Lloyd's Maritime and Commercial Law Quarterly
OVERRIDING POLICY OF THE FORUM
Akai v. People’s Insurance
The question of how to recognize a statutory rule representing overriding policy of the forum, which must therefore be applied in a conflict of laws case whatever law governs the particular issue, attracts increasing attention in England and elsewhere. In the context of contracts, it would now be misleading to begin by saying, as Dr J. H. C. Morris did only 13 years ago, “As a general rule, a statute does not normally apply to a contract unless it forms part of the proper law of the contract, or unless (being a statute in force in the forum) it is procedural.”1 For the two common law countries affected, the Rome Convention2 now directly requires attention to this problem in the area of international contracts. Article 7.2 provides that nothing in it “shall restrict the application of the laws of the forum in a situation where they are mandatory irrespective of the law otherwise applicable to the contract”. This is taken to refer to what are often called by the French term lois de police. Article 16 refers to the more amorphous, but related, notion of ordre public and recognizes the power to refuse application of a foreign law where it is “manifestly incompatible with the public policy … of the forum”. It is with the former category (though they overlap) that this comment is concerned.
Unaffected by the Convention, the recent decision of the High Court of Australia in Akai Pty Ltd v. The People’s Insurance Co. Ltd
3 draws fresh attention to the problem and, by virtue of the fact that the court was divided by three to two, and reverses a two to one decision of the Court of Appeal of New South Wales where the majority had used a yet third line of reasoning, shows the difficulty in ascertaining and applying the intention of the legislator in this respect.
Before turning to the decision itself it is worth looking at the techniques for giving particular legislation overriding status so far considered in leading cases. Older legislation may (apparently) ignore the conflict of laws and questions of scope completely: a (noncontractual) example is s. 1(1) of the Age of Marriage Act 1929.4 The court may then have to articulate the scope itself. In other cases the question has simply been treated as one of (really non-purposive) statutory interpretation.5 But a drafter having policy instructions
1. Conflict of Laws, 3rd edn (1984), 278.
2. Given effect to in the United Kingdom by the Contracts (Applicable Law) Act 1990.
3. (1996) 71 A.L.J.R. 156; reversing [1996] L.R.L.R. 86.
4. “A marriage between persons either of whom is under the age of sixteen shall be void”: its scope was determined in Pugh v. Pugh [1951] P. 482.
5. E.g., Boissevain v. Weil [1949] 1 K.B. 482 (wartime Defence Regulations prohibiting currency transaction by British subject even where governed by a foreign law).
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