What is conflict of laws and why is it essential for international copyright contracts? What are the basic rules of conflict of laws and where to find them? The latest article gave us answers to these questions and outlined basic matters important for the international copyright contracts.
In this article we tell more about the rule underpinning the international copyright contracts – a choice of law.
What is a choice of law?
The choice of law is the main rule to determine which country’s law applies to international copyright contracts (and, in essence, other contracts too). It is set out in Article 3 of the Rome I Regulation and says that “a contract shall be governed by the law chosen by the parties”. This rule means that parties are, in general, free to choose which law should govern their contract. In consequence when we are looking for the law applicable to the international copyright contract, we should verify if the parties to the contract agreed that a specific law will govern it.
How can the parties choose an applicable law?
The parties can choose the applicable law expressly in a copyright contract (a “choice of law clause”) or in other contract made before or after the copyright contract. They can do so directly indicating the applicable law (like “law of Poland”) or otherwise, for instance by using connecting factors, that is facts connecting a contract with a particular law (like “place where the licensor has its registered seat”).
The parties should draft the choice of law clause very carefully to avoid any doubts about its scope. Take for example the provision: „in any matters not regulated by the licence agreement, the law of Poland shall apply”. Even though it is clear that Polish law governs all issues not included in the licence contract, determining which law applies to issues included in the contract can be quite difficult.
The applicable law does not have to be chosen explicitly. It can also be interpreted from the terms of a contract (for example if the contract clearly refers to a given country’s law in some provisions) or the circumstances (for instance email correspondence between the parties). The main practical drawback of an indirect choice of law is that it has to be interpreted from the contract. It makes the whole process subjective and by far more uncertain. It is worth remembering that the choice has to be “clearly demonstrated”, which means that any doubts will be probably interpreted against this rule.
The parties can always change their mind and decide to choose a law other than previously agreed or make a choice of law after entering into the contract. What is important, any change in the law after making the contract does not make it invalid and cannot adversely affect third parties’ rights.
What can the parties include in the choice of law clause?
The parties can select the applicable law to the whole contract or its certain parts. This opportunity can be quite useful when you draw up a contract with copyright transfer or licence as one of its provisions (like a software development and maintenance contract). In situations like that, there may be sometimes advantageous to select a specific law (for example less formalistic) to govern only copyright issues or exclude these matters from a given law.
The parties may also make a choice of law dependent or limit it by a date or condition (for example setting up a company in a given country, reaching a limit of licences sold by a licensee or distributor).
Can we always apply the choice of law rule?
Although the choice of law is the main rule regulating international copyright contracts, there are situations when it is impossible to rely on it. We will discuss this issue in the next article.
