The test for the implication of applicable law, absent express choice

23/04/13

In a judgment handed down on 22 April 2013, the Court of Appeal rejected the argument put forward by the Respondent that in order to imply a choice of law pursuant to Article 3 of the Rome Convention, it was necessary to demonstrate that an actual or conscious choice had been made. Instead, the relevant test was whether, on an objective view, the parties must have taken it without saying that their contract should be governed by the relevant law or that the contract as a whole pointed ineluctably to the conclusion that the parties had intended it to be governed by that law.

In the instant case, although a previous employment contract between the parties had been found by the first instance judge to have most likely been governed by English law, there was no actual written agreement. The present claim concerned a different subsequent agency relationship for which Spain was to be the centre of the Appellant's activities. Despite the fact that the first instance judge accepted that had a choice of law been made in relation to that agency, it probably would been for English law, that was not sufficient in the circumstances of the case to show an implied choice of that law.

Accordingly, the Court of Appeal upheld the judgment of HHJ Mackie QC who found that Spanish law applied to the unwritten agency agreement between the parties, with the consequence that post-termination relief under the Commercial Agents Directive was to be determined pursuant to the Spanish implementing indemnity provisions rather than the English implementing compensation provisions.

The judgment is here.