Theory of Harmony of Laws
We have to apply the foreign law so that wherever the case is decided, that is, irrespective of
the forum, the solution should approximately be the same
THUS: identical or similar problems must have identical or similar solutions
Hague Conference on Private International Law
is the preeminent organisation in the area of private international law. The HCCH was formed in
1893 to "work for the progressive unification of the rules of private international law".
Philippines : Member since July 14, 2010
Convention on the Law Applicable to Contractual Obligations 1980 or
the "Rome Convention"
is a measure in private international law or conflict of laws which creates a common choice of
law system in contracts within the European Union.
Implemented in U.K. as the Contracts (Applicable Law) Act of 1990
It has now been replaced by the Rome I Regulation
CASE:Beximco Pharmaceuticals v. Shamil Bank of Bahrain
Shamil Bank of Bharain is an Islamic bank incorporated under Bahrain law.
Beximco Ltd. is a Bangladesh-based pharmaceuticals company.
In 1995, Beximco approached Shamil Bank for financing. Both sides agreed upon a transaction in
an Islamic financial product called Murabaha (deferred sale) financing.
Accordingly, they entered into a Murabaha Financing Agreement under which the Bank
agreed to purchase Beximco its desired goods through the agency of Beximco itself and then to
sell the goods to the latter (Beximco) for a deferred price.
The difference between the purchase price paid by the Bank and the deferred price agreed to be
paid by Beximco was the profit for the Bank.
In this way, they wanted to avoid interest (riba) in their transaction because it is forbidden in
Islamic Shariah.
Thus, Beximco agreed to pay the Bank the aggregate price of the goods plus profits calculated
according to another agreement called Market Rate Agreement.
If Beximco failed to make the payment by the due date, they would pay the Bank compensation
as agreed upon in the Market Rate Agreement.
The parties agreed upon the following choice of law clause:
Subject to the principles of Glorious Shariaa, this
Agreement shall be governed by and construed in accordance with the laws of England.
Upon defaults by Beximco to pay the outstanding amount, the
Bank brought the matter to an English court to realise its claim.
The defendant, Beximco, pleaded that the transactions involved disguised loans at interest
and as such was invalid and unenforceable under Shariah law. The defendant,
Beximco, pleaded that the transactions involved disguised loans at interest and as such was
invalid and unenforceable under Shariah law.
It also argued, relying on the choice of law clause, that the claim would sustain only when the
transactions in question were valid and enforceable both under Islamic law principles and
English law.
The Court of Appeal of England and Wales, by affirmation of the lower courts decision, held
that to apply to an international contract, the law must be a single country law.
Shariah law, according to the Court, did not meet this requirement and hence was inapplicable
under the 1980 Rome Convention
Article 1.1, Rome Convention
applicable law in an international commercial contract had to be a country law.
No non-State law like Shariah did meet this requirement.
providing for only-State law as applicable law was a limitation of the Rome Convention.
Rome I Regulation
removed the limitation
was adopted by the European Union in 2008 replacing the Rome Convention.
The Regulation did not require an applicable law to be a State law.
relaxed only-State law requirement by allowing non-State law to be incorporated in commercial
contracts
THEORY OF JUSTICE
The purpose of all laws, including conflict of laws, is the dispensing of JUSTICE.
Criticism
Almost every man has his own notion of fairness and equity: to leave the adjudication of conflicts
problems to the varying whims of judicial fancy may itself symbolize the highest form of injustcice
THE RIGHT THEORY?
It will be observed that the theories above mentioned do not mutually exclude one another; perhaps
the truth may be found in their combination
If the world is to progress in understanding and judgement, it must recognize this imperative
postulate:
That sometimes we have to apply the proper foreign law because courtesy, convenience and
international duty so demand
Because there are vested rights we cannot ignore
Because all to often the foreign law has apparently become part and parcel of our law
Because identical situations should be resolved by identical remedies, irrespective of the forum
Because to do otherwise may ultimately result in the negations of justice
END.