Arbitration clause for resolving contracts
Contracting parties can always stipulate an alternative clause for resolving conflicts, especially an arbitration clause, making use of a mediator or arbiter who is able to make a fair judgement.
1.4 Contracts with international aspects
Holders of rights usually exercise their rights through contracts, i.e. licence agreements (give others right to use) or transfer of rights, etc. If a contract has international aspects, e.g applies to a territory other than the country of residence of the rights holder or is entered into with a foreign co-contracting party or the service has to performed abroad, a conflict of law may arise.
To resolve this, the parties can determine the applicable law by stipulating it in the contract (so-called choice of law). However, this choice does not apply to persons not involved in the contract (third persons).
The so-called “Principle of contractual autonomy” in a contract is provided for by a number of international treaties (United Nations Convention on Contracts for the International Sale of Goods of 11 April 1980, REGULATION (EC) No 593/2008 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 17 June 2008 on the law applicable to contractual obligations (Rome I), etc.). According to this principle the contractual parties can choose the applicable law.
In the absence of any applicable international treaties, this principle is usually provided for by national private international law. But this principle does have certain limitations, e.g. on the protection of workers. However, co-contracting parties are not obliged to define the applicable law in an international contract. In the absence of any such stipulation, the rules of conflict of laws will apply.
Swiss law explicitly permits the freedom to choose the applicable law for contracts in Article 116 of the IPLA. In the following articles the IPLA provides specific conditions which apply to specific contracts concerning the choice of law: for sales agreements, for property contracts, contracts with consumers and employment contracts. Finally as far as contracts regarding intellectual property rights are concerned (and so copyrights too) Article 122 IPLA provides specific conditions: if the parties have not chosen the applicable law, this will be the law of the country of residence of the person transferring or granting the intellectual property rights. Please note that, for certain contracts, the freedom to choose the applicable law is limited, e.g. in work contracts (IPLA Article 122.3).
In the context of copyright it should be noted that a publishing contract is not viewed as a contract according to Art. 122 IPLA (contracts regarding intellectual property rights). The publishing contract is legally seen as a service agreement, which is governed by Article 117 IPLA. Here the law of the residence state of the person that has to perform the characteristic contractual service is applicable. In the case of publishing agreements this characteristic service is usually being performed by the publisher. That is why the applicable law refers to the residence or registered office of the publisher. It should be noted that this only applies in absence of any choice of law.
Furthermore mandatory provisions should be noted: Even in cases where foreign law would be applicable, if an occurrence of use contravenes a national mandatory provision, the courts may apply this provision.
GOOD TO KNOW
FAQ
1.4-1 A French national living in France but studying in Switzerland is mandated by his university to translate a German novel. They stipulated in the contract that Swiss law is applicable. Is this mandatory for everybody, even for third persons?
Within the contractual relation between the student and the University Swiss law will be applicable, because the parties used their “contractual autonomy” and chose the applicable law (Art. 116 IPLA). Conversely, in dealings with third persons (not involved in the contract), e.g. with the German author, the usual rules of conflict of laws will apply as the third persons are not party to the contract; hence the contract’s clauses are not mandatory for them.
1.4-2 A French translator living in France signs a contract with the University of Geneva to transfer the copyright for a translation. They do not stipulate the applicable law. Suppose the Geneva courts would be competent, which law applies?
As the translator is transferring her copyrights, the court in Geneva will apply the Swiss international private law (IPLA).This stipulates in Art. 122.1 IPLA that the law of the country of residence of the translator (hence the person that transfers its copyrights) applies, i.e. French law.