I received the following note from longtime reader Scott Chalmers, a foreign legal consultant at King & Spalding’s Houston office who’s qualified in England and Australia:
Ken, one drafting/legal issue that repeatedly comes up in negotiations between US and non-US lawyers is the use of the phrase ‘without regard to its conflict of laws provisions’ in the governing law clause.
Americans have typically insisted upon keeping that phrase, even if the governing law is non-US (e.g. English law, Australian law). Of course, we non-US lawyers respond by saying it’s completely unnecessary (i.e. those courts don’t apply the doctrine of renvoi, don’t have to overcome any related legislation, raises questions as to what the parties intentions are, etc.).
Given your upcoming talks in Australia, this ‘old chestnut’ might be a good one to tackle, as (IMHO) you’d get some interest on the issue.
For those wondering about the phrase Scott highlights, here’s what Negotiating and Drafting Contract Boilerplate § 6.02 (Tina L. Stark ed. 2003) has to say (footnotes omitted):
The purpose of [the language in question] is to avoid renvoi, that is, to ensure that a particular state’s law governs only substantive matters, and that the court does not also apply the designated law to choice-of-law questions. 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.
In order not to subvert the parties’ intent, the provision specifically excludes from its embrace the state’s conflict of law principles. …
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.
It follows that if a jurisdiction doesn’t recognize the notion of renvoi—and I gather from Scott that courts in England and Australia, at a minimum, do not—the “without regard to its conflict of laws provisions” caveat is unnecessary.
But this opens a bigger can of worms. What other U.S. boilerplate is irrelevant if the governing law is that of a non-U.S. jurisdiction? That’s something that I’m starting to think about, and not only because I’m heading to the other side of the world—it will also be an issue when I start work on the international version of Koncision’s confidentiality-agreement template.
So I invite you to chime in!