Choice of law (lovvalg)
Also known as rome i regulation, rome i, governing law, applicable law
Choice of law is the question of which country's rules the contract is judged by — and where the parties have not agreed, the Rome I Regulation designates the law for them.
- Determines
- Which country's rules apply
- Can be agreed
- Yes, between businesses
- Otherwise
- The Rome I Regulation designates the law
In practice
Choice of law and jurisdiction are the two questions that decide how difficult a foreign claim becomes. Jurisdiction says where the case is heard. Choice of law says which rules decide it — and the two do not necessarily go together.
Where the parties have agreed a governing law, that generally applies. Where they have not, the Rome I Regulation designates the law from the nature of the contract; in an ordinary sale of goods it is typically the seller’s country. That is a sensible default rule, but it is not a guarantee, and it settles questions such as limitation, the rate of interest, and what can be claimed at all.
Which makes the governing-law clause one of the cheapest lines in a set of terms of trade. It costs nothing to write and spares you the argument that otherwise arrives only once the claim has fallen due.
Where it commonly goes wrong
- Agreeing jurisdiction but forgetting the governing law. The case can then end up being heard in Denmark under another country’s rules.
- Assuming Danish law follows the customer. The invoice is Danish, but the contract may well be governed by another law.