Governing law là gì?

Currently, compared to normal English communication, legal English seems to be less popular. For example, people are familiar with the terms “government” and “law”. However, for many people, the “regulatory law” remains relatively unknown. Therefore “What is the Governing Law?”.

Here, we would like to provide you with basic information about “regulating law” through the article below.

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What is the Governing Law?

Governing law is the governing or applicable law, this is a clause that often appears in international commercial contracts because the laws of countries are often different, so to avoid conflicts of law the parties often agree. select a single source of common law to govern the contract. This also makes the settlement of disputes arising from the contract faster and more convenient.

How to write “governing law” in international commercial contracts

After studying “What is the Governing Law?”, Many people are still having difficulty drafting this clause in international commercial contracts. Therefore, in the next section, we would like to guide you how to write the “governing law” in international commercial contracts as follows:

Terms… (Governing Law): This Contract or any agreement arising out of the foregoing agreements between the parties shall be maintained and construed in accordance with the laws of…. / Treaty of… / Commercial practice of….

(Meaning: The contract or any dispute arising from the agreement of the parties to the contract shall be governed by and construed in accordance with the laws of the country… / international treaties…. / International commercial practices… ).

After studying “What is the Governing Law?”, It can be seen that a fairly common problem today is that the selection of applicable law sources, the governing law in commerce and the way to apply those sources of law faces many difficulties because the legal system in the world is very difficult. diversity. rich, massive. Therefore, we would like to answer the above problem through the next part of the article as follows:

The sources of law often chosen are the governing law or the law applicable in international commercial contracts?

Currently, social relationships are increasingly complex, especially business relationships between merchants. Therefore, they often tend to choose many different sources of law in order to best ensure their legitimate rights and interests. Among them, the most popular are the following sources of law:

– International treaties: means an agreement signed between subjects of international law (state, non-governmental organization, intergovernmental organization) giving rise to the rights and obligations of such subjects in accordance with the law. . International.

An international treaty usually consists of one or more related texts, regardless of the title of the text. Currently, international treaties can have many different names such as Conventions, Treaties, Agreements, Statutes, Regulations, Declarations, … and are classified as follows:

+ Based on the signatories, international treaties include multilateral treaties (Trans-Asia-Pacific Economic Cooperation Agreement – CPTPP) and bilateral international treaties (Agreement on economic cooperation between the two countries). ). bilateral economic relations between Vietnam and the EU – EVFTA Agreement).

+ Based on the field of regulation of the treaty, international treaties include: political treaties (e.g. mutual legal assistance agreements), economic treaties (e.g. Vienna Convention of the United Nations). international contract for the sale of goods 1968), environmental treaty (Paris Convention on Climate Change), etc.

+ Based on the scope of application, international treaties include regional international treaties (Tariff Agreement in ASEAN – ATIGA) and global treaties (United Nations Convention on Human Rights).

– National law: is a system of legal documents promulgated by the competent authority of a country to regulate the areas under the sovereignty of that country.

These are two sources of law that are often preferred when drafting contracts as well as resolving disputes arising in international trade because of its mandatory legal value. In addition, in international trade relations, traders can refer to the following sources of law:

– International trade practices: is a set of unwritten rules of conduct formed from the actions and conduct of traders and recognized by traders as law.

For example, the basic delivery conditions in the international sale of goods INCOTERMS 2020.

– Judgment precedent: Judgment or interpretation or application of law is considered precedent to serve as a basis for judges to then apply in similar cases.

Example: Case DS 404 / WTO on anti-dumping on frozen shrimp products of Vietnam.

– General principles of international law;

Theories of famous jurists and scholars.

Principle of selection of applicable law, governing law for the contract.

In Vietnam, this principle is stipulated in Article 683 of the 2015 Civil Code, whereby:

The parties to a contractual relationship may agree on the choice of law applicable to the contract. The parties can choose whether the law applies to the whole or only part of the contract, or another law applies to different parts of the contract. Selections can be made or changed at any time.

– If the parties do not have an agreement on the applicable law, the law of the country closest to the contract shall apply.

– In case the contract has the subject matter of real estate, the law applies to the case of transfer of ownership or other rights to real estate, lease of real estate, or use of real estate for security purposes. . performance of obligations is the law of the country where the immovable property is located.

The form of a contract is determined by the law applicable to that contract. In case the form of a contract is not consistent with the form of a contract as prescribed by law applicable to such contract but is consistent with the form of a contract under the law of the country where the contract is concluded or the law of Vietnam, the form such contract form is recognized in Vietnam.

In addition, the parties may choose international commercial practices as the law applicable to the contract if such custom is not contrary to the basic principles of Vietnamese law.

What is Governing Law?

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