Chapter 5 Deliberate Connections (Indirect Choice of Law)

474. A further instrument available for the private ordering of transnational ac- tivities and the resulting legal relations consists in the deliberate creation of links relevant under private international law that connect transnational fact situations with specifi c legal systems which the persons in question prefer to other legal systems for substantive reasons. Th e links brought about by such deliberate activities have traditionally been considered as artifi cial, alleged or pretended connections with a given jurisdiction. Confl ict lawyers have dealt with them under the heading of “ fraus legis”, “ fraude à la loi”, “evasion of laws”, “wetsontduiking” or “Gesetzesumgehung”. Th e negative connotation of these terms results from the assumption of a quasi-natural, deeply rooted and stable connection of individuals, companies, corporeal things and acts with a given jurisdiction, the notion of a pre-established “seat” of the le- gal relation. Where such assumption prevails, the calculated creation of a relevant link with a diff erent jurisdiction may appear as illegitimate. Th e question that has to be asked in our times is whether such quasi-natural and deeply rooted connections to specifi c jurisdictions can still be claimed to exist in all areas of the law. While they still endure in some legal disciplines such as the law of immovable property, others are undergoing a transforma- tion. To employ the term coined by Savigny, the “seat” of some legal relation- ships seems to be increasingly indicated by connecting factors permitting fl exibility and mobility at lower costs for the persons involved. Put in other words: private actors are progressively capable of changing the connections of those legal relations and of establishing, by appropriate moves, connec- tions with legal systems that may suit their interests and intentions better than the connecting factors accepted in former times. Th e process may in- deed be characterized as a turn towards an “indirect choice”.⁹⁸⁹ 475. Th is transformation of the discipline will be further investigated with regard to some traditional connecting factors employed in the confl ict of laws, see infra section 1. Th e tendency towards objective connecting factors allowing for greater mobility goes hand in hand with the progressive advancement

989 See the illuminating article of Peter North, “Choice in Choice of Law”, in id., Essays in Private International Law, Oxford, 1993, pp. 171-200 at pp. 172-179. 306 Part II Private Ordening

and liberalization of the recognition of foreign decisions and other crystal- lizations of foreign law. Th is development is targeted at the implementation of the so-called principle of recognition which has received particular atten- tion as the principle of mutual recognition within the European Union, see below section 2. Th e nexus between recognition and private ordering of the type outlined supra can be explained by the following consideration: as the preconditions of recognition are becoming more lenient and recognition is handled more generously, the individual liberty to choose among several ju- risdictions by deliberately establishing appropriate connections is enlarged as a matter of fact since the persons involved need not eff ectively give up the connections with the legal system whose law had previously governed their relationship. Th e possibility of maintaining the substantive factual connec- tions with country A while at the same time deliberately creating connec- tions with country B in order to benefi t from its legal order raises the ques- tion of fraus legis. In a system of mutual recognition, it appears in a new light as will be further explained in section 3.

Section 1: Connecting Factors Favouring Private Choice

1. Formal Requirements and the Lex Loci Celebrationis a) The recognition of the lex loci celebrationis 476. In modern society and culture, a profound distinction between form and substance can be observed. Form is not valued in the same way as substance. Th is is refl ected by the treatment of formal requirements in many areas of the law. Th ey are considered as ancillary to substance and are aff orded sec- ondary signifi cance in most contexts. Accordingly, a rather lenient approach has evolved in private international law, relating to all kinds of juridical acts, in particular contracts, marriages and wills. Courts and legislators do not insist on the observance of the formal requirements established by the law governing the contract or unilateral declaration in question; instead, they accept the formalities laid down in the law of the place where the contract or declaration is made.⁹⁹⁰ According to Savigny, this rule has been accepted ever since the sixteenth century.⁹⁹¹ Th e designation of this rule by the Latin

990 See for contracts in Europe, Article 11, Rome I; in the United States § 199 Rest. Sec- ond, Confl ict of Laws, and, even more lenient, Article 3538 of the Louisiana Civil Code; for Switzerland Article 124 of the law of 1987; for Tunisia Article 68 of the law of 1998; for Venezuela Article 37 of the law of 1998; in legal literature see Frank Vischer, “Connecting Factors”, IECL, Vol. 3, Chap. 4, Sects. 36-38, referring to con- tracts, marriage and wills; for the latter it is suffi cient to refer to the validating al- ternative connections laid down in the Hague Convention on the Confl ict of Laws Relating to the Form of Testamentary Dispositions of 5 October 1961, in Hague Con- ference on Private International Law, ed., Collection of Conventions 1951-2009, Th e Hague, 2009, pp. 52 et seq. 991 Savigny, p. 350 (§ 381).