Unraveling the problem phrase "without regard to conflicts of laws principles"

Uncategorized May 06, 2019

Many legal and linguistic problems arise when we translate across legal systems, not the least of which is that the same concept may have radically different implications between our source and target countries. One such concept is renvoi, a word that rarely ever explicitly creeps up in translation, but is all over contracts nonetheless, typically in contracts.

Renvoi is not, in itself, a problem word in translation—at least not when the source text explicitly uses the word renvoi. Black’s Law defines renvoi as “a doctrine under which court in resorting to foreign law adopts rules of foreign law as to conflict of laws, which rules may in turn refer court back to law of forum.”

The clearest example of renvoi I can think of is in Tina L. Stark’s Negotiating and Drafting Contract Boilerplate § 6.02[3]:

 “The following would be an example of renvoi: a party brings suit in a court in California, with respect to a contract with a New York choice of law provision. To determine what law should govern, the California court looks to New York law. The California court then decides that under the New York choice of law rules, the substantive law of New York is not the appropriate law—rather, Texas law is.”

Renvoi only becomes a translation problem when American contract drafters try to avoid renvoi by using the phrase “without regard to conflicts of laws principles” as shown below:

“This Agreement will be governed by and construed under the laws of the State of [insert State of choice] without regard to conflicts of laws principles that would require the application of any other law.”

 

Why do American lawyers insist on using this problem phrase?

Conflicts of laws provisions are intended to identify what law applies to a contract by express intention of the contracting parties and they apply to the substantive issues of the contract, provided that the contract is bona fide, legal, and not contrary to applicable public policy. American lawyers insist on using the phrase “without regard to conflicts of laws principles” in conflict of laws provisions for two reasons, as explained by Lauren Day:

“First, express exclusion of conflict of laws principles prohibits a future argument from either party that conflict of laws principles require a court to apply the laws of a jurisdiction other than the express jurisdiction of governing law. Second, the express exclusion of conflict of laws principles is useful in avoiding a renvoi – which is where a court will refer to the laws of a foreign jurisdiction in a matter involving a conflict of law. In some instances, a renvoi may result in the intention of the parties being lost. Exclusion of conflict of laws principles clarifies that the parties intend that the governing law expressly indicated in the contract is to apply.”

Dualism

Inside the United States, the phrase “without regard to conflicts of laws principles” in a conflict of laws provision is irrelevant. According to Tina Stark the reason is that:

“Although renvoi is indeed a theoretical problem, as a practical matter, most courts, as a matter of course, apply their own choice of law rules in determining whether to enforce the governing law provision. Accordingly, some practitioners now consider it unnecessary to specify that the chosen law does not incorporate that jurisdiction’s choice of law rules.”

In addition, as Adams points out: “It follows that if a jurisdiction doesn’t recognize the notion of renvoi […] the ‘without regard to its conflicts of laws provisions’ caveat is unnecessary.”

Of course, these authors can only say that because the U.S. has a dualist approach to international law, meaning that U.S. courts will look to U.S. law alone when solving a dispute.

But what about international contracts?

Many contracts drafted in the United States, where renvoi is merely a theoretical problem, end up in countries with a monist approach to international law where International Private Law applies to the matter of jurisdiction, choice of law, and foreign judgement. And in the receiving country, renvoi is not just a theoretical problem. Thus, parties very often find themselves tied up in court for years arguing jurisdiction and applicable law.

 

In Translation…

Translators will tend to interpret “without regard to conflicts of laws principles” literally, rendering phrases that are not likely to prevent renvoi in the target language at all. Instead, these phrases will often result in further confusion, especially in countries where renvoi is avoided by reference to the Codes or International Private Law. In such cases, when we know for sure that a contract will be crossing borders and there's a chance that it can end up in a foreign court, an explanatory phrase is usually more appropriate clarifying that the parties have chosen their applicable law, minus the International Private Law of that jurisdiction and its principles. But of course, such interpretation of the source text requires client knowledge and consent.

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