical need for the development of an instrument concerning choice of law in international contracts , prepared by the Permanent Bureau, January 2007; Questionnaire addressed to stakeholders in the field of international commercial arbitration

2 Questionnaire addressed to Member States to examine the practical need for the development of an instrument concerning choice of law in international contracts , prepared by the Permanent Bureau, January 2007; Questionnaire addressed to stakeholders in the field of international commercial arbitration to examine the practical need for the development of an instrument concerning choice of law in international contracts, prepared by the Permanent Bureau, January 2007. 3 T. KRUGER, Feasibility study on the choice of law in international contracts - overview and analysis of existing instruments, Prel. Doc. No 22 B of March 2007 for the attention of the Council of April 2007 on General Affairs and Policy of the Conference. 4 I. RADIC, Feasibility study on the choice of law in international contracts - special focus on international arbitration, Prel. Doc. No 22 C of March 2007 for the attention of the Council of Apr il 2007 on General Affairs and Policy of the Conference. 5 Feasibility study on the choice of law in international contracts - report on work carried out and preliminary conclusions, prepared by the Permanent Bureau, Prel. Doc. No 22 A of March 2007 for the attention of the Council of April 2007 on General Affairs and Policy of the Conference.10 DEVELOPMENT OF THE PRINCIPLES ON CHOICE OF LAW IN INTERNATIONAL COMMERCIAL CONTRACTS April 2008

The Council invites the Perm anent Bureau to continue its exploration of this topic concerning international businessto-business contracts with a view to promoting party autonomy. The Permanent Bureau is asked to explore, in co -operation with relevant international organisations and interested experts, the feasibility of drafting a non-binding instrument, including the specific form that such an instrument might take.6

March 2009

The Permanent Bureau issues a Report on Work Carried Out and Suggested Work Programme for the Developme nt of a Future Instrument, in which a possible work programme for the development of a non -binding instrument on the law applicable to international contracts is proposed.7

March – April 2009

Programme for the Developme nt of a Future Instrument, in which a possible work programme for the development of a non -binding instrument on the law applicable to international contracts is proposed.7

March – April 2009

The Council invites the Permanent Bureau to continue its work on promoting party autonomy in the field of international commercial contracts. In particular, the Permanent Bureau is invited to form a working group consisting of experts in the fields of private international law, international commercial law and international arbitration law and to facilitate the development of a draft non-binding instrument within this working group.8

January 2010

The Working Group on Choice of Law in International Contracts (Working Group) meets in The Hague for the first time. It sketches the scope of the future instrument.9

April 2010

The Council invites the Working Group to continue its work for the progressive development of a draft instrument of a non-binding nature.10

6 Conclusions and Recommendations adopted by the Council on General Affairs and Policy of the Conference (1-3 April 2008), specifically under "Choice of law in international contracts". 7 Report on work carried out and suggested work programme for the development of a future instrument, prepared by the Permanent Bureau, Prel. Doc. No 7 of March 2009 for the attention of the Council of March / April 2009 on General Affairs and Policy of the Conference. 8 Conclusions and Recommendations adopted by the Council on General Affairs and Policy of the Conference (31 March – 2 April 2009), specifically under "Choice of law in international contracts". 9 Report of t he First Meeting of the Working Group on Choice of Law in International Contracts (21-22 January 2010). 10 Conclusions and Recommendations adopted by the Council on General Affairs and Policy of the Conference (7-9 April 2010), specifically under "Choice of law in international contracts".DEVELOPMENT OF THE PRINCIPLES ON CHOICE OF LAW IN INTERNATIONAL COMMERCIAL CONTRACTS 11 November 2010

10 Conclusions and Recommendations adopted by the Council on General Affairs and Policy of the Conference (7-9 April 2010), specifically under "Choice of law in international contracts".DEVELOPMENT OF THE PRINCIPLES ON CHOICE OF LAW IN INTERNATIONAL COMMERCIAL CONTRACTS 11 November 2010

The Working Group holds a second meeting in The Hague. The participating experts tentatively agree on the text of certain provisions of the draft instrument.11

April 2011

The Council decides that the draft articles and the commentary prepared by the Working Group should be reviewed by a Special Commission at a later stage.12

June 2011

The Working Group holds a meeting in The Hague for the third time. The participating experts finalise the text of the draft articles of the future instrument and identify relevant issues which will either be referred to in a document as requested by the Council indicating the policy choices involved and/or elaborated in greater detail in the commentary.13

April 2012

The Council decides to establish a Special Commission to discuss the proposals of the Working Group and make recommendations as to future steps to be undertaken, including the decision to be taken on the form of the non -binding instrument and the process through which the commentary shall be completed.14

November 2012

A Special Commission meeting is convened in The Hague to review the work carried out by the Working Group. The Special Commission is tasked with the in-depth review of the draft Principles. It unanimously approves a revised form of the Principles, and makes a number of recommendations to the Council relating to the completion of the instrument.15

April 2013

The Council gives its preliminary endorsement of the Draft Hague Principles on Choice of Law in International Contracts and mandates the Working Group to complete the Commentary. The Council will then be invited to either give its final endorsement of the

11 Report of the Second Meeting of the Working Group on Choice of Law in International Contracts (15-17 November 2010).

Law in International Contracts and mandates the Working Group to complete the Commentary. The Council will then be invited to either give its final endorsement of the

11 Report of the Second Meeting of the Working Group on Choice of Law in International Contracts (15-17 November 2010). 12 Conclusions and Recommendations adopted by the Council on General Affairs and Policy of the Conference (5-7 April 2011), specifically under "Choice of law in international contracts". 13 Report of the Third Meeting of the Working Group on Choice of Law in Inte rnational Contracts (28-30 June 2011). 14 Conclusions and Recommendations adopted by the Council on General Affairs and Policy of the Conference (17-20 April 2012), specifically under "Choice of law in international contracts". 15 Draft Hague Principles as approved by the November 2012 Special Commission meeting on choice of law in international contracts and Recommendations for the commentary.12 DEVELOPMENT OF THE PRINCIPLES ON CHOICE OF LAW IN INTERNATIONAL COMMERCIAL CONTRACTS complete package of the Principles and the Commentary, or if necessary submit the package to the Special Commission.16

June 2013

The Working Group ho lds a fourth meeting in The Hague, which focuses on the formulation of the draft Commentary.17

January 2014

The Working Group meets in The Hague for the fifth time. The participating experts continue and complete their discussions on the wording of the Commentary accompanying the Draft Hague Principles. An Editorial Committee is established within the Working Group. This Committee is charged with finalising the text of the draft Commentary.18

April 2014

Further to the April 2014 Council meeting, a written consultation procedure on the draft instrument is organised, where Members are invited to submit comments. The instrument is to be approved if no objection is raised within 60 days.19

March 2015

Upon completion of the written procedure without objection, the Principles on Choice of Law in International Commercial Contracts are formally approved on 19 March 2015.

is to be approved if no objection is raised within 60 days.19

March 2015

Upon completion of the written procedure without objection, the Principles on Choice of Law in International Commercial Contracts are formally approved on 19 March 2015.

16 Conclusions and Recommendations adopted by the Council on General Affairs and Policy of the Conference (9-11 April 2013). 17 Report of the Fourth Meeting of the Working Group (24-26 June 2013). 18 Report of the Fifth Meeting of the Working Group on Choice of Law in International Contracts (27-28 January 2014) ; The draft Hague Principles on Choice of Law in Internati onal Commercial Contracts, Prel. Doc. No 6 of March 2014 for the attention of the Council of April 2014 on General Affairs and Policy of the Conference. 19 Conclusions and Recommendations adopted by the Council on General Affairs and Policy (8-10 April 2014), specifically under "Choice of law in international contracts".List of Participating Experts

Members of the Working Group ( certain experts had primary drafting responsibility for particular Articles of the Commentary and this is indicated with an below)

Mr Neil B. COHEN , Professor of Law, Brooklyn Law School, Brooklyn, New York, United States of America (Member of the Editorial Committee, Article 10)

The Hon. Justice Clyde CROFT, Supreme Court of Victoria, Melbourne, Australia

Mr Sibidi Emmanuel DARANKOUM , Professor of Law, University of Montreal, Montreal, Quebec, Canada

Mr Andrew DICKINSON, Fellow of St. Catherine's College and Professor of Law at the University of Oxford, Oxford, United Kingdom (Article 11)

Mr Ahmed Sadek EL KOSHERI, Partner of Kosheri, Rashed & Riad, Legal Consultants & Attorneys at Law, Cairo, Egypt

Ms Bénédicte FAUVARQUE-COSSON, Professor of Law, University Paris II PanthéonMr Ahmed Sadek EL KOSHERI, Partner of Kosheri, Rashed & Riad, Legal Consultants & Attorneys at Law, Cairo, Egypt

Ms Bénédicte FAUVARQUE-COSSON, Professor of Law, University Paris II PanthéonAssas, Paris, France (Member of the Editorial Committee, Article 7)

Mr Lauro GAMA E. SOUZA Jr. , Lawyer speciali sing in international law and commercial arbitration; Associate Professor, Pontifical Catholic University of Rio de Janeiro, Brazil (Articles 2 & 3)

Mr Francisco J. GARCIMARTÍN ALFÉREZ, Professor of Law, Universidad Autónoma de Madrid, Madrid, Spain (Articles 1, 9 & 12)

Mr Daniel GIRSBERGER, Professor, University of Lucerne, Faculty of Law, Lucerne, Switzerland (Chair of the Working Group , member o f the Editorial Committee , Introduction & Article 10)

Ms Yujun GUO , Professor of Law, Wuhan University, Institute of International Law, Wuhan, China

Mr Thomas KADNER GRAZIANO , Professor, University of Geneva, Faculty of Law, Geneva, Switzerland (Member of the Editorial Committee, Article 6)14 LIST OF PARTICIPATING EXPERTS Mrs Marielle E. KOPPENOL-LAFORCE, Professor of Law, University of Leiden; Lawyer (International Contracts, Arbitration and Litigation), Houthoff Buruma, Rotterdam, Netherlands (Article 6)

Mr Dieter MARTINY , Professor Em. of Law, Europa University Viadrina, Frankfurt (Oder); guest researcher at the Max-Planck-Institut für ausländisches und internationales Privatrecht, Hamburg, Germany (Articles 4, 5 & 8)

Mr Campbell McLACHLAN , Professor of Law, Victoria Un iversity of Wellington, Wellington, New Zealand

(Oder); guest researcher at the Max-Planck-Institut für ausländisches und internationales Privatrecht, Hamburg, Germany (Articles 4, 5 & 8)

Mr Campbell McLACHLAN , Professor of Law, Victoria Un iversity of Wellington, Wellington, New Zealand

Mr José Antonio MORENO RODRÍGUEZ , Professor, CEDEP – Centro de Estudios de Derecho, Economía y Política , Asunción, Paraguay; member of the International Chamber of Commerce (ICC) International Court of Arbitration.

Mr Jan L. NEELS, Professor of Private International Law, Faculty of Law, University of Johannesburg, South Africa (Preamble, Articles 4 & 5)

Ms Yuko NISHITANI, Professor, Kyushu University, Faculty of Law, Fukuoka, Japan (Articles 1, 8 & 12)

Mr Richard F. OPPONG, Assistant Professor of Law, Faculty of Law, Thompson Rivers University, Kamloops, British Columbia, Canada (Article 9)

Ms Geneviève SAUMIER, Professor of Law, McGill University, Faculty of Law, Montreal, Quebec, Canada (Chair of the Drafting Committee of the Special Commission, member of the Editorial Committee, Articles 2, 3 & 11)

Mr Symeon C. SYMEONIDES, Alex L. Parks Distinguished Professor of Law and Dean Emeritus, Willamette University College of Law, Salem, United State s of America (Member of the Editorial Committee)

Mr Ivan ZYKIN , Professor of Law, First Deputy President of the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation, Moscow, Russia (Article 7)

Observers

Mr Michael Joachim BONELL , Chair of the Working Group Contract Principles, UNIDROIT, Rome, Italy

Mr Fabio BORTOLOTTI, Chair of the ICC Commission on Commercial Law and Practice, International Chamber of Commerce, Paris, France

Observers

Mr Michael Joachim BONELL , Chair of the Working Group Contract Principles, UNIDROIT, Rome, Italy

Mr Fabio BORTOLOTTI, Chair of the ICC Commission on Commercial Law and Practice, International Chamber of Commerce, Paris, France

Mr José Alejand ro CARBALLO LEYDA , Legal Counsel, Energy Charter, Brussels, Belgium; observer of the International Law Association (ILA)

Mr Simone CUOMO , Senior Legal Advisor, Council of Bars and Law Societies of Europe, Brussels, Belgium (alternate: Ms Enrica SENINI , Studio Legale Senini, observer of the Council of Bars and Law Societies of Europe, Brescia, Italy)LIST OF PARTICIPATING EXPERTS 15 Mr Timothy LEMAY , Principal Legal Officer, Head, Legislative Branch, UNCITRAL Secretariat, Vienna, Austria (alternates: Ms Miriana BELHADJ, Associate Legal Off icer, Mr Cyril EMERY, Legal Officer, UNCITRAL Secretariat, Vienna, Austria)

Ms Francesca MAZZA, Counsel, former Secretary of the ICC Commission on Arbitration, International Court of Arbitration, Paris, France, currently Secretary General, German Institute of Arbitration

Mr Klaus REICHERT, Senior Counsel at the Bar of Ireland, observer of the International Bar Association (IBA), London, United Kingdom

Mr Peter WERNER, Senior Director, International Swaps and Derivatives Association (ISDA), London, United KingdomPrinciples on Choice of Law in International Commercial Contracts (approved on 19 March 2015)

Preamble

1. This instrument sets forth general principles co ncerning choice of law in international commercial contracts. They affirm the principle of party autonomy with limited exceptions.

2. They may be used as a model for national, regional, supranational or international instruments.

3. They may be used to interpret, supplement and develop rules of private international law.

international commercial contracts. They affirm the principle of party autonomy with limited exceptions.

2. They may be used as a model for national, regional, supranational or international instruments.

3. They may be used to interpret, supplement and develop rules of private international law.

4. They may be applied by courts and by arbitral tribunals.

Article 1 Scope of the Principles

1. These Principles apply to choice of law in international contracts where each party is acting in the exercise of its trade or profession. They do not apply to consumer or employment contracts.

2. For the purposes of these Principles, a contract is international unless each party has its establishment in the same State and the relation ship of the parties and all other relevant elements, regardless of the chosen law, are connected only with that State.

3. These Principles do not address the law governing –

(a) the capacity of natural persons;

(b) arbitration agreements and agreements on choice of court;

(c) companies or other collective bodies and