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

Author:Ragne Piir

The article examines the role and employment of the public-policy exception in private international law from the perspective of the law applicable to contractual obligations. To begin with, prerequisites for recourse to the public-policy clause are investigated, to illustrate why this exceptional clause is likely to come into play rather infrequently, as indeed should be the case. The article... (see full summary)

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
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 speci 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.

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