application of foreign law - SSRN papers

APPLICATION OF FOREIGN LAW ________________

HARMONIZATION OF PRIVATE INTERNATIONAL LAW IN EUROPE AND APPLICATION OF FOREIGN LAW: THE “MADRID PRINCIPLES” OF 2010 Carlos ESPLUGUES MOTA*

I. II.

III. IV.

Introduction The First Part of the Play: Foreign Law Before National Courts in Europe A. Introduction B. The Legal/Factual/Hybrid Condition Granted to Foreign Law Before National Courts in Europe 1. The Lack of a Common Approach and the Habitual Irrelevance of the Theoretical Position Originally Adopted 2. Theoretical Shortcomings: the Pleading of Foreign Law Before National Courts and the Clear Role Played by the Judge and the Parties 3. “Procedure” Prevails Over “Substance”: the Impact of Procedural Rules on the Application of Foreign Law a) Application of Foreign Law by Courts and the “Iura Novit Curia” Principle: Utopia and Reality b) The Unnecessary Becomes Increasingly Necessary: the Supplementary Role Played by the Parties as Regards Pleading and Ascertaining the Content of Foreign Law C. The Peak of the Process: Effective Application of Foreign Law by National Courts in Europe 1. Valid and Sufficient Ascertainment of the Content of Foreign Law 2. The Collapse of the System: What Happens in Those Cases Where Foreign Law is Not Considered to Be Sufficiently Determined? 3. Possible Review of the Application of Foreign Law by Upper Courts The Second Part of the Play: Application of Foreign Law by Non-Judicial Authorities in Europe The Way Ahead: the Various Solutions Foreseeable to this Situation and “the Madrid Principles” A. Some Solutions Available if We Ever Need Them

* LLM (Harvard), MSc (Edinburgh); Full Professor of Private International Law, University of Valencia (Spain).

Yearbook of Private International Law, Volume 13 (2011), pp. 273-297 © sellier. european law publishers & Swiss Institute of Comparative Law

Printed in Germany

Electronic copy available at: http://ssrn.com/abstract=2152058

Carlos Esplugues Mota B.

V.

The Madrid Principles 1. Scope 2. Avoidance of the Legal/Factual Condition Issue 3. Proof of Foreign Law 4. Non-Application of Foreign Law 5. Revision of Decisions by Upper Courts and Authorities The Final Act: Nostradamus or the Beginning of a Beautiful Friendship?

I.

Introduction

Over the past few years, the European Union has undertaken an active and broad process of harmonization of Private Law (PL) and Private International Law (PIL). Focusing on choice-of-law rules, many diverse areas of law have been influenced by this harmonization, so that today a growing set of common choice-of-law rules exists within the European Union (EU).1 Nevertheless, this process, directly grounded upon Article 81 of the Treaty on the Functioning of the EU, is far from being finished.2 The harmonization effort will likely increase in the near future so as to embrace many domains not yet governed by the European instruments.3 These future developments will vastly alter the basis and current situation of PIL in Europe, leading to a dramatic change of scene in the years to come. Besides, harmonization will create an additional effect; the process undertaken will foster an even more rapid expansion of international and interstate trade and, therefore, increase the number of cross-border cases arising within the EU integrated territory. The sophisticated legal structure created in Europe during these last decades gives rise to mixed feelings of both admiration and criticism. Certainly, there is much to admire and also a lot to criticise as regards what has been done and what remains to be performed. Focusing primarily on what is still to be undertaken within the process of harmonization of PIL in Europe, there is still some concern about the lack of a common set of rules governing the application of foreign law by EU judicial and non-judicial authorities. Although this is a longstanding and well known issue, no common action has been taken so far in Europe, which has created See P. STONE, EU Private International Law (2nd ed.), Cheltenham 2010, p. 4-14. Note, H.P. MANSEL/ R.W. THORN, Europäisches Kollisionsrecht 2009: Hoffnungen durch den Vertrag von Lissabon, IPRax 1/2010, p. 1 et seq. A general overview of the current situation of the process of harmonization of PL and PIL in Europe may be read at A. VAQUER (ed.), European Private Law Beyond the Common Frame of Reference. Essays in Honour of Reinhard Zimmermann, Groningen 2008, or R. SCHULZE/ H. SCHULTE-NÖLKE, European Private Law – Current Status and Perspectives, Munich 2011, among many others. 3 Note, B. CAMPUZANO DÍAZ et al, Recent developments in European conflict of laws: contracts, torts, family, and successions, Sevilla 2008. 1 2

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Yearbook of Private International Law, Volume 13 (2011)

Electronic copy available at: http://ssrn.com/abstract=2152058

Harmonization of Private International Law and Application of Foreign Law a real and insurmountable weakness in the whole process of harmonization4 that is capable of undermining the very effectiveness of the designed common system of choice-of-law rules. Within a harmonized system of law, the absence of a common set of rules governing the application of foreign law can have devastating effects from a structural point of view; it hampers decisional harmony5 and runs directly against the consolidation of a genuine European area of justice in civil matters, especially since a greater degree of harmonization of PIL in Europe will directly increase the number of cases involving the application of foreign law.6 Furthermore, the absence of this common system may foster “forum shopping” by the parties and enhance parochialism and resource to the lex fori by national authorities, thus affecting the proper operation of the different EU Regulations on PIL.7 Moreover, the current situation makes the application of the prospective competent foreign law susceptible of a certain degree of manipulation by parties and legal actors. Although the above issue is important, even more relevant are the consequences forced upon the parties involved in prospective disputes in Europe. For example, the lack of a common set of rules regarding the application of foreign law may result in the imposition of some unjustifiably burdensome laws. As the Commission itself acknowledges,8 this issue may increase legal risks associated with cross-border litigation and expand both costs and the duration of the proceedings, all of which impair the parties’ legal expectations.9 Indeed, in certain 4 C. ESPLUGUES MOTA, La imperfección de la perfección: la ausencia de reglas comunes sobre aplicación del derecho extranjero por los jueces, como talón de Aquiles del proceso europeo de armonización del derecho internacional privado, in F. BLASCO GASCO/ M. CLEMENTE MEORO/ J. ORDUÑA MORENO et al (Coords.), Estudios jurídicos en homenaje a Vicente L. Montés Penadés, Vol. I, Valencia 2011, p. 977 et seq. 5 M. JÄNTERÄ-JAREBORG, Application of Foreign Law in Swedish Courts – Recent Developments, in G. MELANDER (ed.), Modern Issues in European Law Nordic Perspectives Essays in Honour of Lennart Palsson, Dordrecht 1997, p. 79-80, 98; M. JÄNTERÄJAREBORG, Foreign Law in National Courts a Comparative Perspective, Recueil des Cours, vol. 204 (2003), p. 218. 6 The American experience is very clear in this sense. See to this respect, R.J. MINER, The Reception of Foreign Law in the U.S. Federal Courts, Am J. Comp. Law, vol. 43 (1995), p. 581 et seq. 7 M. JÄNTERÄ-JAREBORG, Foreign Law (note 5), at 199. 8 See EUROPEAN COMMISSION, Communication from the Commission to the European Parliament, the Council, the European Economic and the Committee of the Regions. A Common European Sales Law to Facilitate Cross-Border Transactions in the Single Market, Brussels 11.10.2011 COM (2011) 636 final, p. 2, available at (24.10.201), and Proposal for a Regulation of the European Parliament and the Council on a Common European Sales Law, Brussels 11.10.2011, COM(2011) 635 final 2011/0284 (COD), p. 3, available at (20.10.2011). 9 R. FENTIMAN, International Commercial Litigation, Oxford 2010, p. 283.


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Carlos Esplugues Mota circumstances this may even amount to a direct violation of Article 6 of the European Convention on Human Rights of 1950. Furthermore, some theoretical problems may also arise from the current lack of common solutions regarding the application of foreign law in Europe. The cost and difficulties of ascertaining the content of the foreign law applicable to the case at stake and the uncertainty that derives from it have for a long time stood at the very foundation of the revolutionary and counter-revolutionary theories that have flourished in the field of PIL since the very famous academic “attack on the conventional concept of the choice-of-law problem” written by David Cavers in 1933 in the Harvard Law Review.10 Today, in Europe, we share an ample and well elaborated system of rules devoted to offer people the highest level of certainty by predicting the territorial application of any law to a specific issue. But, as in 1933 in the United States of America, we still lack a valid, predictable, simple and affordable common system of ascertaining the content of a foreign law called to be applied. The EU’s lack of activity in this field coexists with too many approaches and solutions and too many procedural differences as to the application of foreign law, which hampers the ability to achieve certainty and predictability for all those involved in the single market. There is a sort of Trojan horse before the harmonized model of choice-of-law rules in the EU. But in this case it is filled with wellknown contents: an ineffectual conflicts model, discredit and a lack of competitiveness for the harmonized system as a whole, higher costs, increasing difficulties, and legal uncertainty for parties. Our words may sound too dramatic, but the analysis of the different legal systems in Europe shows that, unfortunately, they are not unrealistic.

II.

The First Part of the Play: Foreign Law Before National Courts in Europe

A.

Introduction

The application of foreign law by national courts has been said to be the “crux of the conflict of laws”.11 Nevertheless, such application still lacks a common response within the EU. Furthermore, the analysis of the solutions embodied in the different legal systems of EU Member States shows the existence of several recur10

D.F. CAVERS, A Critique of the Choice-of-Law Problem, 47 Harv. L. Rev. 173 (1933-1934); “while the conduct of business and certain social activities may be embarrassed by a want of uniformity in the laws of the forty-eight states that embarrassment springs primarily from the cost and difficulty of ascertaining accurately the content of those laws and not from the admitted difficulty of predicting their territorial application.” (p. 199). 11 R. FENTIMAN, Foreign Law in English Courts. Pleading, Proof and Choice of Law, Oxford 1998, p. 1.

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Harmonization of Private International Law and Application of Foreign Law ring problems and very different, yet not always sufficiently clear, responses. Besides, there are very important inconsistencies between the theoretical approach to foreign law and its practical application, as well as many procedural shortcomings,12 in most EU Member States. Despite the current negative situation, with the sole – and particular – exception of references embodied in Article 30(1)(i) of Regulation Rome II13 and in the “Commission Statement on the treatment of foreign law” annexed to the Regulation itself,14 no prospective harmonized legislation in this field is envisaged within the EU, at least, nothing in accordance with the Action Plan Implementing the Stockholm Programme for the period 2010-2014.15

B.

The Legal/Factual/Hybrid Condition Granted to Foreign Law Before National Courts in Europe

1.

The Lack of a Common Approach and the Habitual Irrelevance of the Theoretical Position Originally Adopted

Historically, foreign law has been given differing treatments in the legal systems throughout the world; either it has been considered as a fact or it has been granted a legal nature.16 The legal or factual consideration accorded to foreign law directly They should not be underestimated, as S. GEEROMS writes, “… operation of a choice-of-law rule, regardless of the theoretical framework of why foreign law should be applied in a given case, succeeds or fails with the procedural treatment of foreign law”, S. GEEROMS, Foreign Law in Civil Litigation: A Comparative and Functional Analysis, Oxford 2004, p. 2. 13 Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II), OJ L 199, of 31.7.2007. 14 At the end of the Rome II Regulation, there is a general statement (“Commission statement on the treatment of foreign law”) dealing with a possible future harmonization of this issue: “The Commission, being aware of the different practices followed in the Member States as regards the treatment of foreign law, will publish at the latest four years after the entry into force of the ‘Rome II’ Regulation and in any event as soon as it is available a horizontal study on the application of foreign law in civil and commercial matters by the courts of the Member States, having regard to the aims of the Hague Programme. It is also prepared to take appropriate measures if necessary” (p. 49). 15 See COM(2010) 171 final (Brussels, 20.4.2010), Communication From the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. Delivering an Area of Freedom, Security and Justice for Europe's. Citizens Action Plan Implementing the Stockholm Programme, available at (12.10.2011), p. 20 et seq. 16 See J. MCCOMISH, Pleading and Proving Foreign Law in Australia, Melb.U.L.Rev. vol. 31 (2007), p. 415-418. Arguments for one or another position may be found in T.C. HARTLEY, Pleading and Proof of Foreign Law: The Major European Systems Compared, 12


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Carlos Esplugues Mota influences its procedural treatment before national judges. Questions of law are to be considered by the court ex officio and are dependent on the principle “iura novit curia,” with their application subject to judicial control by upper courts.17 By contrast, questions of fact are beyond the scope of judicial notice and, therefore, must be pleaded by the parties in accordance with the principle of party disposition, which is the basis of civil procedure in Europe: facts are subject to the evidence provided by the parties to the judge and are binding on upper courts.18 Accordingly, when a court accepts the legal character of foreign law it should take an active role regarding pleading and ascertaining the content of foreign laws. On the contrary, when foreign law is treated factually it gives the parties a highly – and almost uniquely – active position on how foreign law is treated.19 This twofold approach has traditionally been reproduced in Europe. (1) As a matter of principle, most EU Member States embrace the legal condition of foreign law.20 Nevertheless, some relevant differences occur among such states with regard to both the legal foundation of foreign law and the scope and clarity of the legal recognition granted: (A) Sometimes the legal nature accorded to foreign law directly derives from, more or less, explicit legal provisions. That is the case in Austria,21 Belgium,22 The Czech Republic,23 Estonia,24 Greece,25 Hungary,26 Italy,27 Portugal,28 I.C.L.Q. 1996, p. 272-274; M. JÄNTERÄ-JAREBORG, Foreign Law (note 5), at 228-229 and 264 et seq. 17 In favour of this position stands the Declaration on the “Equality of Treatment of the Law of the Forum and of Foreign Law”, available at: (9.10.2011), issued by the Institut de Droit International in 1989, in its Session of Santiago de Compostela. 18 R. HAUSMANN, Pleading and Proof of Foreign Law – a Comparative Analysis, The European Legal Forum 1-2008, p. I-2. 19 R. HAUSSMANN (note 18), at I-2; T.C. HARTLEY (note 16), at 271-272. 20 See S. GEEROMS (note 12), at 42 et seq. 21 § 3 Bundesgesetz über das Internationale Privatrecht (IPRG). Vid. M. NEUMAYR, § 3 IPRG para. 1, in H. KOZIOL/ R. BYDLINSKI/ R. BOLLENBERGER (eds), Kurzkommentar zum ABGB (2nd ed.), Wien 2007, p. 2031-2032; R. HAUSMANN (note 18), at I-9. 22 Art. 15 (1) Code of Private International Law (CPIL). Note: P. WAUTELET, Aux confins de la “norme”: quelques réflexions sur le statut du droit étranger en droit international privé belge, in M. PÂQUES et al (eds): Liber Amicorum Paul Martens. L’humanisme dans la résolution des conflits. Utopie ou réalité?, Brussels 2006, p. 639 et seq. 23 Art. 53 (1) Private International Law Act (PILA). See M. PAUKNEROVA/ J. BRODEC, Czech Republic and Slovak Republic, in C. ESPLUGUES MOTA/ J.L. IGLESIAS BUHIGUES/ G. PALAO MORENO (eds), The Application of Foreign Law, Munich 2011, p. 175. 24 Art. 2 Private International Law Act (PILA). See V. NEKROSIUS/ V. VEBRAITE, Baltic Countries: Estonia, Latvia and Lithuania, in C. ESPLUGUES MOTA, et al. (note 23), at 120. 25 Art. 337 Code of Civil Procedure (CCP). See E. VASSILAKAKIS/ V. KOURTIS, Greece, in C. ESPLUGUES MOTA, et al. (note 23), at 203.

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Harmonization of Private International Law and Application of Foreign Law Slovakia,29 Slovenia30 and, to some extent, Bulgaria31 and Romania.32 However, despite the legislator’s decision to give foreign law legal status in these countries, the legal nature of foreign law before the national courts in those countries is under pressure in some: Belgium and Italy are good examples.33 (B) In addition, several EU Member States have complemented the absence of any explicit legislative recognition of the legal nature of foreign law with the active role played by national courts and scholars; Germany is paradigmatic to this respect.34 (C) Finally, and despite the lack of any legal provision on which to stand, foreign law is also awarded legal effect in France,35 Poland36 and the Scandinavian countries,37 though they all reach this outcome in different ways.

26

Art. 5 Code of Private International Law (CPIL). Vid. V. HARSAGI/ N. KENGYEL/ Z. NEMESSANYI, Hungary, in C. ESPLUGUES MOTA, et al. (note 23), at 215. 27 Art. 14 Private International Law Act (PILA). Note, I. QUEIROLO et al., Italy, in C. ESPLUGUES MOTA, et al. (note 23), at 241; P. MENGOZZI, La riforma del diritto internazionale privato italiano. La legge 31 maggio 1995 n. 218 (2nd ed.), Naples 1997, p. 64; R. BARATTA, Diritto internazionale privato, Milan 2010, p. 147 et seq. 28 Art. 348 Civil Code (CC). & Art. 721(3) Civil Procedure Code (CPC). See A. FERRER CORREIA, Liçoes de direitto internacional privado I, Coimbra 2000, p. 427 et seq; L. DE LIMA PINHEIRO, Direito internacional privado. Vol. I. Introduçao e Direito de Conflitos. Parte Geral, Coimbra 2001, p. 456. 29 Art. 53 (1) PILA. See M. PAUKNEROVA/ J. BRODEC (note 23), at 175. 30 Art. 12 (1) Private International Law and Procedure Act (PILPA). Note R. KNEZ/ V. ROSIC, Slovenia, in C. ESPLUGUES MOTA, et al. (note 23), at 345-346. 31 Article 44.2 CPIL, though some exceptions to this legal status are envisaged by the law (e.g. Art. 77 CPIL). See N. NATOV et al., Bulgaria, in C. ESPLUGUES MOTA, et al. (note 23), at 148. 32 Romania could be included in this category, though some positions in favour of its hybrid condition also exist. Note, R.G. MILU/ M. TAUS, Romania, in C. ESPLUGUES MOTA, et al. (note 23), at 318 and fn. 6. 33 See C. ESPLUGUES MOTA, et al., General Report on the Application of Foreign Law by Judicial and Non-Judicial Authorities in Europe, in C. ESPLUGUES MOTA, et al. (note 23), at 11-12. As regards Italy, note T. BALLARINO/ D. MILAN, Corso di Diritto internazionale privato (3rd ed.), Padova 2008, p. 97. 34 § 293 Zivilprozessordnung (ZPO). Note, D. LEIPOLD, in F. STEIN/ M. JONAS, Kommentar zur Zivilprozessordnung (22nd ed.), Vol. 4, Tubingen 2008, § 293, p. 793 et seq.; J. KROPHOLER, Internationales Privatrecht (6th ed.), Tübingen 2006, p. 215; Th. RAUSCHER, Internationales Privatrecht. Mit internationalem und europäischem Verfahrensrecht (3rd ed.), Heidelberg 2009, p. 32; V. SANGIOVANNI, La conoscenza, l’interpretazione e l’applicazione della legge straniera da parte del giudice civile tedesco, Riv. dir. int. priv. proc. 1999, p. 915-916; R. HAUSMANN (note 18) at I-2; M. ARTZ, Kollisionsrecht und ausländisches Recht in spanischen und deutschen Zivilverfahren, Frankfurt am Main 2004, p. 167-169. 35 In France, the Cour de Cassation has stated that once it has been designated by the competent choice-of-law rule, foreign law is law. See C.Cass. (Civ.), 13.1.1993, Coucke,


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Carlos Esplugues Mota (2) Some Member States treat foreign law before national courts as a purely factual issue, despite this approach being the minority position in the EU. Countries following this approach are usually linked to the British legal tradition: The United Kingdom,38 Malta,39 Cyprus40 and Ireland.41 Yet Spain42 and Luxemburg,43 both of the continental tradition, also follow this approach, albeit for differing reasons. Unfortunately, reality is much more complicated than stated so far and many alterations and shortcomings exist in practice. (1) Firstly, in a small number of EU Member States foreign law is neither clearly considered as law nor as a pure fact. Instead, it is treated as a hybrid, thus becoming a kind of “tertium genuus” that is not always clearly defined. This hybrid condition of foreign law very much gravitates on ancillary topics, like the grounds upon which foreign law is called on for application or the possible revision of foreign law by higher courts. This happens, for instance, in Latvia,44 Lithuania45 and to some extent, The Netherlands.46 Rev. crit. dr. int. pr., 1994, p. 80; P. MAYER/ V. HEUZÉ, Droit international privé (10th ed.), Paris 2010, p. 137 et seq.; F. MÉLIN, Droit international privé (4th ed.), Paris 2010, p. 136. 36 In Poland, full recognition of the legal condition of foreign law also exists, but it is solely made by Polish doctrine. See W. POPIOLEK/ M. ZACHARIASIEWICZ, Poland, in C. ESPLUGUES MOTA, et al. (note 23), at 276. Art. 11(1) of the Draft PILA modifies this situation, accepting the legal condition of foreign law. 37 As a matter of principle, and despite the absence of a legal foundation, foreign law is also deemed to be a legal condition in Scandinavian countries. Note L. ERVO et al, Scandinavian Countries, in C. ESPLUGUES MOTA, et al. (note 23), at 329. Although some conflicting views are said to exist to this respect. Note, M. JÄNTERÄ-JAREBORG, Application of Foreign Law (note 5), at 81-82. 38 See E.B. CRAWFORD/ J.M. CARRUTHERS, United Kingdom, in C. ESPLUGUES MOTA, et al. (note 23), at 392, fn. 4; R. FENTIMAN (note 9), at 281; J.H.C. MORRIS (by D. MCCLEAN/ K. BEEVERS), The Conflict of Laws (7th ed.), London 2009, p. 10 et seq. 39 T. SCIBERRAS/ K.A. BORG, Malta, in C. ESPLUGUES MOTA, et al.(note 23), at 266. 40 A.C. EMILIANIDES, Cyprus, in C. ESPLUGUES MOTA, et al. (note 23), at 161-162. 41 W. BINCHY, Irish Conflicts of Law, Dublin 1988, p. 104 et seq. 42 Art. 12(6) CC and Art. 281(3) Civil Procedure Act (CPA). Note, J.L. IGLESIAS BUHIGUES et al., Spain, in C. ESPLUGUES MOTA, et al. (note 23), at 357-358; P.P. MIRALLES SANGRO, Aplicación del Derecho extranjero en el proceso y tutela judicial, Madrid 2007, p. 173 et seq. 43 C.App., 22.12.1916, Pasicrise Lux. 10.14; Tr.Arr. Luxembourg, 5.11.1997, n. 3/97. See G. CUNIBERTI/ I. RUEDA, Luxembourg, in C. ESPLUGUES MOTA, et al. (note 23), at 256. 44 Art. 22 Introduction of civil law. See V. NEKROSIUS/ V. VEBRAITE (note 24), at 120. 45 Art. 1.10 CC. See V. NEKROSIUS/ V. VEBRAITE (note 24), at 120. 46 Art. 25 CPC and Article 70 Judicial Organizatin Act (JOA). See V. VAN DEN EECKHOUT, The Netherlands, in C. ESPLUGUES MOTA, et al. (note 23), at 377.

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Harmonization of Private International Law and Application of Foreign Law (2) Secondly, European legal reality very seldom – almost never – reflects a straightforward projection of any of the above three approaches. Virtually no EU Member State fully accepts the consequences of the theoretical position originally maintained regarding the nature of foreign law before national courts.47 On the contrary, theoretical inconsistencies exist in many European countries regarding the treatment of foreign law. Moreover, such inconsistencies are deepened by the fears, prejudices and temptations that the application of foreign law entails to the judge48 and are further exacerbated by the role awarded to procedural rules in this field.

2.

Theoretical Shortcomings: the Pleading of Foreign Law Before National Courts and the Clear Role Played by the Judge and the Parties

As a matter of principle, the roles played by national courts and parties in pleading foreign law should depend on the condition awarded to foreign law by the State.49 This implies that granting legal condition to foreign law before national courts should lead to the recognition that national courts play a fully active role in this issue, to the exclusion of the parties. Parties should not be obliged to always plead foreign law and should also be expected to maintain a totally passive attitude towards the judges’ application of foreign statutes ex officio. On the contrary, awarding a factual nature to foreign law should entail a totally active approach by parties and, in consequence, would render a passive role to courts. In such circumstances, the judge should be unable to take judicial notice of foreign law, in so far as it is a fact unaware to him; he would neither know nor be able to know – “sua sponte” – the content of the foreign law to be applied. As a result, he should be compelled to wait for one or both parties to plead the applicable foreign law. However, things are rather different in practice, and a significant level of inconsistency exists in Europe between the theoretical position embraced by States and the role assigned to the parties. (1) Most EU Member States endorsing the legal nature of foreign law expressly recognize the leading role played by judges and, accordingly, the lack of a need for any active role by the parties.50 Nevertheless, in some of the countries that first bestowed legal condition on foreign law, the roles played by courts and parties 47

T.C. HARTLEY (note 16), at 271. M. JÄNTERÄ-JAREBORG, Application of Foreign Law (note 5), at 79-80. 49 See S. GEEROMS (note 12), at 15 et seq. 50 That is the case in Austria (§ 3 & § 4 (1) IPRG); Belgium (Art. 15 CPIL); Bulgaria (Art. 43.1 CPIL); Czech Republic (Art. 53.1 PILA); Estonia (§ 2 PILA); Germany (by interpreting § 293 ZPO); Greece (Art. 337 CPC and Art.144.4 Code of Administrative Procedure –CadmP-); Hungary (Sec. 5 CPIL); Italy (Art. 14 PILA); Poland (Art. 1143 CPC); Portugal (Art. 348 CC); Slovakia (Art. 53 PILA); Slovenia (Art. 12(1) PILPA); and Romania (Art. 7 of the Law No 105/1992). See C. ESPLUGUES MOTA, et al. (note 33), at 2225. 48


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Carlos Esplugues Mota are dependent on the mandatory/non-mandatory character awarded to the choiceof-law rules based on the availability of the rights at stake.51 In those cases in which choice-of-law rules are mandatory, the parties become rather passive in relation to pleading foreign law. Whereas in those situations where the choice-of-law rule is deemed facultative, it is necessary for a party to plead the relevant foreign law before it is necessary for the judge to apply it: France52 and the Scandinavian countries53 are good examples of that approach. (2) In those countries in which foreign law is considered factual, the court’s role in pleading foreign law is generally passive.54 Nevertheless, this general statement necessitates, again, certain qualifications. That is the case of Spain55 and Luxembourg.56 (3) Finally, those countries applying a hybrid nature to foreign law also maintain certain differences among themselves regarding the roles played by the courts and the parties.57

51

M. JÄNTERÄ-JAREBORG, Foreign Law (note 5), at 243; B. FAUVARQUE-COSSON, Libre disponibilité des droits et conflits de lois, Paris 1996, p. 174 et seq. 52 C.Cass. (Civ.), 11.10.1998, Rebouh & C.Cass. (Civ.), 18.10.1988, Schule, both in J.D.I., 1989, 349. See R. HAUSMANN (note 18), at I-4; D. SOLENIK, L’application de la loi étrangère par les juges du fond anglais et français: réflexions pour une approche convergente dans l’espace européen, Paris 2006, p. 198 et seq.; B. AUDIT, Droit international privé (6th ed.), Paris 2010, p. 234-241; F. MÉLIN (note 35), at 137; P. MAYER/ V. HEUZÉ (note 35), at 141. 53 M. JÄNTERÄ-JAREBORG, Foreign Law (note 5), at 277-280; L. ERVO, et al. (note 37), at 329; T.C. HARTLEY (note 16), at 289-290. 54 That is the case in United Kingdom (see E.B. CRAWFORD/ J.M. CARRUTHERS (note 38), at 394; R. FENTIMAN (note 9), at 281; CHESHIRE, NORTH & FAWCETT (edit. by J.J. FAWCETT/ J.M. CARRUTHERS), Private International Law, Oxford, OUP, 14th ed., 2008, p. 113 et seq.); Ireland (see T.P. KENNEDY, Ireland, in C. ESPLUGUES MOTA, et al. (note 23), at 231); Malta (T. SCIBERRAS/ K.A. BORG (note 39), at 266 and 277) and Cyprus (A.C. EMILIANIDES (note 40), at 162). 55 Art. 12 (6) CC. 56 Note, Tr.Arr. Luxembourg, 26.4.1989, n. 233/89; Tr.Arr. Luxembourg, 16.5.1986, n. 36051; C.App. 19.3.1998, n. 19521; Tr.Arr. Luxembourg, 5.4.2000, n. 63348. 57 In The Netherlands, the Judge must apply Dutch choice-of-law rules and the law to which it determines to be applicable ex officio (Art. 25 CPC). Whereas in Latvia (Arts. 654 & 655 Code Procedural Law –CPL-) and Lithuania (Arts. 1.10 (1), 1.12 (1) and 808(1) CPC) foreign law is applied as a result of international conventions or Latvian law. Foreign law is awarded legal condition in those countries. Whereas when the application of foreign law is dependent on the agreement of the parties, foreign law is treated as a mere fact.

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Harmonization of Private International Law and Application of Foreign Law 3.

“Procedure” Prevails Over “Substance”? The Impact of Procedural Rules on the Application of Foreign Law

As stated, the lack of coherence between a country’s theoretical approach to foreign law and its implementation is reinforced by the impact that procedural rules have on the treatment of non-domestic law before national courts.58 Usually there is no straightforward extrapolation of the theoretical approach embraced in relation to some questions clearly linked to the procedural treatment of foreign law before courts, such as the validity of the “iura novit curia” principle, the role played by parties in ascertaining the content of foreign law, and how the appeal system operates with regard to judgments rendered by lower courts upon the application of foreign law. In all these examples, the interaction with the civil procedural rules of the forum creates unpredictable consequences for the parties.

a)

Application of Foreign Law by Courts and the “Iura Novit Curia” Principle: Utopia and Reality

Those EU Member States endorsing either a factual or hybrid condition to foreign law envisage many incoherencies regarding the role played by the principle of “iura novit curia”.59 In both cases it is for the parties to provide the court with the exact content of the foreign system of law to be applied. On the contrary, many shortcomings are evident when approaching the position maintained in the several States upholding the legal condition of non-domestic law in relation to the validity and effectiveness of the “iura novit curia” principle. Accepting the legal nature of foreign law usually entails in Europe –but not in all European countries accepting this legal condition, as already seen- the application of foreign law ex officio by national courts, making it unnecessary for parties to plead foreign law. From a logical standpoint, the combination of these two consequences would necessarily render admissible the application of the principle “iura novit curia” to both domestic and foreign law. This should be the coherent consequence of the active role awarded to the court in this area. Nevertheless, once again an analysis of the European legal reality shows several divergences from the paradigm. On the one hand, what should be the general rule – the application of the principle to both domestic and non-domestic law – becomes rather unusual. In fact, the general rule applies only in Belgium, Hungary, Portugal and Slovenia.60 On the 58

Very relevant to this respect is F. MÉLIN, La connaissance de la loi étrangère par les juges du fond (Recherches sur l’infériorité procédurale de la loi étrangère dans le procès civil), Marseille 2002, p. 99 et seq. 59 See C. ESPLUGUES MOTA, et al. (note 33), at 31-32. Although some flexibility may exist in some cases. For instance, and as regards England, note, J.H.C. MORRIS (note 38), at 13. 60 Portugal (Art. 348.1 CC) and Slovenia (Art. 12.1 PILPA) in an explicit manner. Portugal (Art. 348.1 CC); Slovenia (Art. 12.1 PILPA); Belgium (M. TRAEST, Belgium, in C. ESPLUGUES MOTA et al. (note 23), 137) and Hungary (V. HARSAGI/ N. KENGYEL/ Z.


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Carlos Esplugues Mota other hand, the rejection of the “iura novit curia” principle for foreign law – which should have no role to play in this field once the legal condition of foreign law and the active role played by the courts is accepted –becomes, in fact, the general rule in the continent.61 Reality shows that all European countries except four, which as a matter of principle firmly assert the legal condition of foreign law before national courts, accept the fact that it is impossible for the judge to know the law of the whole world and therefore consider the principle of “iura novit curia” limited to domestic law only.62 By doing so, most European countries, in practice, belong to a sort of “hybrid approach”, in which foreign law is certainly considered to be “law”, but not exactly of the same kind as “domestic law”. The rejection of the principle “iura novit curia” directly redefines the roles assigned to parties and judges in the process of ascertaining the content of the applicable foreign law.

b)

The Unnecessary Becomes Increasingly Necessary: the Supplementary Role Played by the Parties as Regards Pleading and Ascertaining the Content of Foreign Law

Treating foreign law as a fact gives the parties63 an active role to play in determining the content of the applicable foreign law. Due to the very nature of a “fact,” the burden of asserting the content of the foreign law falls on the parties. The court is generally unaware of facts and, therefore, cannot do anything but wait for the parties to provide the content of foreign law. This is the general rule in those countries upholding this approach.64 Nevertheless, once again there are some more or less NEMESSANYI (note 26), at 215) due to the interpretation of courts and scholars. Also some Italian authors uphold the application of this principle to foreign law in Italy, though accepting that the judge may not know the content of every foreign law. See F. MOSCONI/ C. CAMPIGLIO, Diritto internazionale privato e processuale. Parte Generale e contratti (3rd ed.), Torino 2004, p. 175. 61 See C. ESPLUGUES MOTA, et al. (note 33), at 33-36. 62 See C. ESPLUGUES MOTA, et al. (note 33), at 32-36. 63 As a matter of fact, all EU Member States generally accept the right that accompany the parties to plead the application of foreign law on a purely voluntary basis, notwithstanding the condition granted to foreign law or the obligation of the court to apply foreign law ex officio. Moreover, the parties seem to exercise this right on many occasions. Certainly, in some cases this is done because the civil procedure law of the different Member States only allows the parties to provide the judge with all factual and legal bases of their claim at the very beginning of the proceeding. This is plainly clear in summary proceedings. But other cases exist in which the decision to plead the application of foreign law stems from the desire of the party/ies to ensure that foreign law will be applied to their cases. 64 That is the case of UK, Ireland, Malta or Cyprus. See C. ESPLUGUES MOTA, et al. (note 33), at 53-55.

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Harmonization of Private International Law and Application of Foreign Law wide qualifications and exceptions in this category of countries: Spain and Luxembourg are good examples.65 Similar mixed approaches can be seen in those countries embracing the hybrid condition of foreign law.66 Accepting the legal condition of foreign law should entail a very inactive role by parties regarding the ascertainment of the content of foreign law. Their role should be limited to supporting the court in this task. Nevertheless, the rejection of the “iura novit curia” principle for foreign law in most of those countries upholding its legal condition fully reinforces the role played by those parties regarding the pleading and determination of the content of non-domestic law. This rejection results in a situation where courts and parties have neither a purely passive nor a fully active role to play but, instead, both share some active position in determining and applying foreign law. The intensity and breath of this role, and the level of its mandatory nature, varies greatly from country to country within the EU; in many cases no clear legal solutions even exist.67 Unfortunately, this situation does not favour legal certainty and may even lead to a violation of some basic procedural principles. The supplementary role played by parties in determining the content of foreign law entails higher costs and raises the issue of having to establish whether these costs qualify for legal aid under Article 47(III)68 of the Charter of Fundamental Rights of the European Union.69 Such a possibility seems to be treated on very restrictive terms when the parties have a duty to provide the court with the content of foreign law, although a more flexible approach is said to exist when the party is asked by the judge for assistance. Nevertheless, no settled answer to this decisive question seems to exist in Europe.70 The means that may be used by courts and parties to ascertain the content of foreign law is one of the few issues in which, although differences exist, a certain harmony – but not uniformity – may be found regardless of the condition granted to foreign law before State courts. In fact, several national European legal systems tend to include flexible approaches to this issue.71 In any case, where a 65

J.L. IGLESIAS BUHIGUES, et al. (note 42), at 46-47. See C. ESPLUGUES MOTA, et al. (note 33), at 47-48. 67 See C. ESPLUGUES MOTA, et al. (note 33), at 39-45; F. MÉLIN (note 58), at 82 et 66

seq. 68 “Legal aid shall be made available to those who lack sufficient resources in so far as such aid is necessary.” 69 OJ C 364, of 18.12.2000. Council Directive 2002/8/EC of 27 January 2003 to improve access to justice in cross-border disputes by establishing minimum common rules relating to legal aid for such disputes (OJ L 26, of 31.1.2003) is silent to this respect. 70 See C. ESPLUGUES MOTA, et al. (note 33), at 57-59. 71 See T.C. HARTLEY (note 16), at 274; R. HAUSMANN (note 18), at I-8 ff. Some jurisdictions embody a general reference to all available procedural means in order to achieve the content of foreign law (e.g. Estonia, § 234 CCP & § 4 PILA; Germany, § 293 ZPO; Greece Arts. 337 CCP & 144 (4) CAdmP; Romania, Art. 7 of the Law no 105/1992; Slovenia, Art. 12(1) PILPA or Spain, Art. 299 CPA. This same attitude is said to be maintained in UK, Cyprus, Ireland or Malta). In other countries, a non-exhaustive list of


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Carlos Esplugues Mota purely passive attitude of the judge is foreseen, the origin of the information he may gather and according to which the judgment is rendered may have some relevance as to the possibility of having the judgment reviewed by upper courts.72

C.

The Peak of the Process: Effective Application of Foreign Law by National Courts in Europe

1.

Valid and Sufficient Ascertainment of the Content of Foreign Law

Almost all national systems require the content of foreign law to be sufficiently ascertained for the court to apply it. The determination that foreign law has been validly and sufficiently proven is a question for the judge himself to decide based on the information gathered; in fact, foreign law will be applied exclusively should the court determine that it has sufficient knowledge of the law’s content and interpretation in the country of origin. This is a purely subjective process determined on a case-by-case basis.73 Although a basic similarity – and in some cases silence –74 exists in Europe as to the goal of ascertaining the content of foreign law among the several EU Member States – that is, to apply foreign law in the same way it is applied by foreign courts – different standards of proof can be found in the EU Member States. The existence of assorted legal cultures, diverging standards for determining the content of foreign law and possible deadlines established for the judge to accomplish this task75, run against the presence of a uniform practice in this realm and may lead to uneven or unexpected solutions, all of which undermine the on-going process of harmonization of PIL in Europe.

2.

The Collapse of the System: What Happens in Those Cases Where Foreign Law is Not Considered to Be Sufficiently Determined?

In some cases the court may consider that the content of foreign law has not been sufficiently ascertained. Should this happen, all EU Member States accept the application of the lex fori. This result is stated explicitly in statutes in certain in-

means is embodied (e.g. Austria, e.g. § 4(1) IPRG; Bulgaria, Art. 43(1) CPIL; Czech Republic, Art. 53 (2) PILA; Hungary, Art. 5 CPIL; Italy, Art. 15 PILA; Poland, Art. 1143 CPC; Portugal, Art. 348 (1) & (2) CC or Slovakia, Art. 53 (2) PILA). Whereas some other EU Member States are silent to this respect (e.g. Belgium, Cyprus, France or Lithuania). 72 See C. ESPLUGUES MOTA, et al. (note 33), at 48-55. 73 See to this respect, B. MARKESINIS/ J. FEDTKE, Giudici e diritto straniero. La pratica del diritto comparato, Bologna 2009, p. 241 et seq. 74 For instance, Cyprus, Malta, United Kingdom or Ireland. 75 Like in Austria (§ 4 (2) IPRG); Belgium (Art. 15.2.II CPIL); Czech Republic (Art. 53 PILA); Estonia (§ 4 (4) PILA) or Slovakia (Art. 53 PILA).

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Harmonization of Private International Law and Application of Foreign Law stances.76 In other cases, application of the lex fori results from case law or academic research.77 Regardless, the application of domestic law instead of the competent foreign law is usually done with some apprehension by the court. All possible efforts to ascertain the content of foreign must have been attempted. In addition, in many cases the application of domestic law instead of the foreign law takes place as a last resort: France78 and Slovenia79 are plain examples of this rule. Because the application of the lex fori in such cases implies to some extent the failure of the choice-of-law rules system, some alternative – or complementary – approaches are also accepted in several European countries on limited grounds.80 Thus reference to “any other relevant choice-of-law rule” (Italy)81, recourse to “whichever law would be competent in the alternative” (Portugal)82, application of the probable content of foreign law (Germany83 and Sweden)84 or of Swedish law if it is considered to be fair (Sweden)85, application of another provision of the same foreign law (Bulgaria),86 reference to the law of a third State having a closer connection to the dispute at stake (Czech Republic,87 Germany,88 Slovakia89 or The Netherlands)90 or of principles of law internationally accepted (The Netherlands) 91 are also taken into account. In a few other countries, the lack of proof of the content of foreign law has even resulted in the dismissal of the claim on certain occasions: Spain92 and Sweden,93 though some isolated cases, have also been reported in 76

Austria (§ 4(2) IPRG); Belgium (Art. 15.2.II CPIL); Czech Republic (Art. 53 PILA); Estonia (§ 4(4) PILA); Italy (Art. 14(2) PILA); Latvia (Art. 22 of the Introduction to the CC); Lithuania (Art. 1.12 (3) CC); Poland (Art. 7 PILA); Portugal (Art. 348 CC); Romania (Art. 7 of the Law No 105/1992); Slovakia (Art. 53 PILA) or Slovenia (Art. 12(4) PILPA). 77 Bulgaria, Cyprus, France, Germany, Greece, Hungary, Ireland, Malta, Spain, The Netherlands and United Kingdom. See C. ESPLUGUES MOTA, et al. (note 33), at 70-72. 78 M. JÄNTERÄ-JAREBORG, Foreign Law (note 5), at .292. 79 R. KNEZ/ V. ROSIC (note 30), at 347. 80 Note F. MÉLIN (note 58), at 247 et seq. 81 Art. 14 (2) PILA. Vid. P. MENGOZZI (note 27), at 65-67. 82 Art. 23 CC. 83 BGH, 23.12.1981, IVb ZR 643/80, NJW 1982, 1215. See S. GEEROMS (note 12), at 211. 84 L. ERVO, et al. (note 37), at 71. 85 L. ERVO, et al. (note 37), at 71. 86 N. NATOV, et al. (note 31), at 151-152. 87 M. PAUKNEROVA/ J. BRODEC (note 23), at 179-180, fn. 36. 88 I. BACH/ U.P. GRUBER, Austria and Germany, in C. ESPLUGUES MOTA, et al. (note 23), at 109-110. 89 M. PAUKNEROVA/ J. BRODEC (note 23), at 179-180, fn. 36. 90 V. VAN DEN EECKHOUT (note 46), at 383-384. 91 V. VAN DEN EECKHOUT (note 46), at 383-384. 92 J.L. IGLESIAS BUHIGUES et al. (note 42), at 363-364.


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Carlos Esplugues Mota England to this respect.94 Nevertheless, and despite these alternative possibilities, resort to the lex fori appears to have manifest support in Europe.

3.

Possible Review of the Application of Foreign Law by Upper Courts

Review by upper courts of judgments on the grounds of misapplication of choiceof-law rules or a lack of or incorrect application of the competent foreign law is necessary, not only to ensure the proper functioning of the national and EU systems of PIL, but also to guarantee parties full access to justice and further legal certainty within the EU. However, this somewhat harmonious situation is qualified by the existence of many variations in the specific grounds of review (and the scope of such review), the available methods of appeal, and the competent courts to review lower courts decisions. Besides, in many instances no specific solutions directly related with the application of foreign law by lower courts are envisaged by the legislator.95

III. The Second Part of the Play: Application of Foreign Law by Non-Judicial Authorities in Europe The application of foreign law is no longer constricted to only judicial authorities. Foreign law is increasingly taken into account by non-judicial authorities within the EU, such as public notaries, civil registrars and land or commercial registrars. Unfortunately, the multitude of differences and problems detected when dealing with the application of foreign law by judicial authorities in Europe are even extended when referring to non-judicial authorities, with the added problem that there is an habitual lack of regulation in this field: (1) Only two countries include specific responses regarding the application of foreign law by national non-judicial authorities: Estonia96 and Spain.97 (2) Neither a specific system nor specially designed rules exist regarding the application of foreign law by non-judicial authorities in Austria,98 The Czech 93

Until 1973, see M. JÄNTERÄ-JAREBORG, Foreign Law (note 5), at 326. S. GEEROMS (note 12), at 195-196. 95 See C. ESPLUGUES MOTA, et al. (note 33), at 75-78. 96 The PILA of 2002 embodies an explicit rule as regards the application of foreign law by non-judicial authorities in § 5 titled “Rights of administrative agencies in application of foreign law”. 97 Art. 12(6) CC states the obligation that accompany Spanish “courts and authorities” to apply Spanish choice-of-law ex officio. 98 I. BACH/ U. P. GRUBER (note 88), at 113. 94

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Harmonization of Private International Law and Application of Foreign Law Republic,99 Cyprus,100 Germany,101 Greece,102 Italy,103 Latvia,104 Lithuania,105 Luxembourg106, Malta,107 Scandinavian countries,108 Slovakia,109 Slovenia, 110 or The Netherlands.111 In some of these countries (The Czech Republic, Cyprus, Latvia, Lithuania, Luxembourg, Portugal, Slovakia, Slovenia and The Netherlands) the application mutatis mutandi of the solutions applied to judicial authorities to nonjudicial authorities is said to be upheld, but this tends to be a doctrinal approach.112 In others, like Malta, a case-by-case approach is necessary.113 Many other countries are just silent on this topic. (3) The remaining EU Member States tend to include certain isolated rules in relation to the application of foreign law by non-judicial authorities. An example is Portugal with its rules regarding public notaries.114 Nonetheless, application of foreign law by non-judicial authorities is usually considered to be rather scarce, and a comprehensive legal and academic response to this issue is lacking in all EU Member States. Sometimes it is said that a real application of foreign law by nonjudicial authorities is not even feasible.115 As stated, the common and usual absence of a global response to the application of foreign law by non-judicial authorities and the lack of valid information regarding their effective application of foreign law is commonplace in all EU Member States. This scenario makes it almost impossible to highlight any existing common trends in this field in Europe. Nevertheless, a more flexible approach regarding the application of foreign law by non-judicial authorities is seemingly envisaged in the different EU Member States that provide a response to this issue. Non-judicial authorities are apparently 99

M. PAUKNEROVA/ J. BRODEC (note 23), at 182. The only existing regime of application of foreign law by non-judicial authorities refers to arbitration. A.C. EMILIANIDES (note 40), at 162. 101 I. BACH/ U.P. GRUBER (note 88), at 113. 102 E. VASSILAKAKIS/ V. KOURTIS (note 25), at 201. 103 I. QUEIROLO, et al. (note 27), .at 17 et seq. 104 V. NEKROSIUS/ V. VEBRAITE (note 24), at 127-128. 105 V. NEKROSIUS/ V. VEBRAITE (note 24), at 127-128. 106 G. CUNIBERTI/ I. RUEDA (note 43), at 261. 107 T. SCIBERRAS/ K.A. BORG (note 39), at 265, fn. 2. 108 L. ERVO, et al. (note 37), at 337. 109 M. PAUKNEROVA/ J. BRODEC (note 23), at 182. 110 R. KNEZ/ V. ROSIC (note 30), at 345. 111 V. VAN DEN EECKHOUT (note 46), at 377. 112 C. ESPLUGUES MOTA, et al. (note 33), at 80. 113 T. SCIBERRAS/ K.A. BORG (note 39), at 265, fn. 2. 114 C. ESPLUGUES MOTA, et al. (note 33), at 80, fn. 439; L. DE LIMA PINHEIRO (note 28), at 458. 115 See M. TRAEST (note 60), at 140. 100


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Carlos Esplugues Mota granted greater discretionary power regarding the ascertainment of foreign law and they tend to implement that power in a much more informal manner.116 Besides, in many cases the activity performed by non-judicial authorities is subject to final scrutiny by courts.117 Unfortunately, no further commonality apparently exists among the different EU Member States. The analysis of the varied responses embodied in the few European legal systems dealing with this question shows both contrasts and deafening silence in relation to some key questions; for instance, the meaning of the concept of “non-judicial authorities” as regards the application of foreign law, the function and role played by these authorities, the role undertaken by parties in this field, and the consequences derived from the lack of ascertainment of foreign law by non-judicial authorities.118

IV. The Way Ahead: the Various Solutions Foreseeable to this Situation and “the Madrid Principles” A.

Some Solutions Available if We Ever Need Them

The situation previously depicted could be easily considered to be far from satisfactory. We have metaphorically referred to it as the “Trojan Horse” and the “Achilles’ Heel” of the EU harmonized choice-of-law rules. In fact, while checking the existing situation on the application of foreign law in Europe, one very much has the feeling of attempting to drive a Ferrari without petrol through the forest at night. What a feeling of helplessness! Gradually, the need to tackle the issue of the application of foreign law by judicial and non-judicial authorities in Europe to ensure the proper operation of the existing and future EU Regulations on PIL becomes clearer and reaches an outstanding relevance. The consolidation of the internal market will give rise to an increasingly higher number of international cases before EU Members States’ courts and Authorities and, consequently, to a progressively higher number of cases susceptible to be governed by foreign law. In fact, the necessity of some common rules regarding the application of the competent foreign law is also felt beyond the boundaries of the EU. Thus, The

116

C. ESPLUGUES MOTA, et al. (note 33), at 81. See E.B. CRAWFORD/ J.M. CARRUTHERS (note 38), at 407; G. CUNIBERTI/ I. RUEDA (note 43), at 261; V. NEKROSIUS/ V. VEBRAITE (note 24), at 128; M. PAUKNEROVA/ J. BRODEC (note 23), at 182-183. 118 See C. ESPLUGUES MOTA, et al. (note 33), at 81-89. 117

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Harmonization of Private International Law and Application of Foreign Law Hague Conference on Private International Law has been working in this field for some time without achieving any result so far.119 The current legal situation in Europe in this area can hardly cope with this new horizon to come. As it has been stated above, the existing legal framework is commonly unsettled, is subject to multiple interpretations and manipulation, and, is always diverse and unclear. The current situation is hardly consistent with the existing trend towards harmonization within the EU; instead it runs against harmonization and will create an increasingly flawed system. Moreover, the current situation upsets legal certainty and contradicts the objective of ensuring that all European citizens within the EU have full access to justice. Several approaches can be adopted to address the current situation. At least four are easily ascertainable at first blush: (1) Firstly, one could think that the present state of affairs should remain the way it is. Certainly the problems envisaged may foster “forum shopping” and all sort of manoeuvres within the EU harmonized system by those involved in the case at stake – parties, judges and authorities – curtailing the system’s effective application. But these issues do not apply to all areas covered by harmonized choice-oflaw rules and, besides, they are not so relevant or habitual. Many of the harmonized choice-of-law rules refer to obligations and recognize the large role played by party autonomy, thus softening the real risk of “forum shopping”.120 Because of the large area of law covered by these Regulations – Rome I and Rome II – which allow party autonomy at even a very late stage in a dispute, the failure by either party to try to prove the content of foreign law could indeed be approached as an exercise of their party autonomy. Regardless of how true this may be, it remains equally valid that other instruments currently in force and planned for the future in fields directly affecting the life of citizens in Europe – e.g. international maintenance claims, marital crisis and succession – limit party autonomy, placing the issue back onto the scene even if we accept that some of these instruments do not apply to all EU Member States. Besides, devices currently available – the London Convention,121 the European judicial network in Civil Matters,122 the European Judicial Atlas in Civil Matters123, 119

The Conference has fully acknowledged the relevance of this issue and the need to explore the feasibility of future instruments in this area. Note Hague Conference on Private International Law, Prel. Doc. N. 11A, March 2009: “Accessing the Content of Foreign Law and the Need for the Development of a Global Instrument in this Area – A possible Way Ahead”, available at (11.10.2011). 120 See C. AZCÁRRAGA MONZONÍS, The harmonization of the application of foreign law in the European Space of Civil Justice, International Journal of Procedural Law, vol. 4 (accepted, to be published at the end of 2012). 121 It is said to receive a highly sporadic use in the EU Member States. See C. ESPLUGUES MOTA, et al. (note 33), at 56. 122 Available at (10.10.2011). 123 Available at (10.10.2011).


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Carlos Esplugues Mota and European e-justice –124 offer only a partial vision of European legal reality, and by only referring to Europe seem insufficient to overtake problems arising in a continent with an enormous level of immigration and, therefore, the potential of having non-EU legal systems apply to the different cases at stake. (2) Secondly, the future existence of a unified substantive set of Private Law rules in Europe may also run in favour of maintaining the current situation, in so far as no application of foreign law would be envisaged in the continent in the future: the Proposal for a Regulation of the European Parliament and the Council on a Common European Sales Law125 could be approached as a first step towards this goal. Certainly the basic premise on which this approach stands is valid, but this Proposal (only) marks the beginning of a long and uncertain process. (3) Thirdly, the possibility of moving the problem from the choice-of-law field to the recognition arena could also play a role in this issue. This has already been put into question as regards areas of law in which no future EU action is foreseen – e.g. the name of a person –126 but its extrapolation to those fields already covered by harmonized choice-of-law rules could also be explored. The notion of “origin,”127 which is so well known in Europe, and the principle of the mutual confidence in European Judges and Authorities, on which the whole European process of harmonization stands, would certainly uphold this approach. Nevertheless, a certain “vested rights” flavour arises out of this solution that ultimately could run against it. (4) Finally, a common set of rules regarding the application of foreign law within the EU could be drafted. This is the position supported by several European Scholars and professionals who met in Madrid in February of 2010.128 They all agreed that despite all the difficulties that this project entails (the experience of works undertaken at The Hague Conference of Private International Law shows 124

Available at (10.10.2011). 125 Cit. 126 M. LEHMANN, What’s in a Name? Grunkin-Paul and Beyond, this Yearbook, Vol. 10 (2008), p. 156. 127 M. GUZMÁN ZAPATER, El principio del reconocimiento mutuo: ¿Un nuevo modelo para el Derecho internacional privado comunitario?, RDCE 1998, núm. 3, p. 137 et seq. 128 Scholars from the University of Antwerp (Belgium), the Karlova University of Prague (Czech Republic), the Joensuun University (Finland), the University of Paris IIPanthéon-Assas (France), the Johannes Guttenberg University of Mainz (Germany), the Aristotle University of Thessaloniki (Greece), the University of Genoa (Italy), the University of Vilnius (Lithuania), the University of Valencia (Spain), the University of Glasgow (United Kingdom) and members of the Chamber of Advocates – Malta (Malta), the Associate Nationala “Cartea Funciaria” (Romania), the European Land Register Association (ELRA) and the Colegio Nacional de Registradores de la Propiedad y Mercantiles de España (Spain). The meeting took place in the frame of the Project JLS/CJ/2007-1/03: “Application of Foreign Law by Judicial and Non-Judicial Authorities in Europe” awarded by the European Commission, in 2008.

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Harmonization of Private International Law and Application of Foreign Law how difficult is to reach an agreement in this area,129 the highly predictable opposition to any future work of the EU in this field from several Member States or current budgetary constraints), the existing situation is highly unsatisfactory for the legal expectations of citizens in Europe and runs against the European process of choice-of-law harmonization as a whole. In an attempt to tackle this reality, some principles were drafted as a corollary of the study undertaken about the present situation of the application of foreign law by public authorities in Europe. Drafters of the so-called Madrid Principles130 agreed on the necessity, firstly, to fight the current disappointing situation and to do so, secondly, in a fully realistic manner. Thus the Madrid Principles tend to reach a point of equilibrium among the several existing national solutions in Europe, with the clear aim of summarising a common minimum standard in this field in the EU.

B.

The Madrid Principles

The study of the present legal situation in the different EU Member States regarding this complex issue offers a general picture of the existing problems and current trends. The diagnostic performed, as seen, does not render very positive results, but at the same time it provides us with sufficient information about the real situation regarding this field in Europe. From this starting point, the goal of the drafters of the Madrid Principles was to highlight some basic principles of potential acceptance for all, or at least most, of the EU Member States in this area.131 The Madrid Principles consist of 11 statements confronting most of the different issues arising out of this difficult and convoluted field. Taking into account the complex reality of the application of foreign law by public authorities in Europe and the need to provide a sound and certain response to citizens in the continent, the Principles refer to the application of foreign law by both judicial and non-judicial authorities.132 The Drafters uphold the need for a prospective EU instrument to be developed in this area and offer some basic rules to be embodied in it. The current status quo can only be overtaken by establishing some common standards shared by all EU Member States, which requires direct and explicit action from the EU itself. 129

The Council on General Affairs and Policy of the Conference in its meeting held in April 2011 decided, to “continue monitoring developments but not at this point take any further steps in this area, and to revisit the issue at its next meeting” (Council on General Affairs and Policy of the Conference. (5-7 April 2011). Conclusions and Recommendations adopted by the Council, p.3, available at (11.10.2011). 130 See Annex I to this contribution. 131 Note U.P. GRUBER/ I. BACH, The Application of Foreign Law: A Progress Report on a New European Project, this Yearbook, Vol. 11 (2009), p. 157 et seq. 132 Principle II.


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Carlos Esplugues Mota For this instrument to achieve its main goal – to establish a set of common principles and ideas on the application of foreign law by judicial and non-judicial authorities in Europe – a Regulation was favoured instead of a Directive. Certainly, the direct action that a Regulation accomplishes may encounter opposition from some EU Member States – they probably would also oppose a Directive – but for those finally bound by such a Regulation, a fully effective response to the question at stake is offered.133

1.

Scope

Taking into account the growing relevance of the role played by non-judicial authorities in Europe, this EU instrument should cover the application of foreign law by both judicial and non-judicial authorities in Europe.134 For the Regulation to be fully effective, a list of those non-judicial authorities within its scope of application should be provided by the different EU member States.135 Besides, the prospective Regulation should enjoy a universal scope; it should refer to foreign law, whatever the law of an EU or non-EU Member State would be called for application by the competent choice-of-law rule.136 This universal scope of application is fully in line with solutions embodied in the harmonized choice-of-law rules previously enacted by the European Union.

2.

Avoidance of the Legal/Factual Condition Issue

The drafters of the Principles attempt to provide realistic solutions to this difficult and complicated issue. To this respect, they decided to avoid any theoretical approach and instead focused on providing a valid and realistic response to the question of what national public Authorities must do when confronting the application of foreign law. Thus foreign law is said to be applied ex officio by the competent national authority.137 Consequently, a highly active role is expected from the relevant authority to obtain the foreign law’s content.138 Nevertheless, this diligent attitude of the judge cannot hide difficulties that ascertaining the content of foreign law entail -usually being overworked- and the necessity for the parties to support the judge in certain specific occasions. The Principles encourage this cooperation.139

133

Principle I. Principle II. 135 Principle II in fine. 136 Principle III. 137 Principle IV. 138 Principle IV in fine. 139 Principle V. 134

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Harmonization of Private International Law and Application of Foreign Law Consistently the Madrid Principles state in a general manner that the ascertainment of the content of foreign law by the parties should qualify for legal aid. In those cases in which a person qualifies for free legal assistance, it should be extended to cover all costs derived from the proof of foreign law. The Principles, on the contrary, are silent on the situation in which the ascertainment of the content of foreign law is performed by the party upon request by the court.140 However, the minimum standard consideration granted to the Principles will enable those countries covering this last possibility to provide parties with legal aid.

3.

Proof of Foreign Law

The Madrid Principles fully accept the subjective condition that accompanies the proof of foreign law. As stated in Principle V, such proof should be done in a reasonable time and fair manner.141 In this task, the Principles stress the role played by national procedural law and the need for the judge to refer to all available sources of information.142 The fact that most of the available open sources in Europe refer to European law made the Drafters call for a special effort by the EU to reach agreements with other major jurisdictions and institutions to exchange information on foreign law.143 The content of foreign law should be determined in accordance with the Procedural Law of the national authority. The national authority may use, inter alia and in addition to the instruments set forth by international conventions, the information obtained through national and foreign public authorities; they can also ask for the assistance of experts and specialized institutions. The use of the European Judicial Network and other similar networks should be encouraged.

4.

Non-Application of Foreign Law

In those cases where foreign law cannot be validly ascertained in a reasonable time, the Lex fori should applied instead.144 Besides, foreign law should be disregarded when it is deemed inadequate to address the issue in question145 or it is considered to be contrary to the public policy of the forum.146 Although no response is explicitly provided by the Principles, in such cases the forum law should be applied.

140

Principle VIII. Principle V in fine. 142 Principle VI. 143 Principle XI. 144 Principle IX. 145 Principle IX in fine. 146 Principle VII. 141


295

Carlos Esplugues Mota 5.

Revision of Decisions by Upper Courts and Authorities.

Finally, the Madrid Principles recognize that any decision or finding as to the content of foreign law must be open to review, subject to national law in accordance with national procedural law.147

V.

The Final Act: Nostradamus or the Beginning of a Beautiful Friendship?

The current status quo regarding the application of foreign law in Europe is hardly acceptable, either for citizens or for the harmonized system of PIL as a whole. Reaching some certain common rules on this issue, or even a future Regulation on this topic, should not respond to any academic challenge. The major objective of drafting a common set of rules in this field is to provide people with a higher level of legal certainty and to ensure that they have full access to justice within the territory of the EU. That is, to offer citizens in Europe a device that allows them to obtain a certain, flexible and affordable solution to their problems while at the same time preserving their legal expectations within the framework of increasing cross-border litigation. By doing so, we could also reach the goal of furthering the functioning of the internal market in a much more efficient way, enhancing the process of harmonization of PL and PIL in Europe and the consolidation of a European Space of Justice. The Madrid Principles want to contribute to this objective. The Principles stand on the General Report on the application of foreign law by judicial and nonjudicial authorities in Europe148 and aim to fulfil a dual goal in connection with the mentioned General Report. They want to stress how the application of foreign law by judicial and non-judicial authorities is relevant for the legal expectations of citizens in Europe and for the effective consolidation of a European Space of Justice within the EU. And, at the same time, they want to call attention to this issue in a positive and proactive manner. They attempt to leave behind the time of disappointments and complaints as to the existing negative situation in this area of law and to contribute to the necessary debate on this topic with a proposal for some minimum shared standards in this field and some common ideas about its content. The time for debate on this hidden – but perfectly known – issue has arrived and the Principles want to contribute to it.

147 148

296

Principle X. C. ESPLUGUES MOTA, et al. (note 33), at 3 et seq.


ANNEX. The “Madrid Principles” (February 2010) Principle I A general European instrument on the ascertainment of content and manner of application of foreign law seems to be necessary. A Regulation seems to be the most suitable instrument to achieve this goal. Principle II This Regulation should have a broad scope and apply to both judicial and non-judicial authorities. Member States will provide a list of those non-judicial authorities covered by this Regulation. Principle III The Regulation should have a general scope of application notwithstanding the fact that third countries laws can be applied. Principle IV Application of foreign law should be made ex officio by the national authority, which must use its best endeavours to ascertain the content of foreign law. Principle V Any possible means of helping the national authority to ascertain the content of foreign law should be explored. Cooperation with other national authorities and/or the parties should be encouraged in order to ascertain the content of foreign law in a reasonable time and in a fair manner. Principle VI The content of foreign law should be ascertained in accordance with the Procedural Law of the national authority. The national authority may use, inter alia and in addition to the instruments set forth by international conventions, the information achieved through national and foreign public authorities; they can also ask for the assistance of experts and specialized institu297

tions. The use of the European Judicial Network and other similar networks should be encouraged. Principle VII The ascertainment of foreign law does not exclude its non application on grounds of public policy. Principle VIII In those cases where the parties are entitled under national law to legal aid, such legal aid should extend to cover costs associated with the proof of foreign law. Principle IX If in the view of the national authority, a) there has been no adequate ascertainment of the content of foreign law in a reasonable time, or b) it is found that upon ascertainment of foreign law it is inadequate to address the issue in question, the lex fori shall be applied. Principle X Any decision or finding as to the content of foreign law, or for the purposes of paragraph 9 above, shall be open to review subject to national law. Specific grounds for review will be set forth by national law. Principle XI Conclusion of agreements with third countries as to the ascertainment of the content of foreign law should be encouraged. In particular, cooperation with intergovernmental organisations such as The Hague Conference on Private International Law should be supported.
