Proper law of the contract, ascending the proper law of the contract and how the principle has been applied in Ghana

1. CONFLICTOF LAWS
CHOICEOF LAW
LAW OF OBLIGATIONS:
INTERNATIONAL CONTRACTS
PATRICK A.N. ABOKU
09.05.2019

2. Outline
 Introduction
 What is an International Contract
 Ascertaining the Applicable/Governing Law
 Laws Governing Capacity

3. Introduction
 Case with foreign element
 Jurisdiction must be established
 Choice of Law > Next
 Enforcement > Pending
 Choice of Law > determined by multiple factors including
1. Area of law
 Contract
 Tort etc
2. Express choice of the parties if not against
 Public policy
 Bona fid
 Illegality etc

4. Introduction
 Choice of Law > determined by multiple factors including
3. Connecting factors
 where a contract is signed,
 performed
 where a tort is committed
 domicile of the parties etc
4. Available statutes determining the applicable law
 Contracts for carriage of goods, luggage and Persons by Air
 Contracts for carriage of goods by sea
 International sale of goods etc
 Note:
 Proper Law of the Contract is a Common Law Doctrine
 When the governing law is determined by statute the appropriate
terminology is Applicable Law

5. ProperLaw of
theContract
 Applicable/Governing Law is determined by
 The Proper Law Doctrine
 Dictated by Statute
 Proper Law of the Contract
 Per Lord Simonds in Bonython v Commonwealth of Australia
 The system of law by reference to which the contract was made or that with which
the transaction has the closest and most real connection
 Per Dicey
 The law or laws by which the parties intended or may fairly be presumed to have
intended the contract to be governed
 This approach is described as being subjective
 Per Westlake
 The law of the country with which the transaction has the most real connection
 This approach is described as being objective
 Court of Appeal (Ghana) Society General de Compensation v. Ackerman
 The proper law of a contract is the system of law by which the parties intended the
contract to be governed or,where their intention is neither expressed nor to be
inferred from the circumstances,that system of law with which the transaction has its
closest and most real connection

6. Determining the
Applicable Lawof
aContract
 Fundamental Principle of Ghana Private International Law a contract is
governed by:
 the law chosen by the parties (respect for party autonomy)
 in the absence of express or (implied) choice
 the law of the country with which the contract has its closest and most real
connection (AKA real and substance connection)
 NOTES:
 Choice of law by the parties is not absolute
 The Court may in appropriate circumstances ignore the parties’ choice of
applicable law
 Examples of such circumstances is choice of law to determine capacity to
contract
 Reasons for ignoring parties’ choice of law (i.e. party autonomy_
 Public policy reasons
 Illegality (if the choice is illegal or may further an illegality)
 If it is not done bona fide (i.e. in good faith)

7. Determining the
Applicable Lawof
aContract
 Where there is express choice of law
 Courts would enforce due to respect for party autonomy but with limitations
 Choice of law is express when the contract contains a provision stating which
specific law it is to be governed by
 Dicey’s supports respect for express choice of law
 Prof. Oppong suggest this would be ignored by the court on certain
circumstances
 Effect to choice of law would be given if:
 the choice made bona fide (i.e. in good faith)
 E.g. intentionally avoiding limitations in the most closely connected law by choosing
different unconnected law
 the choice illegal or likely to further illegality
 it is not contrary to rules of public policy (Kessie v Charmant)
 Contracts to commit crimes or tortuous acts, that are prejudicial to public policy, to
promote sexual offences/acts, to interfere with the administration of justice, to defraud the
revenue of a nation, corrupt public life and/or to restrain trades
 To prevent forum shopping where individuals would select legal systems that
would help them escape certain limitations e.g. capacity to contract
 These are considered limitations to the choice of law rule
 Read Vita Foods v Unus for further information on express choice of law
rules

8. Proper Lawofthe
Contract applied
inGhana
 In Societe General de Compensation v. Ackerman, the court in holding
Ghana Law was the proper law of the contract, the court considered the
following:
 The place of contracting
 Place of performance
 Mode of payment
 The currency of payment
 The language of the contract
 Place of incorporation of the defendant company
 The conclusion was done, Ghana law was the proper law

9. Proper Lawofthe
Contract applied
inGhana
 Garcia v Torrejoh
 Judicial Approach to ascertaining proper law of the contract in the
absence of express choice of law is an objective and pragmatic one (Prof
Oppong)
 The standard of a reasonable man of business is applied
 The courts reiterated the principle as follows:
 To ascertain the proper law of the contract:
 First, the court will enquire whether the parties have made an express choice
of law
 Second, if the parties have not selected the proper law, then the proper law
will be ascertained from the nature and terms of the contract and the general
circumstances of the case
 The courts would have to ascertain with which system of law the transaction
had its most real and substance connection

10. Proper Lawofthe
Contract applied
inGhana
 Godka Group of Companies v PS Internation
 The principle of the closest and most real connection was applied in Godka
Group of Companies v PS Internation
 The court held that in the absence of an express choice of law agreement, the
proper law of the contract was that with which it was most closely associated
or connected
 Thus, Ghana law was the applicable law
 In this instance:
 The contract one of the parties was a Ghanaian Company
 The contract was performed in Ghana by the delivery of goods in Ghana
 The goods were sold in Ghana
 Payment was to be made in Ghana through Ghanaian Agents

11. Cantheproper
lawofacontract
beCustomary
Law
 Can the proper law of a contract be Customary Law?
 Ghana law is pluralistic in nature i.e. it is made up of several laws (Art. 11 of
Constitution, 1992)
 Thus once the proper law is determined to be Ghana Law, several laws could
apply:
 Common law
 Statute
 Customary law???
 In Solomon v. Ackon, the trial court held that
 NOTE:
 A Ghanaian court is unlikely to come to such a conclusion in cases of international
commercial contracts especially when it is between a Ghanaian and a Foreigner
 But the question is worth considering especially for persons seeking to contract
with Ghanaians
 Foreign courts who conclude that Ghana law is the proper law must also consider
the possibility of the proper law being customary

12. LawGoverning
Capacityto
Contract
 The Law governing capacity to contract is not yet settled
 Using the lex loci contractus
 Historically, it was held that capacity to contract was governed by the law of the
place it was signed ( i.e. lex loci contractus)
 Unsatisfactory because parties could evade any incapacity by contracting in a
place where the capacity does not exist
 Using the proper law doctrine
 Should express choice of law be allowed?
 According to Prof. Oppong, express choice of the proper law to determine
capacity is inappropriate
 The most closely connected test takes into account all connecting factors and more
likely to lead to an outcome consistent with the expectations of the parties
 In Jadbranska Slobodna Plovidba v. Oysa, the court held that a persons capacity
to contract was determined the system of law with which the contract was most
closely connected.

13. Summaryof
Principle
 According to Oppong referencing the relevant authorities
 The proper law of a contract is the system of law by which the parties intended
the contract to be governed or, where their intention is neither expressed nor to
be inferred from the circumstances, that system of law with which the
transaction has its closest and most real connection (Refer Societe Genaral de
Compensation, Garcia v Torrejoh, Godka Group of Companies v PS
International
 Even in the presence of an express choice, the court may ignore the choice if
it is not done bona fide, or it is illegal or if does not comply with the rules of
public policy

14. CaseLaw
 Proper Law of the Contract Doctrine
 Societe General de Compensation v Ackerman
 Garcia v Torrejoh
 Godka Group of Companies v PS International
 Fattal v Fattal
 Vita Foods v Unus Shipping
 Can the proper law be a customary law?
 Solomon v Ackon
 Law Governing Capacity to Contract
 Jadbranska Slobodna Plovidba v. Oysa

15. CaseLaw
 Societe General de Compensation v Ackerman:
 In Societe General de Compensation v Ackerman, the court upheld the trial
courts ruling that the proper law of the contract was Ghanaian law. In this
case, the defendant, a French company, carried on the business of
constructing estates in Ghana. Its contract of employment wit the plaintiff,
who worked for them in Ghana, was drawn up in French. The plaintiff’s salary
was paid in French francs, but living expenses were paid in Ghana Cedis. In
an action for breach of contract, the defendant raised a preliminary objection
to the jurisdiction of the Ghanaian courts on the ground that the proper law of
the contract was French law. In holding that Ghana law was the proper law of
the contract, the place of contracting, the place of performance, the mode of
payment, the currency of payment, the language of the contract and the place
of incorporation of the defendant company were all taken into account.

16. CaseLaw
 Garcia v Torrejoh
 Godka Group of Companies v PS International
 Fattal v Fattal
 Vita Foods v Unus Shipping
 Can the proper law be a customary law?
 Solomon v Ackon
 Law Governing Capacity to Contract
 Jadbranska Slobodna Plovidba v. Oysa

17. Reference
 See Generally:
 Richard Frimpong Oppong,“Private International Law”, Kluwer Law
International (2010)

18. Thank You
Discussion