Applicable law clauses
Applicable law clauses

The following Dispute Resolution practice note provides comprehensive and up to date legal information covering:

  • Applicable law clauses
  • What is an applicable law clause?
  • Example applicable law clause
  • Why include an applicable law clause?
  • Difficulties with agreeing an applicable law clause
  • Disadvantages of not choosing an applicable law
  • Applicable law clause—is it valid?
  • What is a non-national system of law clause and is it valid?
  • What are floating law clauses and are they valid?
  • Retrospective changes to the applicable law
  • More...

Brexit: The UK's departure from the EU has implications for practitioners considering which country’s laws will be applied when determining a dispute. For guidance, see Practice Note: Brexit post implementation period—considerations for dispute resolution practitioners including, in particular, main section: Applicable law.

For guidance on whether judgments of the Court of Justice are binding on UK courts,  see Q&AAre UK courts and tribunals bound by decisions of the Court of Justice of the European Union post-Brexit?

This Practice Note considers applicable law clauses also known as a governing law clause, proper law clause or choice of law clause. Such clauses are used to determine the law to be applied by the courts when determining a dispute between the parties. Most commercial contracts will include such a clause. This Practice Note considers the rationale for agreeing an applicable law clause and the factors to take into account when agreeing one. It covers situations where parties can change the applicable law clause in their contract as well as whether specific types of clauses, ie floating applicable law clauses and stabilisation clauses, are valid. A sample applicable law clause is provided.

What is an applicable law clause?

A commercial contract will set out the terms on which the contracting parties will carry out the contract. Where elements of the contract involve different countries, the interpretation and effect of the contract terms

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