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Conflicts Lawyers I Have Read and Met

Publication: Research - peer-reviewJournal article

There are currently strong indicia that the European Commission is aiming at the preparation of an optional instrument on European contract law (OI), i.e. a set of rules alongside the existing national contract laws which could be applied if chosen by the parties (with this choice taking precedence over the rules of the Rome I Regulation). Whether such an OI will contain rules on agency (or representation) is as of yet unclear; the Expert Group on European contract law has decided not to cover agency in its drafts. A lack of rules on agency would constitute an external gap to be filled with the substantive national rules designated by the choice of law rules of the forum (subject to the actual rules on gap-filling in an OI). In view of the fact that, first, a vast number of contracts are concluded with the help of an agent and, secondly, national laws on agency still differ in various respects, this result would run counter to the whole purpose of an OI. If, however, an OI were to contain rules on agency, making them applicable would raise two issues: (i) Since the interests of three persons are affected, the ordinary rules on bilateral party choice may not be sufficient, and (ii) while parties may have an interest to ascertain the extent of the agent's authority before the conclusion of the contract, optional agency rules can by definition only be applied upon party choice. Which law applies to the external aspects of agency is a matter excluded from Rome I. Traditionally, whether agency rules are subject to party autonomy at all differs according to the nature of the authority: Authority bestowed by law is governed by the law which applies to the source of the authority (e.g. the lex societatis for directors of a company) and not open to party choice. Concerning authority granted by a principal, two approaches can be envisaged: Either all external aspects of agency are governed by the (possibly party-chosen) law applicable to the contract concluded with the help of the agent, or, as in most European countries, a separate choice of law rule is applied which may allow for party autonomy in various ways. A minimum requirement seems to be that the principal (or the agent authorized to do so and on his behalf) choose the applicable law and that both third party and agent could reasonably be expected to have been aware of such choice. This may have the unsatisfactory consequence of a subsequent change of the applicable law; if this change is to the detriment of the agent (by making him liable as falsus procurator), his position must not adversely be affected. Among the various possible reactions to this situation, the following approach appears to be preferable: Rules on agency in an OI (that cannot extend to authority bestowed by law) always apply when the contract concluded with the help of an agent is governed by the OI. Choice of the OI by necessity means choice of its agency rules. Therefore, a provision on party choice in an OI would have to be amended to cater to the interests involved in this triangular situation: Choice of the OI requires that the agent could reasonably be aware of such choice. The requirement that the agent be authorized to effect such choice and the protection of the agent in case of a subsequent choice of an OI should be taken care of by general rules in the OI subjecting the validity of the choice to be determined by the provisions of the OI and protecting the rights of third parties in general (similar to Art. 3[2], [5] Rome I).

Publication information

Original languageEnglish
JournalRabels Zeitschrift fuer Auslaendisches und Internationales Privatrecht
Volume75
Issue number3
Pages (from-to)485-496
ISSN0033-7250
StatePublished - Jul 2011

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