03/25/2016
Written by Jochen Bauerreis and Fanny Cales
Reversal of the presumption that the surety contract has the closest links with the guarantor’s country of residence
When a contract is international in nature, the question arises as to which jurisdiction has competence and which law is applicable.
As regards the criteria for determining the law applicable to an international surety bond, France and Germany have a similar understanding of Article 4 of the Rome I Regulation of 17 June 2008 (“Rome I Regulation”) on the law applicable to contractual obligations in the absence of choice by the parties.
French and German law tend towards a similar application of article 4 of the Rome I Regulation to international surety bonds. In the absence of a choice of law by the parties, the applicable law is in principle that of the country in which the surety resides, since the surety constitutes the characteristic performance of the contract. However, where the contract has closer links with another country, that law will be applicable. We therefore strongly advise parties to international contracts to ensure that the jurisdiction (state or arbitration) and the applicable law are clearly stipulated in their contract.
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