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Introduction

1 Purpose of the essay

Party autonomy is the fundamental principle that gives the parties the freedom to construct their agreements without any restrictions on choosing the law applicable to their contract and the terms thereof Thus, party autonomy is an important principle that plays a vital role in the nature and effect of cross-border commercial transactions This essay proposes an in-depth study of the principle of party autonomy in international contracts and how differently these are applied in two principal systems: common law jurisdictions, with special reference to English law, and civil law jurisdictions, with respect to Spanish law Based on the latter, the subsequent review of those diverse methods will confer upon this essay the opportunity to consider what the consequences of these differences might be regarding the drafting and execution of international commercial contracts At the same time, it will draw upon what recommendations are there for parties involved in trans- jurisdictional transactions to navigate through various legal landscapes

2 Definition

Party autonomy represents the right of the parties to choose the applicable law that shall determine “the existence and validity of, and their rights and obligations arising from, the contract” (Ogunranti, n.d., pp 25-26) Basically, this principle asserts freedom of contract

in that the parties are free to shape their contractual relationship in a manner that best suits the peculiar needs and expectations of the parties Whereas party autonomy has been called

the backbone of international contract, it is not, however, applied absolutely; rather, it is

restricted by mandatory rules, among which consumer-protection rules and labor contracts will be included These limitations are imposed to ensure that while contractual freedom is crucial, it must be balanced with other societal value such as fairness and the protection of vulnerable parties Therefore, having a deep understanding about party autonomy, its limitations and its manifestations across the legal system is essential for cross-border contract drafting and negotiation

3 Outline of the jurisdictions

This essay will focus on two legal systems : English law and Spain law It 1s important to note that English law is the legal system of England and Wales English law

is based primarily on common law, where party autonomy and private agreements are

considered sacrosanct Conversely, Spanish law, via the influences of Roman law,

strongly enshrines the need for considerations of public policy and equally allows a great

latitude to the courts to intervene in such matters of contract There are therefore

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differences in the way party autonomy is modulated within the different legal traditions when comparing the two legal frameworks

Comparative analysis

1 English law

1.1 The Legal Framework for Party Autonomy in the UK

The concept of party autonomy has deep roots in English common law The courts generally respect parties’s autonomy to negotiate and define their nghts and obligations, subject to limitations related to illegality, public policy, and statutory constraints (Treitel, 2015) Historically, the doctrine of freedom of contract shaped the English legal landscape, emphasizing minimal interference with the bargain agreed upon by competent parties

1.2 Interpretation and Application in the UK

Before Brexit, the Rome I Regulation, or Regulation (EC) No 593/2008, was the basic instrument regulating the choice of law in matters relating to a contract within the European Union The principle of party autonomy is enunciated in Article 3 of the Rome I Regulation: "A contract shall be governed by the law chosen by the parties." Thus, this article provides how basic a role party autonomy plays under the regulation, enabling parties to have substantial discretion in choosing the law applicable to cross-border contracts in the EU

This freedom, however, is not unlimited, and one particular limitation is imposed

by Article 9 of the Rome I Regulation, especially within English law, which protects the principle of freedom of contract Article 9 states that the chosen law shall not be inconsistent with the overriding mandatory provisions of the law of the country where the contract is most closely connected "The chosen law shall not be contrary to overriding mandatory provisions of the law of the country where the contract has its closest connection with that country, in so far as those provisions relate to matters for which the law of that country lays down rules the application of which is regarded as necessary in order to protect the interests of the parties concerned, particularly weaker parties, or to safeguard important public interests."

This is an important provision that avoids party autonomy undermining core legal protection either of a weaker party or of the significant public interest It has the result directly affecting the exercise of party autonomy in England, especially in cases of cross-border contracts, whereby the courts of England are required to check if the chosen law does not go against the overriding mandatory provisions of

the country with the closest connection with the contract Thus, whereas the

superiority of party autonomy is generally guaranteed under the Rome I Regulation, Article 9 relaxes that superiority according to the interest of respect for the significant local legal standards that protect both the rights of an individual

and public interest.Post-Brexit, the UK has enacted domestic legislation in line with said EU regulations Therefore, English law continues to be used as the

governing law for international transactions

1.3 Case law

RTI Ltd v MUR Shipping BV [2024] UKSC 18: The owners and the charterers entered into a contract of affreightment concerning the shipment of bauxite Following the imposition of US sanctions on the charterers, which made it impossible for them to pay in US dollars as required under the contract, the charterers offered to pay in Euros The owners then declared force majeure for inability to perform because of the sanctions The first instance courts found

against the owners, on the basis that the owners should have accepted an offer to

pay in Euros as the owners could have mitigated the problem The Supreme Court overturned the decision

Party Autonomy in focus: The Supreme Court made express statements

on the principle of party autonomy Parties can contract on whatever terms they want and also with a freedom not to accept non-contractual performance If MUR had been compelled to accept the offer of payment

in Euros, this would be to compel the acceptance of a variation of the

contract-contrary to party autonomy

Contractual Certainty: The court insisted on contractual certainty and predictability To make the parties accept non-contractual performance would result in massive uncertainty and unpredictability for commercial contracts Parties will remain uncertain as to their undertakings derived from the force majeure clauses, possibly with unexpected and undesired

results

2 Spain law

2.1 The Legal Framework for Party Autonomy in Spain

Party autonomy in Spain has undergone a quite remarkable evolution, responding

to other changes in society and law during this period The concept of autonomia

de la voluntad (autonomy of the will) is central to Spanish contract law, emphasizing the freedom of individuals to shape their own legal relationships through contractual agreements This autonomy is naturally not absolute but is curtailed by law, morality, and public order The roots lie in Roman law, which established the rule that agreements must be binding (pacta sunt servanda) yet imposed at the same time strict formal requirements and curbed autonomy, (Zimmermann, 1996) Currently, party autonomy in Spain is guaranteed, yet increasingly it finds its shape from EU measures such as the Unfair Contract Terms Directive and the Rome I Regulation on the law applicable to contractual obligations

2.2 Interpretation and Application in Spain

The Spanish civil code, particularly Article 1255 set out the principle of party autonomy by stating that : "The contracting parties may establish the terms, clauses, and conditions of their contracts, provided that they do not contravene the law, morality, or public order." Basically, it affirms the parties' common intention It goes on to say that in cases of contract interpretation, courts need to delve deep into the common intention of the parties rather than simply adhering to the literal meanings of the words used What this section implies is that the contracts need to be interpreted in such a way as to give the actual intentions of the parties due weight while not, of course, violating any legal constraints

Spanish law acknowledges party autonomy as a principle but has placed very important restrictions to protect equity and the public interest First, any contract contrary to public policy is null and void Article 6 of the Spanish Civil Code

declares an agreement void if it contravenes legal norms, morality, or public order,

such as agreements that promote illegal practices or violate human dignity (Codigo

Civil, 1889, Art 6) For instance, labor contracts that involve workers' rights, such

as paid leave or minimum wage, are declared null by the Statute of Workers’

Rights (Ministerio de Trabajo, 1980)

Second, good faith is one of the principles governing contracts Article 1258 states that a contract must be entered into in good faith, ensuring that the parties act fairly and equitably with each other The court will intervene when one party acts unfairly, especially in contracts with unequal bargaining power (Tribunal Supremo, 2002)

Spanish law also specifically protects the parties perceived to be weaker, such as consumers or employees The Ley General para la Defensa de Consumidores y Usuarios -in its Spanish abbreviation, (Royal Legislative Decree 1/2007) prohibits the inclusion of unfair terms in contracts, especially in adhesion contracts where one party has no bargaining power (Ministerio de Justicia, 2007)

2.3 Case law

Case STS 436/2008, decided by the Spanish Supreme Court, illustrates the interaction of party autonomy with the application of the United Nations Convention on Contracts for the International Sale of Goods The parties were in dispute over the sale of second-hand vehicles, with the buyer alleging non-

conformity because of wear and tear In this regard, the Court underlined the

principle of party autonomy in international contracts, given that the parties chose the CISG as the regulative law, thus proving their freedom to regulate their contractual relationship within the latter's framework The decision confirmed that,

in accordance with Article 6 CISG, parties can modify or exclude its provisions, attesting to their contractual freedom On the other hand, party autonomy cannot

be unlimited, and the Court upheld the mandatory provisions of Articles 35, in

conformity with the contract, and 39, which decreed that buyers shall notify the

seller of any defects within a reasonable time Careful interpretation of the content

of the agreement allowed the Court to find a balance between the autonomy of the parties and principles of fairness and good faith Its judgment shows how relevant clear agreements are to cross-border transactions The case presents how Spanish Courts protect party autonomy with respect for international legal standards

3 Comparing the Interpretation and Application of Party Autonomy in the UK and Spain

3.1 Similarities

Recognition of Party Autonomy: Both English and Spanish law recognize the principle of party autonomy in international contracts Parties are free

to choose the law that shall govern their contract, and such a choice is

normally respected in both jurisdictions This principle is encapsulated in Article 3 of the Rome I Regulation, to which both the Courts of England, prior to Brexit for English law, and Spanish law continue to apply

Freedom to Choose Law in General: The laws of both England and Spain give the parties in an international contract the freedom to choose the law

of any country, even if there is no material connection between the contract and the law chosen for it This freedom makes the parties in international

trade contracts flexible, predictable, and certain

Limits Relating to Overriding Mandatory Provisions: The two systems

do apply the principle of the overriding mandatory provisions of the law of the country with the closest connection to the contract Article 9 of the Rome I Regulation permits disregarding parties’ freedom of choice of law where that would undermine the application of mandatory rules, such as consumer protection and employment law rules, in the country with which the transaction has the closest connection

3.2 Differences

Public Policy

English Law: Though the English do uphold party autonomy in principle, it would limit the said party autonomy when the law chosen is against English public policy-for instance, the contract's terms are against the fundamental legal principles in the UK, for example, fraud and illegality The Courts in England are more easy-going in respect of the use of the chosen law except in cases where there will clearly appear an evasion of the mandatory national interest

Spanish Law: Spanish law has a greater emphasis on public policy (or orden publico) Spanish courts will most certainly interfere when the choice of law results in a violation of public policy, particularly in fields such as consumer protection or employment law and family law Spanish law is therefore usually more severe in maintaining the protection of the weak parties, for example,

consumers or employees, and the discretionary power of public policy has a greater role in limiting party autonomy

Approach to the Protection of Weaker Parties English Law: Where international contracts are concered, the English courts will uphold the law chosen by the parties, but they would then consider whether the

contract terms comply with mandatory provisions enacted for the protection of weaker parties, especially in consumer and employment contracts On the other hand,

however, English law is prone to being much more lenient and allows party autonomy

in cases when the contract does not oppose the overriding mandatory provisions of the country with the closest links

Spanish Law: Spanish law grants more protection to the weakest parties-for instance, consumers, employees, tenants-and will often bypass the choice of law in international contracts if applying the latter will deprive the protected parties of protection The

Spanish courts will always check whether international contracts comply with the

domestic rules that protect the protected parties, irrespective of any law that the parties may have imposed Protection is emphasized in Spain more than in England

Impact of Brexit on the Rome I Regulation English Law (Post-Brexit): Now that the UK has left the EU, English law does not longer apply the Rome I Regulation as an EU measure England has enacted similar measures in the form of domestic legislation by way of the Private International Law (Implementation of Agreements) Act 2020 and other legislation, thereby continuing in part the principles of the Rome I Regulation The English courts continue to give significant effect to party autonomy, but may interpret the limitations differently than was taken under the former EU regime, with increasing

national focus

Spanish Law post Brexit and currently Because Spain remains a member state of the EU, the Rome I Regulation still applies, and the Spanish law is thus within its application The courts in Spain will use no less a tool than previously when it comes to determining choice of law in international contracts The courts in Spain will remain very attentive to the

protection of weaker parties and to the application of domestic overriding mandatory provisions, in conformity with EU standards

Il Critical evaluation

1 The strengths and weaknesses of the approaches in the UK and Spain

1.1 The English law

Strengths Flexibility and Freedom of Contract: English law upholds the principle of party

autonomy, whereby contracting parties have freedom to choose the applicable law

most convenient to their commercial interests Such flexibility affords businesses the ability to enter into contracts in a form that suits them, thereby allowing a mechanism for overcoming complex issues that relate to cross-border transactions In this respect, for instance, to avoid a partial dispute resolution stage, parties could select a neutral or business-friendly jurisdiction (Dicey, Morris & Collins, 2020) Such flexibility

certainly has significant importance in international trade when there is often difficulty negotiating about contractual matters due to the differences between national law

systems

Predictability and Certainty: One of the major benefits derived from party

autonomy is predictability Allowing the parties to choose the applicable law, English law ensures a lack of conflict on which legal system operates within the contract

Predictability enhances stability and reliability in commercial relationships at a global market level (Cheshire, North & Fawcett, 2021) This is significantly promoted by the fact that the application of the designated chosen law tends to reduce the risk of

unexpected legal consequences and thus enables the parties to anticipate the rights and obligations arising under their agreement

Support of Courts for Chosen Law: Traditionally, the English courts have upheld party choice of law so long as this does not offend against public policy or overriding mandatory rules This judicial deference increases England's attraction as a desired forum for international dispute resolution (Moses, 2017) The English courts are also famed for commercial acumen, and due to this and predictability in applying the

chosen laws, English law is most attractive to foreign firms It enhances contractual certainty and reliability

Weaknesses Limitations Owed to Mandatory Laws: Although the principle of party autonomy is important, its application is restricted by the imposition of adherence to overriding

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