Vita Food Products Inc. v. Unus Shipping Co. Ltd.

Party autonomy is the first rule of the proper law, and Vita Food is its high-water mark: an express choice was given effect although the chosen law had no connection with the contract.

But the case is also the commonest trap on this paper. Students quote it for absolute autonomy. Both this course and the Supreme Court of India say the opposite — the freedom carries three conditions on its face, and a residual power to strike down sits behind them. An answer that stops at Vita Food is a mark down.

The contract was mostly connected with one country, and the parties had expressly chosen the law of another, which had no connection with the contract. The court applied the law the parties had chosen.

Lord Wright:

"where there is an express statement by the parties to select the law of contract, it is difficult to see other criteria to determine proper law provided that the intention expressed is bona fide and legal, and provided there is no reason for avoiding the choice on grounds of public policy"

Step one: take the parties' own word first. Where the parties have said which law governs, there is no better criterion available. Everything else a court could use — place of contracting, place of performance, currency, flag — is an inference about what the parties wanted, and here they have said it.

Step two: attach three conditions, and these are the examinable part. The choice must be bona fide; it must be legal; and it must not offend public policy. The freedom is wide but it is not a licence.

Step three: recognise the retreat since. The modern tendency is against a purely subjective proper law, and Cheshire's view — that "the courts should, and do have a residual power to strike down, for good reason, choice of law clauses totally unconnected with contract," — has "a good deal of supporters".

Step four: take the Indian position from the Supreme Court, which states all of this in one passage. In British India Steam Navigation Co. v. Shanmugha Vilas Cashew Industries:

"It is true that in English law there are certain limitations on freedom to choose the governing law. The choice must be bona fide and legal and not against public policy. It may not be permissible to choose a wholly unconnected law which is not otherwise a proper law of contract. English Courts, it has been said. should, and do, have a residual power to strike down for good reasons. choice of law clause, totally unconnected with the contract. Where there is no express choice of the proper law, it is open to court to determine whether there is an implied or inferred choice of law in the panties contract"

(Read parties for panties in the last line.)

It opens: Discuss party autonomy in the choice of the proper law, and any problem containing an express choice-of-law clause.

The structure that scores: state the rule and quote Lord Wright; give the three conditions; give the retreat and the residual power; give the Indian confirmation from British India Steam Navigation; then apply. If the chosen law is wholly unconnected and the choice looks like an escape from a mandatory rule, say that the bona fide condition and the residual power are both engaged.

Then descend the ladder if there is no express choice. Implied choice: the intention is inferred from the terms and nature of the contract and the circumstances, the judge placing himself in the position of a reasonable man — Tzortzis v. Monarch Line, where an English arbitration clause was a clear implied choice of English law although Sweden was the objectively closest system, on qui elegit judicem elegit jus; Amin Rasheed, where the decisive fact was that at the time of contracting Kuwait had no law of marine insurance; The Assunzione, where the indications were evenly balanced and performance decided it, the contract being performed in Italy and freight payable there in Italian currency. Then imputation by closest and most intimate connection, on NTPC v. Singer Company.

Carry the theme across the module. Party autonomy is a rule about merchants and it stops where they stop: it is at its widest here; it is qualified by good faith, legality, public policy and the residual power; it is displaced for capacity, which must be objectively ascertained; it is withdrawn entirely for consumers and employees by Articles 5 and 6 of the Rome Convention; and it does not exist at all for negotiable instruments, where each signature is governed by the law of the place where it was made and "The party has no right to select their own proper law."

It does not decide: whether an unconnected choice may be struck down — that is the modern gloss, not the holding; nor anything about jurisdiction clauses, which must be taken at once or lost, as British India Steam Navigation shows on the submission point.