[The authors are Saanya Vashishtha and Shreya Tiwari ]

Blaise Pascal famously quoted that “jurisdiction is not given for the sake of the judge, but for that of the litigant”. The concept of party autonomy has become fundamental in the realm of cross-border business transactions within the global world as it lays the ethos of private international law. The current trends indicate that party autonomy will become a universal and incontestable principle that is followed as a rule of law in almost all jurisdictions. Choice of law provides parties certain freedom for determining the jurisdiction of courts that are competent to adjudicate upon the issue at hand.

PRIVATE INTERNATIONAL LAW- INSIGHT INTO FREEDOM IN CHOICE OF LAW

The choice of law or the governing clause is of prime importance as it allows two contracting parties to choose between the applicable laws as per their convenience. It is pertinent to note that the choice of law is only substantive in nature and not merely procedural law. Forum selection provisions or jurisdiction clauses are contractual agreement that designates the court and location where the parties would like to have their legal dispute decided.^[1] Ultimately forum selection clauses provide contracting parties with personal jurisdiction within courts having appropriate jurisdiction over the matter at hand. Adjudicating courts consider both choices of forum and law as essential criteria while deciding upon appropriate jurisdiction. The point of conflict occurs in private international law when forum selection intersects with the choice of law clauses. The recent phenomenon that has been observed is to apply the law chosen by parties regarding the choice of law for adjudication. In response to the same noted scholars have stated this recent approach to be wrong and instead argue that courts should apply forum law in these interpretational clauses. The six major justifications for applying the parties’ chosen law while interpreting a forum selection clause are given below-

1. Choice of law is the fundamental basis of granting party autonomy which is pertinent in the current day world and thus court interference would be a hindrance.
2. The ambit of area concerning contractual interpretation is in essence substantive and thus should be within the governance of chosen law.
3.  The courts are duty-bound to provide legal effect to the intentions on which parties have formed the contract. Since these intentions also include forum selection clauses the courts should view them in the same light.^[2]
4. The certainty of outcomes increases when the courts utilize the law chosen by contracting parties while adjudicating on questions revolving around the forum selection clause.
5. The courts in the global world have been trying their hardest to enforce contracts entered by two parties. Therefore, there is no legal justification for excluding the forum selection clause and applying another law.
6.  Lastly, the applicability of chosen law by courts during matters of dispute indirectly restrains forum law shopping.

Forum selection clauses generally restrain the contracting parties to a certain jurisdiction while the defendant will try to step out of these limitations. In response to this, there will be questions raised pertaining primarily to the interpretation of the forum clause as well as the validity and enforceability of the same. The plaintiff’s focus remains on taking the case to a different court than the one decided upon while challenging the validity of the forum selection clause itself. Thus, the right approach concerning these situations in the international law arena would be to scrutinize the validity of forum selection^[3] as well as the choice of law clause and then interpret as well as predict the effects of it on the matter at hand.

The choice of law clauses in the European Union is governed majorly by two regulations- Rome I and Rome II. The Brussels regulation focuses more on the choice of jurisdiction rather than law and largely remains silent on the matter of choice of law. The 1980 Rome Convention has been replaced by the Rome I Regulation, 2008^[4] which governs the choice of law pertaining to contractual obligations within the arena of the European Union (EU). The Regulation governs both civil and commercial matters. Article 3 of the EU Regulation lays the basic structure governing party autonomy while deciding on the applicable law. The specification of the governing law in the contract itself helps the contracting parties to evade disagreements easily and therefore save both time and cost during an issue at hand.^[5] Rome I Regulation postulates that parties have the autonomy to decide their own governing law. Article 3(1) of Rome I states that “a contract shall be governed by the law chosen by the parties”.^[6] This is in stark contrast to Article 3 of the Rome Convention which had left the choice of applicable law in a grey area by merely stating that the choice must have been established with “reasonable certainty”. Article 3(1) covers this arbitrary area by stating that even when the parties have not made an express provision regarding their choice of law, it can be deciphered via the terms of the contract or facts of the case. It has opened up a lot of space for judicial scrutiny and in its essence empowered parties with the freedom to not only choose but also determine the choice of law in courts. However, another point of contention that arises is how international law as well as forums decide the consensus reached by both the contracting parties on the choice of law and settle disputes when there are conflicting opinions. The case of Ferguson Shipbuilders Ltd. v Voith^[7] had held that the fulfilment of conditions in Article 3 of the Regulation leads to the conclusion that choice of law had been included in the contract under the general conditions specified by one of the parties. This case was again in dispute by the judgement provided by the courts in the case of Iran Continental Shelf Oil Company v IRI International Corporation^[8]. In this case both the parties had advanced the contract while assuming their conditions to be superior and ultimately ended up having inconsistent clauses concerning the choice of law. It had been held that neither of the parties could have been supposed to accept the contract and an assumption regarding the same would be violative of the natural principles of justice by being unfair to one of them. The current stance rests on the principle that both contracting parties must agree to the choice of law being mandated while resting on the same ground with context to the contract. It is pertinent to note that all these case precedents must be applied while keeping in mind Recital 11 of the Rome I Regulation which reiterates that the parties’ freedom in choosing the applicable law must be the topmost priority in matters of contractual obligations. Furthermore, Recital 12 of the same regulation specifies that the reasoning of the court while deciding the choice of law between two parties cannot be a matter to be contested upon. In order to determine the law of the chosen forum courts have often considered the exclusive jurisdiction clause as the most imperative factor while adjudicating on these matters. English courts have also traversed on matters concerning the implied choice of law which is arrived at via an understanding of the facts in landmark cases like Aeolian Shipping SA v ISS Machinery Services Ltd^[9] and American Motorists Insurance Co v Cellstar Corporation^[10]. These judgments have witnessed a shift from the orthodox and traditional approach of confining the discretion of the court within the provisions of regulations and expanding it to include judicial reasoning as well as understanding. In addition, the courts have clearly postulated that discretion must be restrained to determine the “real choice” rather than stretch to what the court would consider being the “most reasonable choice”. The consequences of not including explicitly the choice of law clauses have severe implications of ambiguity and judicial uncertainty apart from the expenses incurred and time lost. All contracts between two parties remain floating or ambiguous until a court comes to their rescue and determines the applicable law. This process ultimately results in a legal battle as every jurisdiction would have different opinions as well as views while coming to a conclusion about the applicable law and this sometimes might even conflict with the goals that the parties are seeking.^[11] The global world has tried its best to increase party autonomy in deciding the applicable and in accordance with the same the Rome I Regulation inculcated Article 3(2). Article 3(2) allows the parties to change the governing law they had agreed upon earlier to another one. It also postulates that this right if being exercised after the conclusion of the contract is subject to restrictions of Article 11 or passes the test of not affecting third parties adversely at large.

Dwelling further, the Rome II Regulation, 2007^[12] governs conflict of laws in non-contractual obligations in both civil and commercial matters. Article 14, sub-clause 1 of the above-mentioned regulation states that two contracting parties engaging in a dispute can choose the law of their choice. The only condition to be kept in mind is that these agreements must have been entered into after the instance of damage has already taken place. In an event that these contracts came into force before such an instance, they would have to be strictly in pursuance of commercial activity as well as be freely negotiated in order to be enforceable.^[13]

Conclusively, both these European Union legislations have universal application in the sense that Article 2 of Rome I and Article 3 of Rome II have allowed EU courts to apply non-EU law if the case deems to do that. Furthermore, the principles of natural justice and lex fori or law of the land fundamentals where the dispute occurs should not be freely violated at the cost of party autonomy while choosing applicable laws. 

DWELLING INTO PARTY AUTONOMY IN INTERNATIONAL SALES LAW

The Contracts for the International Sale of Goods, 1980 elucidates the obligations of contracting parties, the remedies in case of non-adherence, and balances the interests of both buyers and sellers. The need for party autonomy to choose the applicable law arises due to the fact that the CISG does not dwell on the validity of international contracts pertaining to the sale of goods as well as property. Freedom of contract is guaranteed under the CISG as it allows the parties to determine the provisions of a contract even while deviating from or changing the provisions of the CISG itself.^[14] The same has been the meaning and implication of Article 6 of the CISG subject to the provisions of Article 12.^[15] Article 11 of the CISG empowers the parties to choose whether they want the contract to be written or not or subject to certain formal requirements. Article 12 of the mentioned contract merely states that any modification or termination of a contract must be made in writing. Furthermore, Article 12 does not in any way limit the ambit of Article 11 as it applies to only those parties who belong to States that have made a declaration under Article 96 of this convention.^[16]

In cases where the parties rescue themselves from the application of the CISG itself, they need to choose an applicable state law that would govern the contract. A bare reading of Article 6 of the CISG navigates three scenarios-

1. The parties decide to retain the CISG in its whole essence.

2. The parties apply the CISG while making derogations and variations from certain provisions.
3. The parties rescue themselves from the ambit of CISG and become subjects of uniform or national law. 

The CISG under Article 8 states that the conduct and statement of contracting parties must not be viewed in a vacuum but seen in resonance with the intent of parties. The intent of parties concerning the exclusion of CISG and its interpretation by the courts has been a topic of rigorous debate and discussion. The courts in the case of American Mint LLC v GO Software Inc^[17] and Société Anthon GmbH & Co v SA Tonnellerie Ludonnaise^[18]  have stated the requirement of explicit clauses in the contract which stipulate the exclusion of CISG from governing the contract. However, the court in the case of Golden Valley Grape Juice and Wine LLC v Centrisys Corporation^[19] had considered the existence of a choice of law clause to imply the exclusion of CISG. These differing precedents have led to a lot of confusion among international law scholars and the matter rests in a grey area to date. Another problem pertaining to freedom of party in choosing applicable law under the CISG is that while allowing parties to vary from the provisions of the convention it creates an open space for forum shopping. This argument has been countered by interpreting the fundamentals of Article 7 of the CISG which promotes working in good faith and promotion of international uniformity. Article 7 has been postulated as the heart of the CISG and thereby every principle must be viewed in concurrence with the same and the aim should be to reduce legal barriers. Within this realm of judicial interpretation within the CISG Article 8 occupies a sacrosanct position with respect to the intent of parties. The beauty and complexity of Article 8 lies in the fact that sub-clause 1 postulates a subjective test, while sub-clause 2 mandates the reasonable person analysis ie an objective test, and lastly sub-clause 3 deals with the discretion of the judge.^[20]

The Contracts for the International Sale of Goods (CISG) is very liberal while granting autonomy to parties in choosing their law. The need of the hour is to strike the right balance between this liberal approach while ensuring conformity to the principles of fair dealing and cooperation for justice at the international level.

INTERCONNECTIONS BETWEEN CROSS-BORDER INSOLVENCY AND CHOICE OF LAW

Cross Border Insolvency

Cross-Border Insolvency in a practical sense can be considered a situation where the insolvent debtor owes the debt to the creditor who is domiciled in a jurisdiction outside of that of the insolvent debtor. This gives an international element to insolvency and makes it a matter under private international law.

We will first talk about the Legal Framework in a contemporary setting followed by its manifestation in modern private international law in form of the MLCBI, which will then be compared and contrasted with the EIR.

Modern Legal Framework on Cross-Border Insolvency

The contemporary framework for the laws of Cross-Border Insolvency is not one of substantive nature as it is not easy to design such a framework due to the conflicting nature of each state’s insolvency laws. Though it is worth noting that, like with other private international affairs such as sale of goods and arbitrational laws, efforts have been made by the international community in determining the procedural law, and regulation of the Cross-Border Insolvency.

Numerous legal philosophies have been deliberated, including those such as:-^[21]

• Territorialism: Where Each jurisdiction applies its own laws over assets located in its jurisdiction to the exclusion of others
• Universalism: Where a singular legal regime applies for all Cross-Border insolvency cases.

While both of these have been criticized individually, aspects of both have been taken to achieve a middle ground between them, which resulted in conceiving of the Cross-Border insolvency regime, subsequently leading to the formation of the UNCITRAL Model Law on Cross-Border Insolvency (MLCBI) and the European Insolvency Regulation (EIR), which has been discussed below.

The UNCITRAL Model Law on Cross-Border Insolvency (MLCBI)

The MLCBI was formed in 1997^[22] with the aim to bring and formalize an effective form of the administration process, in order to deal with cases of Cross-Border Insolvency in a concise manner whilst also simultaneously promoting numerous objectives listed in its Preamble.

The Model Law acknowledged the need to allow foreign proceedings to be conducted in a member state, or the appointment of a foreign representative to conduct insolvency proceedings in the member state.

In the case of foreign proceedings, it is up to the Insolvency Practitioner appointed in the case to determine if a foreign proceeding is needed, thereby excluding the parties involved in such a decision. The Model Law relies on a business’ Centre of Main Interests (COMI) in order to determine where the foreign main proceeding can take place, which takes away any sense of party autonomy in determining the forum where the insolvency process can take place.

Centre of Main Interests (COMI)

Art. 17 of the Model Law^[23] lays down two elements on basis of which the COMI is ascertained;

1. Place where the debtor conducts the administration of his interests on a regular basis and
2. Is ascertainable by third parties.

At the same time, Art. 16 (3)^[24] lays down that the debtor’s registered office or habitual residence in case of an individual will be presumed to be the center of the debtor’s interest.

It can be seen that the Model Law has tried making sure that the forum of the insolvency proceedings is decided by a uniform set of proceedings, leaving no room for either party, the creditors or debtors to determine the forum of the insolvency proceedings.

The fact that the COMI has to be determined by a third party means that a debtor’s intention in its own COMI will not have any effect in determining the COMI which further takes out any influence the debtor might have in determining the forum of the proceedings.

Even in the case of a Foreign non-main proceeding, the forum of the dispute is determined by whether the debtor has an establishment in that state, i.e., a place of operations where the debtor carries out a non-transitory economic activity with human means and goods or services.^[25]

The way these laws have been drafted clearly shows the intention of the Model Law not to provide autonomy to either of the parties in determining the forum, which works in its favour as the Model Law primarily works towards protecting the interests of both the creditors and debtors, whilst maximizing the value of the assets in the insolvency process.

EIR and MLCBI – Similarities

The EIR, just like the MLCBI, states that the COMI needs to be ascertainable to third parties, which again works in the same manner as mentioned in the MLCBI, achieving the same purpose. In the assessment of COMI, neither domicile of the creditors nor agreement between creditors and debtor that the COMI is in a particular Member State can be of any relevance.

Secondly, the location of the debtor’s COMI on the date of request of insolvency proceedings are relevant in determining jurisdiction. While the presumption is that the COMI of the debtor is the place of its head office, it was laid down by the CJEU in Interedil (2011) that the COMI will be determined by attaching greater importance to the place of company’s central administration,^[26] and in the case where the registered office is not in the same place as the place of central administration, a comprehensive assessment of all factors ascertainable to third parties will be used to establish its actual COMI.^[27]

However, it is worth noting that such a conspicuous push by the CJEU in hopes of achieving transparency and gaining publicity has resulted in lesser party autonomy. This has happened in order to protect the interests of all creditors involved, thereby ensuring creditor investments do not reduce due to a poor legal framework in Cross-Border Insolvency.

EIR and MLCBI – Differences

While the MLCBI, through its law, acts to prevent party autonomy, the EIR makes it evidently clear in its Recitals itself that it works towards preventing party autonomy by ensuring that the tactic of forum shopping cannot be accessed by the parties.

Alluding to Recital 5 of the EIR, we can clearly see that the proper functioning of the internal market in insolvency proceedings can only be achieved if parties cannot attain a favorable legal position through the method of forum shopping. Furthermore, Recital 29 clearly states that the Regulation contains numerous safeguards against forum shopping. The provision that work towards preventing forum shopping is Art. 3 which lays down the court of the member state of the COMI of the debtor shall have jurisdiction over the case.

INTERNATIONAL COMMERCIAL ARBITRATION AND THE CHOICE OF LAW

The procedure of Arbitration is the one wherein the parties adopt the procedure of alternate dispute resolution in order to resolve their disputes. One of the major advantages of choosing arbitration as an alternate dispute resolution procedure is that it provides for party autonomy. Party autonomy or the provision for the parties to have the freedom to opt is one of the basic structures of arbitration.

The provision of party autonomy allows the parties to have the freedom of choice throughout the process of arbitration. Firstly, party autonomy can be realized in the arbitration agreements which allow the party to either have an arbitration clause or draft a separate arbitration agreement. This has been given under article 7 of the UNCITRAL Model Law on International Commercial Arbitration^[28] which talks about the arbitration agreements and the procedure followed for a valid arbitration contract to be enforced. The parties can also choose the governing law & the applicable laws on the contract drafted. Further, the party autonomy can also be seen in the process of selecting the arbitration tribunal which states that under articles 10 and 11 of the said act which states that the parties have the right to determine the arbitration tribunal and the number of arbitrators that should be present.

Further, article 20 of the above-mentioned act postulates that the parties have the freedom to select the place of arbitration, that is the parties have the freedom to select both the venue of arbitration as well as the seat of arbitration. Thus, the seat of arbitration becomes significant during the process of arbitration which leads to the principle of “Lex Arbitari” which essentially means the law of arbitration which is decided by the parties.^[29] One of the landmark cases on this fundamental principle was laid down in the case of James Miller v Whitwoth Street Estates^[30]. Herein it was held that Lex arbitari is substantial as it governs the validity of the agreement signed by the parties even though it may or may not govern the substantial or the procedural laws present. Secondly, it was held that arbitrators must take into consideration, the mandatory laws of the seat of arbitration. Even though arbitration give the party autonomy at times it can fall under the garb of contention due to missing clauses which further impact the agreement and make it contentious as well.

In the context of the European Union, both Rome I and Rome II remain silent on the point that they bind international arbitrators within an EU state while determining the choice of law from the competent jurisdictions.^[31] The way ahead in these circumstances would be to add governing law clauses by the consent of both parties and thereby reduce the chances of conflict as well as the loss of time and money while traversing jurisdictions in determining the applicable law.

CONCLUSION

The advent of globalization has led to the party autonomy emerging as both a cornerstone and a contested terrain in cross-border business transactions. The current Legal framework attempts to strike a delicate balance between enabling commercial predictability through enforceable choice-of-law and jurisdiction clauses, while ensuring that procedural fairness, creditor protection, and systemic transparency are not undermined.

This paper posits that while party autonomy is widely accepted, it remains layered with doctrinal tensions and jurisdictional complexities. This can be seen as the freedom to choose a governing law or forum is often checked by competing principles like the need to protect weaker parties, avoiding forum shopping, ensuring consistency in insolvency regimes, and upholding public policy standards. Instruments such as the Rome I and Rome II Regulations in the European Union, the CISG, and the UNCITRAL Model Law on Cross-Border Insolvency each reflect these tensions in different ways. For instance, Rome I affirms the primacy of the parties’ will through Article 3, but simultaneously subjects that will to the safeguards of public interest and good faith. Rome II allows choice of law in non-contractual obligations but restricts it to prevent manipulation after damage has occurred. The CISG, while liberal in recognising freedom of contract, struggles with issues of interpretation and exclusion, leading to divergent jurisprudence across jurisdictions.

In the realm of cross-border insolvency, party autonomy is deliberately curtailed to safeguard creditor rights and preserve economic fairness. The Centre of Main Interests (COMI) approach under the MLCBI and the EIR exemplifies how procedural certainty is prioritised over individual autonomy in the interest of collective enforcement and asset value maximisation. Even where the intention of the debtor might suggest otherwise, the COMI is determined by factors external to party agreement, thereby reinforcing a model where fairness and predictability override contractual freedom.

International commercial arbitration, by contrast, remains the strongest bastion of party autonomy. From choosing the arbitration seat and tribunal members to selecting the governing law, arbitration empowers the parties extensively. Yet, even this space is not immune from interpretative disputes—especially in the absence of express clauses or when the arbitral framework conflicts with mandatory national laws.

What emerges from this multi-regime analysis is that party autonomy is neither absolute nor entirely discretionary. It exists within a controlled legal environment shaped by evolving jurisprudence, legislative intent, and the growing need for international harmonisation. The principle’s application is nuanced—permitted generously in commercial contracts and arbitration, restricted methodically in insolvency, and regulated delicately in tortious or non-contractual matters.

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^[1] Legal Information Institute, Cornell Law School, https://www.law.cornell.edu/wex/forum_selection_clause.

^[2] Buxbaum, Hannah, “Forum Selection in International Contract Litigation: The Role of Judicial Discretion” (2004). Articles by Maurer Faculty. 326. https://www.repository.law.indiana.edu/facpub/326.

^[3] Ibid 2.

^[4] Regulation (EC) No. 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations.

^[5] English Choice of Law in Contract Under the Rome I Regime: Is Flexibility Giving Way to Predictability?

^[6] Article 3(1) of the Rome I Regulation No. 593/2008.

^[7] Ferguson Shipbuilders Ltd. V Voith Hydro Gmbh & Cp KG (2000) SLT 229 (OH).

^[8] Iran Continental Shelf Oil Company v IRI International Corporation (2002) 2 CLC 696.

^[9] Aeolian Shipping SA v ISS Machinery Services Ltd (2001) EWCA Civ 1162

^[10] American Motorists Insurance Co v Cellstar Corporation (2003) Lloyd’s Rep IR 295.

^[11]Michael Gruson, Contractual Choice of Law and Choice of Forum: Unresolved Issues, 635 PLI/CoMM 349, 367-68 (Oct., 1992). 

^[12] Regulation (EC) No. 864/2007 of the European Parliament and of the Council, 11 July 2007.

^[13] Hellner, Michael. “Choice of Law by the Parties in Rome II: Rationale of the Differentiation between Consumer and Commercial Contracts” https://www.idunn.no/doi/10.18261/issn.2387-3299-2019-01-09.

^[14] Makale, Hakemli. “Freedom of Contract, Party Autonomy, and its Limit under CISG”, 2016, http://www.hukukdergi.hacettepe.edu.tr/dergi/C6S1makale4.pdf.

^[15] Contracts for the International Sale of Goods (1980), https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/19-09951_e_ebook.pdf.

^[16] “Party Autonomy, Intent and Conduct and the Relevance of Usages on the Buyer’s Remedy of Avoidance”. file:///C:/Users/DELL/Downloads/Chapter%20Four%20(1).pdf.

^[17] American Mint LLC v GOSoftware Inc United States (2005) Federal District Court.

^[18] Société Anthon GmbH & Co v SA Tonnellerie Ludonnaise (2009) Supreme Court of France.

^[19] Golden Valley Grape Juice and Wine LLC v Centrisys Corporation (2010) Federal District Court.

^[20] “Party Autonomy, Intent and Conduct and the Relevance of Usages on the Buyer’s Remedy of Avoidance”. file:///C:/Users/DELL/Downloads/Chapter%20Four%20(1).pdf.

^[21] Franken, Sefa M. “Cross-Border Insolvency Law: A Comparative Institutional Analysis.” Oxford Journal of Legal Studies 34, no. 1 (2014): 97–131. http://www.jstor.org/stable/24562810.

^[22] Atkins, Scott. “The Model Law on Cross Border Insolvency turns 25.” Norton Rose Fullbright, 2022, https://www.nortonrosefulbright.com/en/knowledge/publications/87d4ce21/the-model-law-on-cross-border-insolvency-turns-25.

^[23] UNCITRAL Model Law on Cross Border Insolvency, Article 17.

^[24] UNCITRAL Model Law on Cross Border Insolvency, Article 16(3).

^[25] UNCITRAL Model Law on Cross Border Insolvency, Art 2(f).

^[26] Bork, Reinhard, and Renato Mangano, ‘International Jurisdiction’, European Cross-Border Insolvency Law (New York), 2016; online edn, Oxford Academic, https://doi.org/10.1093/oso/9780198729099.003.0003.

^[27] Handout CBI 2.

^[28] UNCITRAL Model Law on International Commercial Arbitration, Article 7.

^[29] Novovic, Milos. “Seat of arbitration, lex arbitri, and substantive law”. International Commercial Arbitration, 2015.

^[30] James Miller v Whitwoth Street Estates [1970] AC 583.

^[31] Tzevelekou, Anastasia, “International Arbitration by Aceris Law LLC”, 2020, https://www.international-arbitration-attorney.com/rome-i-rome-ii-applicable-law-and-international-arbitration/.