Comparative Study of the Limitations of Parties to a Contract in Choosing the Governing Law

In this article, the limitations of the parties to a contract in choosing the governing law have been investigated by conducting a comparative analysis on civilized systems and regional and international conventions. The purpose of the current article is to determine the limitations and exclusions of applicable law after proving the law of autonomy of will in Iranian legal system. However, we are convinced that parties to a contract cannot stipulate whatever they want in the contract. Therefore, choosing the governing law of the contract, non-national legal rules especially unwritten customs, general principles of law and indefinite law as the applicable law for contract is incorrect. In contrast, choosing international and regional contracts, unrelated law to the contract, changing the selected law and also determining various laws, provided that do not contradict one another, are permitted. In addition to limitations of parties in terms of choosing the law, governing the chosen law on contractual relationship faces with some exclusions in the way that the chosen law of parties does not contain laws of procedure, capacity and form of contract. Moreover, applicable law should not contrast with public order and binding rules of the forum State or the country that has the close relationship with contract.