Applicable Law on Contractual Obligations in European Union and American Law

In EU and American law, the principle of autonomy has been recognized. For the purpose of unification, Rome 1 Regulation allows parties to choose the law that has no link to the contract. By contrast, in American law, the selected law is required to have a basic or reasonable relationship with the contract. According to Rome 1 Regulation, the chosen law does not affect the application of overriding mandatory provisions of the law of the forum and the law of the performance of the contract. In American law, the chosen law should not be in conflict with public policy of the forum and a fundamental policy of a state which has, substantially, greater interest than the chosen state in relation to the determination of a particular issue. This article examines the positions of European Union and American law regarding the determination of applicable law.