Application of the Public Policy Exception in the Context of International Contracts - The Rome I Regulation Approach

• Author: Ragne Piir
• Pages: 26-32

Ragne Piir

LLM, Adviser to the Administrative Law Chamber

of the Supreme Court of Estonia, on secondment

to the Court of Justice of the European Union

Application of the Public Policy

Exception in the Context

of International Contracts –

the Rome I Regulation

Approach*1

1. Introduction

Though constituting one of the cornerstones of the system of private international law rules on matters of

contractual obligations, the parties’ freedom to choose the law applicable to their contracts is not entirely

unlimited. In addition to targeted protection in favour of those parties regarded as being weaker,*2 along

with specif‌i c limitations for purely internal contracts,*3 the Rome I Regulation (Rome I)*4 includes an over-

all clause allowing the courts of EU member states the possibility to refuse to apply a provision of the

foreign law either chosen by the parties or otherwise applicable to the contract on grounds of manifest

incompatibility with its public policy (ordre public).*5

Other than this general public policy exception, Rome I provides for a similar instrument – overall

mandatory provisions of the law of the forum state.*6 Both serve the purpose of safeguarding the fundamen-

tal principles of the forum country whilst, however, operating differently. Overall mandatory provisions

embody and protect the state’s public interests in a ‘positive’ manner, inasmuch as they are to be applied

regardless of the content of the law otherwise applicable to the contract. Therefore, they do not necessarily

1 This article was published with support from ESF Grant No. 9209.

2 Contracts in favour of passengers, consumers, insurance contracts’ policy-holders, and employees – see Articles 5, 6, 7, and

8 of Rome I, respectively.

3 Contracts pertaining to situations wherein all elements relevant to the situation are located in one country – see Article 3

(3) and (4) of Rome I.

4 Regulation (EC) No. 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to

contractual obligations (Rome I). – OJ L 177, 4.7.2008, p. 6 ff. It replaces the Rome Convention on the law applicable to

contractual obligations of June 1980. The consolidated text of that convention is found in OJ C 334, 30.12.2005, p. 1 ff.

5 Article 21 of Rome I. In this paper, the notions of public policy and ordre public are used in parallel in denotation of the

public policy clause of Article 21.

6 Provisions of the forum state that are to be applied to the contract irrespective of the law otherwise applicable to the con-

tract – see Article 9 (1) and (2) of Rome I.

http://dx.doi.org/10.12697/JI.2015.23.03

26 JURIDICA INTERNATIONAL 23/2015