Determining Governing Law Not A Separable Issue

Author:Mr Gearóid Carey
Profession:Matheson
 
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The High Court1 recently deemed that the question of determining which governing law applies to a dispute should not be dealt with as a separate and distinct matter in isolation from a ruling on the relevant facts. Although to an extent this is fact specific, parties should be mindful that where a dispute arises and there is a question over the applicable law, the Irish courts may require all aspects of the dispute to be determined at the same time. Accordingly, it is not necessarily the case that the governing law is to be determined separately from questions regarding liability.

Background

The underlying proceedings involved a claim by the plaintiffs for declaratory relief and damages arising out of an alleged breach of contract and negligence on the part of the defendant in connection with the supply of magnets to the plaintiffs for use in wind turbines. The defendant denied liability and counterclaimed in respect of unpaid invoices and loss of profit. A fundamental issue arose as to whether Dutch or Irish law governed the contract and which should be applied by the court in determining the substantive dispute.

The defendant contended that the contract was to be governed by the law chosen by the parties pursuant to Article 3.1 of the EU Rome I Regulation and, accordingly, Dutch law applied because the defendant's general conditions of sale (which mandated Dutch law) were incorporated into the contract because of their attachment to a series of quotations delivered by email and their inclusion in the order confirmation forms. In contrast, the plaintiffs felt that Article 4(3) of the Rome I Regulation applied such that the law of the country most closely connected to the contract shall apply. The plaintiffs contended, among other things, that Dutch law was never accepted as the law of the contract and that the court should properly consider the negotiations that took place between the parties to the effect that Irish law was applicable. The defendant applied for orders directing either the trial of a preliminary issue or a modular hearing with regard to the applicability of Dutch law, arguing that time and costs would be saved if the applicable law was identified before the full hearing, since the parties would otherwise have to prepare their case on two different bases (ie, Dutch law and Irish law).

Relevant law

Judge Hedigan began by reciting the relevant Rules of the Superior Courts, from which his jurisdiction to make the orders sought...

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