The Limitation in Choice of Law and Choice of Forum Within International Business Contract
Abstract
Clauses on Choice of Law and Choice of Forum are often used in International Trade Contract. Its usage is strongly motivated by cross-jurisdictional parties, allowing them to adhere to the different legal systems. The function of the choice of law and choice of forum is to provide legal certainty among the parties in the creation, implementation, and resolution of disputes that arise in the future. The choice of law concerns the material law imposed by the parties, while the choice of the forum concerns the forum where the dispute will be resolved. The basic principle in the choice of law and the choice of forum is the autonomy of the parties, where the parties are given the freedom to determine the law and the forum in the contract they make. This freedom is not unlimited but has limitations in its application. Limitations within determining the law and the forum used, among others, do not violate public order and mandatory rules, are not carried out for legal smuggling, and must be based in good faith. The validity of the choice of law and the choice of the forum depends on the violation of these restrictions so that the parties can acknowledge and accept the choice of law and the choice of the forum.
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