Contracts often contain "choice of law" clauses along these lines:
"Any dispute arising in connection with this Agreement shall be governed by the law of ...."
The presence – or absence – of an apparently simple bit of legal "boilerplate" like this can be extremely important in wine trade disputes. The determination of what country's law applies in the event of a dispute will affect the parties' rights and obligations under their contract, their entitlements on termination of the relationship, and – often profoundly – the commercial realities of the situation in the event of a dispute.
Most wine agency, distribution and joint venture contracts are made between parties domiciled in different countries. It follows that if a dispute arises there is almost always a potential "conflict of laws" to resolve. In addition to the question of jurisdiction (i.e. in which country must, or may, proceedings be commenced – see jurisdiction) there is the question whether the dispute should be dealt with according to the law of producer's country or that of the agent/distributor/joint venturer. There can also be circumstances in which the law of some other country might be a contender. So, before a court or tribunal can decide the dispute, should it come to that, it will first be necessary to establish by which country's law the contract is governed.
Is there an agreed choice of law?
Express choice – if the parties have agreed that the law of a particular country should apply, that choice of law will generally be upheld, subject to mandatory laws that cannot be disapplied – see below.
Implied or inferred choice – if there is no express choice, it may nevertheless be possible to infer – from the contract itself or from the surrounding circumstances – that the parties intended the law of a particular country to apply. For example, if the contract does not specify the applicable law, but provides for disputes to be resolved by the courts, or by arbitration, in a particular country, that may support the inference that the law of that country was intended to apply.
No choice – in the absence of either an express or an inferred choice, the applicable law will usually be ...........
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