The law applicable to the international agency contract.

When operating in the field of international contract law, certainly the first aspect to be analysed is to understand by which law the contractual relationship is governed.
As is well known, the regulation of applicable law, in the European context, is dictated by the European Regulation Rome I, No 593/2008 on the law applicable to contractual obligations.

Article 3 of the Regulation gives the parties the freedom to choose to which law to subject the contractual relationship:

"...the choice is express, or clearly follows from the provisions of the contract or the circumstances of the case"

In the event that the parties have not chosen to which jurisdiction the contract shall be subject, the following shall apply Article 4 of the Regulation, which sets out the criteria for identifying the law applicable to the relationship. Specifically, Article 4(1)(B) of the Regulation prescribes that contracts relating to the provision of services, which also includes agency contracts, are governed by the law of the country in which the service provider (the agent, therefore) is habitually resident. This implies that all agency relationships between a foreign principal and an Italian agent, for which the parties have not (expressly) chosen the applicable law, will be governed by the law of the country in which the agent has its habitual domicile, i.e. normally by Italian law.

It can therefore be said that the Italian law is applicable to the international agency contract in the following cases:

• in the case of choice of parts (Art. 3 Rome I Regulation);
• at absence of choice of the parties, in all cases where the agent has its habitual residence on Italian territory (Art. 4 Rome I Regulation);
• in the event that the parties decide to submit the contract to foreign law, the Italian rules shall apply ".internationally imperative"or "necessary application" (Art. 9 Rome I Regulation).

With reference to this last point, which certainly constitutes one of the most complex and critical profiles of international trade law, it is deemed necessary to briefly elaborate.

As is well known the freedom given to the contracting parties to choose how to regulate a contractual relationship encounters limitsIn all legal systems there exist mandatory rules intended precisely to limit the freedom of the parties in order to ensure the observance of certain principles. Applying this principle in the sphere of international contracts is not easy, precisely because one is obliged to deal with the mandatory rules of two or more jurisdictions: the one chosen by the parties and the one which, in the absence of choice, would apply pursuant to Art. 3 of the Rome I Regulation.

How, then, does the right granted to the parties to choose the applicable law fit in with the principle that the mandatory rules applicable in the absence of choice must be respected?

In principle, it may be said that the choice of a particular law entails the total derogation of the rules of a particular legal system (including mandatory rules) in favour of those of another legal system. This implies that, normally, if the parties choose to subject their contract to another legal system, their contract will have to comply with the mandatory rules of that system, but not those of the system derogated from through their choice.

However, it should be noted that, in particular cases, national legislators may decide to attribute to certain standards an even more binding valuesuch as to make them mandatory even at the choice of the parties: these rules are defined as "internationally imperative"or of 'necessary application' and are thus distinguished from those that are 'merely mandatory'.

In the European context, this principle is governed by Article 9 of the Rome I Regulation, which defines the rules of necessary application as:

"... provisions compliance with which is regarded as crucial by a country for the safeguarding of its public interests, such as its political, social or economic organisation, to such an extent as to require their application to all situations falling within their scope, whatever the law applicable to the contract under this Regulation."

The European Court of Justice intervened to interpret the scope of this rule in the Unamar case: in this ruling, the Court stated that the national court may apply the most protective rules of its own law (instead of the law chosen by the parties)

"...only if the court before which the case is brought makes a detailed finding that, in the context of that transposition, the legislature of the State of the forum considered it crucial, within the legal system concerned, to afford commercial agents protection additional to that provided for by that directive, taking account, in that regard, of the nature and purpose of those mandatory provisions.

From this ruling, it follows that in order to prevail over the law of another country based on the same directive, it is not sufficient that the rules chosen provide for a higher level of protection and attribute to them the character of internationally mandatory rules, but that it must also be shown that this choice is of crucial importance for the system in questionin view of the nature and purpose pursued by the rules in question.