Party Autonomy: Removing Obstacles to Legal Diversity in the European Market*

: One of the main obstacles to the internal market is legal diversity: Member States often adopt different legal standards not only within public and economic law but also with regard to private law. The traditional approach of European Institutions (harmonising legislation among Member States) was soon comple-mented by the principle of mutual recognition; these two methodologies embodied the European strategy for minimising the problem. However, a third European tool is becoming obvious: to give private parties the ability to choose the applicable law. This new approach enhances regulatory competition among Member States and turns unessential the unification of national rules, which suits best the proportionality principle. Party autonomy as a means for overcoming the difficulties of legal diversity is not only a reality in European statutory law – which already brought the ability for choosing the applicable law to contracts, torts, divorce, inheritance, alimony, matrimonial property – but is also highlighted in ECJ’s case-law, which declared legal diversity is not a barrier to the basic freedoms as long as parties may choose the applicable rules. The article will focus on the grounds and advantages of this method to address the issue of legal diversity, advocating its use in areas where the traditional approach is ineffective or impossible (such as some rights in rem, within the scope of the freedom of movement of capital).


Market and Competition Law Review / volume iii / no. 1 / april 2019
Party Autonomy: Removing Obstacles to Legal Diversity in the European Market* Afonso Patrão** ABSTRACT: One of the main obstacles to the internal market is legal diversity: Member States often adopt different legal standards not only within public and economic law but also with regard to private law. The traditional approach of European Institutions (harmonising legislation among Member States) was soon complemented by the principle of mutual recognition; these two methodologies embodied the European strategy for minimising the problem. However, a third European tool is becoming obvious: to give private parties the ability to choose the applicable law.
This new approach enhances regulatory competition among Member States and turns unessential the unification of national rules, which suits best the proportionality principle. Party autonomy as a means for overcoming the difficulties of legal diversity is not only a reality in European statutory law -which already brought the ability for choosing the applicable law to contracts, torts, divorce, inheritance, alimony, matrimonial property -but is also highlighted in ECJ's case-law, which declared legal diversity is not a barrier to the basic freedoms as long as parties may choose the applicable rules.
The article will focus on the grounds and advantages of this method to address the issue of legal diversity, advocating its use in areas where the traditional approach is ineffective or impossible (such as some rights in rem, within the scope of the freedom of movement of capital Legal diversity is a barrier to the proper functioning of the internal market which European Institutions have been fighting: firstly, by harmonising and unifying the legal standards of each Member State; afterwards, by implementing mutual recognition, which could keep the existence of different legal rules without repressing free movement. In this article, we plan to show there is a third tendency of the European Union in order to accomplish freedom of movement, despite legal diversity: allowing private parties to choose the applicable law (professio iuris) to several domains. The European Institutions are minimising the difficulties of the existence of different standards by granting citizens and companies the right to elect the legal system of their preference, thus promoting competition between Member States and reassuring stability and confidence to economic operators, notwithstanding the EU country where they act.
However, there are known difficulties to unification, which made utopic the idea that legal diversity would disappear only by this approach: the impossibility of entirely abolishing disparity, due to possible different interpretations of uniform rules and by reason of interaction of those rules with the remaining internal legal system; slowness, difficulty and costs of the unification process; renunciation to the power of Member States of adapting the rules to their national communities; eradication of regulatory competition between Member States, which engenders so many good outcomes. 4 Therefore, when the European Court of Justice (ECJ) pronounced the principle of mutual recognition, European Institutions with law-making muito largas, em ordem a garantir o funcionamento, sem distorções graves, das leis do mercado no espaço económico integrado" (p. 14). Also, Georges van Hecke, "Intégration économique et unification du droit privé", in De Conflictu Legum -Essays presented to KOLLEWIJN and OFFERHAUS (Leyden: A. W. Sijthoff, 1962), 198.; Sergio Cámara Lapuente, "Un derecho privado o un código civil para Europa: planteamiento, nudo y (esquivo) desenlace", in Derecho Privado Europeo, ed. Sergio Cámara Lapuente (Madrid: Editorial Colex, 2003), 68: "normalmente la unión monetaria y aduanera acaban conduciendo a un Código uniforme"; Luís de Lima Pinheiro Rozas and Sixto Sánchez Lorenzo, Curso de Derecho Internacional Privado (Madrid: Editorial Civitas, 1996), 158; Pedro Miguel Asensio, "Integración europea y derecho internacional privado", Revista de Derecho Comunitario Europeo 1, no. 2 (1997): 414; Ulrich Drobnig, "Unified rules on proprietary security -in the world and in Europe", Boletim da Faculdade de Direito da Universidade de Coimbra LXXXV (2009): 669, and "Scope and general rules of a European Civil Code", European Review of Private Law 5, no. 4 (1997): 489; Antoni Vaquer Aloy, "¿Armonización del derecho privado en Europa vs. codificación del derecho civil en Cataluña?", in Estudios Jurídicos en Homenaje al Profesor Luis Díez-Picazo, ed. Antonio Cabanillas Sánchez (Madrid: Civitas -Thomson, 2003), 1055; Roy Goode, "A credit law for Europe", International and Comparative Law Quarterly 23 (1974): 251; Harry Duintjer Tebbens, "Private international law and the Single European Market: Coexistence or cohabitation", in Forty Years On: The Evolution of Postwar Private International Law in Europe (Daventer: Kluwer -University of Amsterdam, 1990), 49; José Maria Gondra Romero, "Integración económica e integración jurídica en el marco de la Comunidad Europea, desde una perspectiva sistemático-funcional", in Tratado de Derecho Comunitario Europeo, ed. Eduardo García de Enterría, Julio González Campos, and Santiago Muñoz Machado (Madrid: Editorial Civitas, 1986), 275-276. 4 Cf. Afonso Patrão,Autonomia Conflitual…,360. powers discovered a new approach to harmonisation: mutual recognition was seen as an alternative to unification, more harmonious with subsidiarity and proportionality principles. In fact, mutual recognition assumes an equivalence between different laws of Member States, 5 ensuring economic agents that the compliance to the law of the Member State of origin shall grant the right of selling a good or performing a service in all EU. Such principle makes it non-compulsory to unify rules in different Member States: it is enough to comply with the law of the Member State of origin in order to perform activity in all the EU, which would keep legal diversity without its inherent problems. 6 Said differently: mutual recognition involves the conclusion that unification or harmonisation of legislations is not always the most accurate way of accomplishing the internal market, making it possible to limit the approximation of legislations to a minimum. Legal diversity is not necessarily an obstacle to the freedoms of circulation, being possible (or even desirable) to achieve an Economic and Monetary Union within distinct legal systems, as long as economic operators are not bound to comply with foreign divergent rules. When applied to private law -which the ECJ expressly did 8 -, the nature of mutual recognition is debatable: some writers sustain it is a hidden rule on the conflict of laws, ascertaining an alternative connection in favour of the economic freedom (favor offerentis) between the application of the law of the country of origin and the law applied in the country of destination; 9 "Free choice in international corporate law: European and German corporate law in European competition between corporate law systems", in An Economic Analysis of Private International Law, ed. Jürgen Basedow and Toshiyuki Kono (Tübingen: Mohr Siebeck, 2006), 190. 8 In fact, despite the origin of mutual recognition in public law domains -built on the idea of mutual trust -the ECJ quickly applied the principle in private law, which is especially clear in Judgment of 1 July 1993, Hubbard, C-20/92, Colectânea da Jurisprudência, 1993, § §19 and 20: "the effectiveness of Community law cannot vary according to the various branches of national law which it may affect. In this case, the national law affected by Community law is not the law relating to the substantive proceedings but national procedural law. The reply to this question must therefore be that the fact that the substantive proceedings come under the law of succession does not justify excluding the application of the right to freedom to provide services enshrined in Community law with respect to a member of a profession responsible for the case". Stressing out the application of mutual recognition to private law, cf. Dário Moura Vicente, "Liberdades comunitárias…", 763; António Frada de Sousa, A Europeização…, 239; Luca G. Radicati di Brozolo, "L'influence sur les conflits de lois des principes de droit communautaire en matière de liberté de circulation", Revue Critique de Droit International Privé 82, no. 3 (1993) 59, no. 1 (1995): 5, 12-13, 25; "EC conflict of laws -A matter of coordination", 25; Alegría Borrás, "Le droit international privé communautaire: Réalités, problèmes et perspectives d'avenir", Recueil des Cours de l'Académie de Droit International, 317 (2005): 375: "l'effet de ce principe est similaire à celui d'une règle de conflit de lois, car il mène à l'application de la loi de l'État d'origine"; Arnaud Nuyts, "L'application des lois de police dans l'espace (Réflexions au départ du droit belge de la distribution commerciale et du droit communautaire)", Revue Critique de Droit International Privé 88 (1999): 256 "ce principe d'équivalence et de reconnaissance mutuelle se prête à un rapprochement avec la technique du rattachement alternative, propre au droit international privé"; Jan von Hein, "Of older siblings and distant cousins: The contribution of the Rome II Regulation to the communitarisation of private international law", Rabels Zeitschrift für ausländisches und internationales other writers believe it is a substantive limitation to the application of the law of the country of destination (or the applicable law pointed out by its national rules on the conflict of laws), whenever it is possible to assume the existence of an equivalence of legislations. 10 Regardless of nature -which The functioning of the principle implies certain consequences. First, the domestic conflict-of-laws and substantive rules should not be applied if they lead to a non-recognition result. Therefore, the principle operates, on the one hand, as a waiver of the domestic rules and, on the other hand, as a special rule of coordination between the member states' legal systems"; E. Crabit, "La directive sur le commerce électronique. Le project 'mediterrané'", Revue de Droit de l'Union Européenne 4 (2000): 750. There are signs of ECJ case-law pointing out this nature: Judgment of 4 December 1986, Commission v. Germany -Insurance, Case 205/84, EU:C:1986:463, paragraph 41, on the applicability of requirements of German insurance law not demanded by the law of the country of origin; Judgment of 9 August Vander Elst, C-43/93, 1994, I-3803, paragraphs 18 ff., on the applicability of prerequisites of the law of country of destination on protection of workers; Judgment 10 May 1995, Alpine Investments, C-384/93, 1995, I-1141, paragraph 48, ascertaining the applicability of the law of country of origin to cold calling activities. 10 Luca G. Radicati di Brozolo, "Libre circulation dans la CE et règles de conflit", in L'Européanisation du Droit International Privé, ed. Paul Lagarde and Bernd von Hoffmann (Köln: Bundesanzeiger, 1996), 93, and "L'influence…", 409: "l'application de ces principes ne signifie pas un bouleversement complet du fonctionnement du droit international privé […]. Les principes en question n'interdissent pas systématiquement l'application de la loi du pays d'accueil, et il est donc impossible d'en déduire une obligation générale d'appliquer toujours la loi du pays d'origine, ce qui, effectivement, équivaudrait au remplacement des règles de conflits"; Mathias Audit, "Régulation du marché intérieur et libre circulation de lois", Journal du Droit International 4 (2006): 1342 "cette prépondérance conférée au principe de reconnaissance mutuelle et l'introduction d'un critère d'équivalence […] ne modifie en rien le constat selon lequel ce sont toujours les règles de l'État de destination qui sont sanctionnées au titre de mesures d'effet équivalant à de restrictions quantitatifs. Si les règles du pays d'origine sont invoquées, c'est uniquement pour faire état de leur 'équivalence' avec celles que prévoit l'État d'importation, ce constat permettant de les écarter"; Mónica Guzmán Zapater, "El principio…", 148, is dubious due to somewhat rambling ECJ case-law 11 -, it is clear that the principle of mutual recognition entails amendments on the legal standards and "Un elemento federalizador para Europa: el reconocimiento mutuo en el ámbito del reconocimiento de decisiones judiciales", Revista de Derecho Comunitario Europeo 10 (2001): 417-418; Hans Jürgen Sonnenberger, "Europarecht und internationales Privatrecht", Zeitschrift für vergleichende Rechtswissenschaft: Archiv für internationales Wirtschaftsrecht 1 (1996): 11-13; Vincent Heuzé, "De la compétence de la loi du pays d'origine en matière contractuelle ou l'anti-droit européen", 395; Christian Kohler, "La Cour de Justice des Communautés Européennes et le droit international privé", Travaux du Comité Français de Droit International Privé (1993 which may be demanded in the country of origin, favouring the economic freedoms despite legal diversity. As sustained elsewhere, it seems proper to describe mutual recognition as very similar to the theory of vested rights, compelling the Member State of destination to ensure a right granted by the country of origin. Regardless of the applicable law, the right granted by the country of origin shall be respected by the country of destination. 12 In fact, pursuant to ECJ judg- 12 Cf. Afonso Patrão, Autonomia Conflitual…, 451.; Ralf Michaels, "EU law as private international law? Maastricht the country-of-origin principle as vested-rights theory", Journal of Private International Law 2, no. 2 (2006): 198 "the country of origin principle displays a remarkable degree of similarity to an old approach that almost has been forgotten. This approach is known as the vested-rights theory"; Paul Lagarde, "La reconnaissance: mode d'emploi", in 18; Luca G. Radicati di Brozolo, "L'influence sur les conflits de lois des principes de droit communautaire en matière de liberté de circulation", Revue Critique de Droit International Privé 82, no. 3 (1993): 421; Javier Carrascosa González, "La autonomía de la voluntad en la contratación internacional", in Autonomía de la Voluntad en el Derecho Privado -Estudios en Conmemoración del 150 Aniversario de la Ley del Notariado, ed. Lorenzo Prats Albentosa (Madrid: Consejo General del Notariado -Wolters Kluwer España, 2013), 644: "el principio del mutuo reconocimiento se basa en una técnica clásica del Derecho internacional privado: el 'conflicto de sistemas'. Que significa lo siguiente: no es relevante la Ley que sea dicha aplicada, la situación legalmente creada y existente en un Estado miembro, se considerará válidamente existente en los demás Estados miembros"; Alfonso Luis Calvo Caravaca and Javier Carrascosa González, Derecho Internacional…, 76-79; Bernard Audit and Louis dAvout, Droit…, 59; Mónica Guzmán Zapater, "El principio…", 151: "Es posible que nos hallemos ante un incipiente sistema de DIPr basado en la idea de reconocimientode un derecho o de una situación consolidada en el extranjero -que, potenciado por la falta de normas comunitarias de DIPr, responde a exigencias propias del Mercado Interior"; Jeremy Heymann, ment Grunkin & Paul, the Member State of destination was held to recognise a legal situation (the name of a person) established according to a different applicable law. 13 However, mutual recognition not always engenders the solution to legal diversity.
On the one hand, because it is a legal principle intended to endorse the creation of an internal market, mutual recognition is applied only when the rules enforced in the destination country trigger obstacles to the basic freedoms, not being employed whenever the law of the country of destination is more tolerant with regard to the rules unconnected to the European freedoms. 14 320-321; Christian Kohler, "La reconnaissance de situations juridiques dans l'Union européenne: le cas du nom patronymique", 72: "il s'agit de donner effet à la situation juridique déterminée dans l'État membre d'origine sans égard à la loi appliquée" ; Heinz-Peter Mansel, "Anerkennung als Grundprinzip des Europäischen Rechtsraums", Rabels Zeitschrift für ausländisches und internationales Privatrecht 70, no. 4 (2006): 724. 13 In fact, in Judgment of 14 October 2008, Grunkin & Paul, Case, C-353/06, EU:C:2008:559, §39, the ECJ ascertained the determination of the name of a child according to the rule on the conflict of law of the country of destination -nationality of the child -would be a restriction to the freedom of movement of people because it would result in a different name vis-à-vis the name established by the country of origin. Cfr. §39, stating the basic freedoms "preclude the authorities of a Member State, in applying national law, from refusing to recognise a child's surname, as determined and registered in a second Member State in which the child -who, like his parents, has only the nationality of the first Member State -was born and has been resident since birth", confirming the obligation to recognise the vested right. Also, Rui Moura Ramos, "A evolução recente do direito internacional privado da família", in Direito da Família e Direito dos Menores: Que Direitos no Século XXI?, ed. Maria Eduarda Azevedo and Ana Sofia Gomes (Lisboa: Universidade Lusíada Editora, 2014), 77; António Frada de Sousa, A Europeização…, 286; Luís de Lima Pinheiro, Direito Internacional…, 393; Paul Lagarde, "Comentário ao Acórdão Grunkin e Paul…", 91-92; Christian Kohler, "La reconnaissance de situations juridiques dans l'Union Européenne: Le cas du nom patronymique", 76; Paschalis Paschalidis, Freedom…, 68. This specific understanding of the nature of mutual recognition was received by German Law in the new §48 EGBGB: Notwithstanding the applicable law to the formation of the name, the name registered in other Member States is recognised. 14 Cf. Paul Lagarde, "La reconnaissance: mode d'emploi", 483: "Il n'impose la reconnaissance que dans les cas où la non-reconnaissance serait une entrave non justifiée par l'intérêt général aux grandes libertés du traité"; Marc Fallon and Johan Meeusen, "Private international law in the European Union and the exception of mutual recognition", Yearbook of Private International Law 4 (2002), 57; Mathias Audit, "Régulation…", 1347. On the interference of mutual recognition only when the law of the country of origin is more indulgent, cf. the example by Peter von Wilmowsky, "EG-Vertrag…", 14: before the harmonisation of rules on the pollution of vehicles, in Germany cars were built for other Member States without respecting the environmental requirements of German law (country of origin), since the countries of destination did not demand such conditions. On the other hand, there are several causes authorising the receiving country to discharge mutual recognition. Application of the law of the country of destination is allowed, even if restraining European freedoms, granted that these rules are justified by overriding requirements relating to the public interest and applicable to all persons and undertakings operating in the territory of the State. 15 Finally, according to the ECJ's case-law, the relevance of mutual recognition is limited to the cases where an equivalence of legislations can be found, not being imposed when different rules of the country of origin and the country of destination pursue unlike purposes. 16 In the ECJ case-law, this is specially obvious in Judgment Überseering (cit. fn 9), § §78 to 82, where the ECJ reflects on the restricting results of the application of a different law to the society, settling the impossibility of refusal of the legal capacity of a company to establish itself in another Member State; and in Judgment of 30 March 1993, Konstantinidis, C-168/91, §15, where the ECJ decides that the result of the rules on transliteration of German law "interfere with his freedom to exercise the right of establishment" (cf. Marta Requejo Isidro, "Libertades comunitarias y registro civil: Algunos casos de incidencia mutua y pautas de solución", in In all these situations, economic agents shall comply with the law of the destination country, being therefore compelled to adjust to different legal systems. Which means mutual recognition does not overcome all difficulties inherent to legal diversity in the European Union. Furthermore, the method of mutual recognition is questionable, since it benefits economic agents from the countries with less severe standards, encouraging Member States to adopt laidback rules -in the context of a regulatory competition. 17

Private International Law as a tool towards the internal market
Besides choosing the most closely connected legislation to an international situation, it is clear that the rules on the conflict of laws play a role in the substantial outcome of a juridical problem, either by choosing the applicable law considering its effects, or by taking account of the political interests of the involved countries. 18 Privado XII (2012) Furthermore, rules on the conflict of laws obey to political interests: when choosing a connecting factor, as long as the classical goals of private international law are fulfilled, 19 governmental purposes are taken into account. 20 These policies are not exclusively the determination of the country which has the strongest connection to an international situation.
On the one hand, when the parties are allowed to choose the applicable law, the physical location is disregarded, valuing the interests of the individuals and the goals of international commerce instead. 21 On the other hand, the selection of the connecting factor often aims the accomplishment of a certain governmental policy. The classical example is the choice between the law of nationality and habitual residence: emigration countries have a tendency to establish the rule of nationality, keeping a connection to its citizens who moved abroad; immigration countries lean towards the rule of habitual residence, maximising the application of lex fori and promoting the integration in the society of the receiving State. 22  ; "15 years of European private international law -achievements, conceptualization and outlook", in Entre Bruselas y la Haya: Estudios Sobre la Unificación Internacional y Regional del Derecho Internacional Privado -Liber Amicorum Alegría Borrás, ed. Joaquin Forner found, often internationally mandatory norms (lois d'application immédiate), unilaterally establishing their scope of application and modifying the system of the conflict of laws with the aim of achieving particular goals of the involved States. 23 In fact, private international law is not formed exclusively by purely localising rules but adopts connecting factors which promote certain policies: "private international law is now losing the 'innocence' which served traditionally to keep it sheltered from the intrusion of state interests". 24 Semipublic law aims to mention legal institutes difficult to categorise in the classical dichotomy public law / private law. In fact, the concern for social welfare extended to the rules of private relationships, in cases like labour contracts and lease contracts. On this issue, cf., more extensively, Afonso Patrão, Autonomia Conflitual…, 89. 24 Horatia Muir Watt, "The challenge of market integration for European conflicts theory", 192. Also, António Ferrer Correia, Direito Internacional… (1997) This is not an unknown circumstance for the European Union, which has been exercising its competence in the field of private international law to fulfil its own policies. In fact, when only States had internal rules on the conflict of laws, "private international rules [were] conceived by competing players in the field of substantive legislation, a field without referee. Since and to the extent that the Community is not a player in this field, it rather acts as referee when legislating in private international law". 25 Not having powers to adopt substantive legislation, the European competence on private international law is exercised in a more neutral way and is employed as a tool for stimulating European policies -especially the achievement of the basic freedoms, becoming a means for achieving European integration. 26 In fact, if the promotion of international relations is the genetic intent of private international law and simultaneously the purpose of European integration, the rules on the conflict of laws are a powerful ally accomplishing 25 (2000): 120 -"ce qui implique, en somme, un processus qui conduit à la 'communautarisation' des systèmes de droit international privé de ceux-ci, au service des objectifs de l'Union européenne"; David Lefranc, "La spécificité des règles de conflit de lois en droit communautaire dérivé (aspects de droit privé)", Revue Critique de Droit International Privé 94, no. 3 (2005): 418; Veerle van den Eeckhout,

The Instrumentalisation of Private International Law: Quo Vadis? -Rethinking the 'Neutrality' of Private International Law in an Era of Globalisation and Europeanisation of Private International
Law, 3. This is probably one of the reasons justifying the "integração de diversas áreas do direito internacional privado no âmbito material do direito comunitário, assim se manifestando àquela primeira disciplina a força expansiva que sempre tem vindo a ser reconhecida a esta última". Rui Moura Ramos, O Tribunal de Justiça das Comunidades Europeias e a Teoria…, 39. the internal market. And that is the reason why writers mention the instrumentalisation of private international law by the European Union. 27 The simple unification of the rules in the conflict of laws is, of course, a condition to the "proper functioning of the internal market, in order to improve the predictability of the outcome of litigation, certainty as to the law applicable and the free movement of judgments, for the conflict-of-law rules in the Member States to designate the same national law irrespective of the country of the court in which an action is brought". 28 But the selection of the connecting factor is not innocuous, as it can favour the purpose of European integration. One of the most obvious examples is the progressive substitution, in the European instruments on the conflict of laws, of the connecting factor nationality with habitual residence, encouraging the integration of persons exercising their freedom of movement into the receiving country's community and, thus, favouring the free movement of people. 29 27 Cf. Erik Jayme, "Il diritto…", 355: "Il diritto internazionale privato serve -sempre secondo le intenzioni del legislatore comunitario -all'integrazione europea"; Luca G. Radicati di Brozolo, "L'influence…", 423; Vincent Heuzé, "De la compétence de la loi du pays d'origine en matière contractuelle ou l'anti-droit européen", 395 -referring the "asservissement du droit international privé aux objectifs du Traité CE"; Johan Meeusen, "Instrumentalisation…", 288: "the resulting transformation of the former could be labelled as instrumentalisation"; Marc Fallon, "Les con-flits…", 199: "Les règles communautaires de droit international privé méritent un aperçu de leur contenu sous l'angle de leur contribution à la réalisation du marché intérieur"; Jürgen Basedow, "Der kollisionsrechtliche…", 3: "eine so internationale Materie wie das IPR aus der Natur der Sache einen Beitrag zur Integration leisten könnte"; "Spécificité…", 292; Santiago Álvarez González, "Derecho internacional privado y derecho privado europeo", in Derecho Privado Europeo, ed. Sergio Cámara Lapuente (Madrid: Editorial Colex, 2003), 185: "el DIPr cobra un cierto protagonismo como alternativa a la armonización"; Alex Mills, Towards a Public International Perspective on Private International Law: Variable Geometry and Peer Governance (2012), http://ssrn.com/ abstract=2025616, 9: "Private International Law is part of the process of defining the European legal order and facilitating the efficient functioning of the internal market"; Herbert Kronke, "Connecting factors and internationality in conflict of laws and transnational commercial law", 59: "A regional economic integration organisation such as the European Union may push for a change from nationality to habitual residence with a view to facilitating greater mobility of persons within its economically integrated area"; Giorgio Badiali, "Le droit international privé des Communautés Européennes", Recueil des Cours de l'Académie de Droit International 191 (1985)

Party autonomy: removing obstacles to legal diversity
The former conclusions -the persistence of legal diversity as an obstacle to the internal market (i) and the instrumentalisation of private international law as a European tool towards the internal market (ii) -drive to a question: is there a transversal policy by the European Union on its instruments on the conflict of laws which would erase the eventual obstacles of legal diversity within private law?
The answer has been obvious, not only to the European Institutions with law-making powers but also to the case-law of the ECJ, which concluded that overriding national rules to basic freedoms, even if allowed by the exceptions of the Treaty, is not an obstacle to the internal market if the parties are free to prevent their application. The possibility of choosing the applicable law (professio iuris) makes legal diversity unproblematic, since economic agents will elect the rules which satisfy its purposes, enhancing international movement. In fact, the freedom to choose the applicable law is a general principle of Private International Law of the European Union, being used in all areas of European intervention. The reasons for allowing the parties to choose the applicable law in almost all of European Instruments on the conflict of laws 31 are not merely in the merits of party autonomy (enhancement of private self-determination; certainty, predictability and easiness of ascertainment of the applicable law; creation of regulatory competition among several States), although all reasons are coherent with the regime of basic freedoms. 32 Instead, the elimination of obstacles to the freedom of movement is a key purpose of the European Union when establishing such connecting factor. 33 de la voluntad en las relaciones plurilocalizadas. Autonomía de la voluntad. Elección de ley aplicable: Consentimiento y forma de los actos", in  33 Cf. Jürgen Basedow, "Der kollisionsrechtliche…", 27: Die Zulassung der Rechtswahl bedeutet nichts anderes, als daß das nationale Kollisionsrechts, gleich ob vereinheitlich oder autonom, gerade keine staatlichen Beschränkungen für den grenzüberschreitenden Wirtschaftsverkehr innerhalb der Gemeinschaft errichtet, die am Maßstab der Art. 30 und 59 EGV gemessen werden könnten"; António Frada de Sousa, A Europeização…, 844: "A intervenção do legislador europeu no domínio dos conflitos de leis em matéria civil e comercial, após a entrada em vigor do Tratado de Amesterdão, levou à adopção de instrumentos de DIP derivado europeu onde pontifica o princípio da autonomia da vontade como critério base de determinação da lei aplicável"; Erik Jayme, "Party autonomy in international family and succession law: New tendencies", Yearbook of Private International Law 11 (2009): 3 "in Europe, introducing party autonomy in international family law is motivated by the needs of integration in the European Union, rather than by ideas of selfdetermination of the person"; Anna Gardella, "Articulo 3.º -Commentario al Regolamento (CE) n. 593/2008 del Parlamento europeo e del Consiglio del 17 giugno 2008 sulla legge applicabile alle obbligazioni contrattuali ('Roma I'), Francesco Salerno, Pietro Franzina (eds.)", Le Nuove Leggi Civili Commentate 3/4 (2009): 614 "la volontà private è spesso considerate come il criterio di collegamento più adatto a realizzare pienamente le libertà fondamentali sancite dal Tratt. CE"; Janeen M. Carruthers, "Party…", 889; Axel Flessner, "Security interests in receivables -A European perspective", in The Future of Secured Credit in Europe, ed. Horst Eidenmüller and Eva-Maria Kieninger (Munique: De Gruyter Recht, 2008), 346: "For the Community, where it is making conflict of law rules for the internal market, party autonomy is mandatory under the basic freedoms"; Paul Lagarde, "Les principes…", 697: "La combinaison des principes d'unité et d'autonomie devrait donc contribuer à l'objectif de suppression des entraves à la libre circulation des personnes"; Alfonso Luis Calvo Caravaca and Javier Carrascosa González, "El Convenio de Roma sobre la Ley Aplicable a las Obligaciones Contractuales de 19 de Junio de 1980", in Contratos Internacionales, ed. Alfonso Luis Calvo Caravaca, Luis Fernández de la Gándara, and Pilar Blanco-Morales Limones (Madrid: Editorial Tecnos, 1997), 74: "al permitir la elección de la ley más conveniente a los contratantes, se potencia la contratación internacional, y en última instancia, el intercambio económico y la circulación internacional de la riqueza. Dicha promoción de la contratación internacional llevada a cabo por el DIPr. Se basa en una idea de libre competencia entre las leyes estaduales"; Dário Moura Vicente, "Perspectivas da harmonização e unificação internacional do direito privado num época de globalização da economia", in Estudos em Honra do Professor Doutor José de Oliveira Ascensão, ed On the one hand, if parties can elect the legal rules of international contracts, non-contractual liability, maintenance obligations, matrimonial regimes, divorce and inheritance, the fact that Member States adopt different substantive rules is not as barrier to basic freedoms, since individuals may adjust their conduct to the legal system of their choice. Thus, when dealing with an international situation, it is possible to ascertain the specific legal system the parties know and in which they trust, eliminating doubts on the legal regime of such transactions; if there is more flexibility and legal certainty establishing the legal status of individuals -because the parties self-determine the applicable rules regardless of the Member State where they live -citizens' mobility is increased, by wiping out one of the obstacles to movement. 34 On the other hand, free movement of people must grant a stability of the citizens' legal status, notwithstanding the alteration of domicile. Their matrimonial regime, their organisation of succession in advance, their name or the validity of contracts concluded before must not be in jeopardy as a consequence of the exercise of a basic freedom. To this aim, professio iuris is a perfect connecting factor: if parties are free to decide, in every Member State, the applicable law to their status, their movement will not affect it, facilitating the management of their lives regardless of the Member State where they choose to reside. 35 Finally, party autonomy may avoid the application of overriding national rules which could refrain European freedoms -even if the restriction was allowed by the Treaty -, as stressed out by the European Court of Justice. In fact, it expressly declared party autonomy would wipe away barriers on the freedom of movement possibly caused by legal diversity, implicitly advising the use of such connecting factor in order to fulfil the Treaty's objectives. In Judgment Alsthom Atlantique, when analysing the compatibility of the freedom of movement of goods with French rules on the seller's liability on defective goods, the ECJ declares "the parties to an international contract of sale are generally free to determine the law applicable to their contractual relations and can thus avoid being subject to French law". Hence, because the parties were free to choose another applicable law, although the national rules would be allowed by European law, the barrier would not be mandatorily applied to parties. 36 These considerations point out a conclusion: the European Union is embracing party autonomy as a complement to mutual recognition in areas where it would not be enough to wipe out the difficulties inherent to legal diversity -especially within private law. Therefore, this fact must be recognised as one of the tools used by the Institutions in order to accomplish the internal market.  Common Market Law Review 29, no. 4 (1992), 777; Walter van Gerven and Jan Wouters, "Free movement of financial services and the European Contracts Convention", in EC Financial Market Regulation and Company Law, ed. Mads Andenas and Stephen Kenyon-Slade (Londres: Sweet & Maxwell, 1993), 67; Matteo Ortino, "The role…", 321; Ornella Feraci, "L'autonomia…", 431. Said in a different way: the ECJ declared party autonomy makes legal diversity unproblematic, since the parties may elect the applicable law. Cf. Dário Moura Vicente, "Perspectivas da harmonização e unificação internacional do direito privado num época de globalização da economia", 1669; "Um Código Civil para a Europa? Algumas reflexões", in Direito Internacional Privado -Ensaios (Coimbra: Almedina, 2002), 10; Stefan Grundmann, "The structure of European contract law", European Review of Private Law 9, no. 4 (2001): 514; Horatia Muir Watt, "The challenge of market integration for European conflicts theory ",199;Luca G. Radicati di Brozolo,"L'influence…",[411][412][413]Marc Fallon,"Les conflits…",77 and 145;Peter von Wilmowsky,6;Oliver Remien,"European…",83;Ben Smulders and Paul Glazener,"Harmonization in the field of insurance law through the introduction of Community rules of conflict", Common Market Law Review 29, no. 4 (1992), 777; Javier Carrascosa González, "La autonomía de la voluntad conflictual y la mano invisible en la contratación internacional", Diario La ley 7874 (2012)

Concluding remarks and further perspectives
The embracement, by the European Union, of professio iuris as a mechanism favouring the internal market will probably not stop. In fact, allying the possibility of choice of law with the effort for harmonisation and the principle of mutual recognition aids the removal of obstacles to the European freedoms caused by legal diversity.
That is why writers predict its extension to new areas, such as property law -namely to securities on moveable property. In fact, the movement of assets may jeopardise the effectiveness of the creditor's security right because of the movement of goods, which is supposed to be guaranteed by the Treaty. 37 This problem could be minimised by extending professio iuris 37 In fact, when a moveable asset is taken to a different Member State, the traditional rule on the conflict of laws -lex rei sitae -makes applicable to securities on that good a different regime, which may establish the invalidity of the rights of the creditor. Therefore, the classical connecting factor may be an obstacle to the freedom of movements of assets. In consequence, some literature sustains European law on the movement of goods is incompatible with the invalidity of security rights as a consequence of the movement of assets -Christiane Wendehorst, "Sachenrecht", in Münchener Kommentar zum bürgerlichen Gesetzbuch, ed. Roland Rixecker and Franz Jürgen Säcker (München: Beck, 2010), 220 and 271; Wulf-Henning Roth, "Die Freiheiten des EG-Vertrages und das nationale Privatrecht", Zeitschrift für europäisches Privatrecht 1 (1994): 24; Anne Röthel, "Internationales…", 1028; Bram Akkermans, "Property law and internal market", 206: "When, because of the application of lex rei sitae, a certain national system of property law applies, and a property right created under the law is not recognised by another Member State, this will affect the way in which trade between these Member States is conducted"; Bram Akkermans and Eveline Ramaekers, "Free movement of goods and property law", European Law Journal 19, no. 2 (2013): 242; Eveline Ramaekers, European…, 7 and 53; Axel Flessner, "Security interests in receivables -A European perspective", 342: "After Centros, Überseering and Inspire Art, it is no longer allowed to nullify a corporation switching its business into another member state, nor to force it into an unwanted new legal form. Why should it be different when property is moved the same way?; Wulf-Henning Roth, "Secured credit and the internal market: The fundamental freedoms and the EU's mandate for legislation", ibid., 41-42 and 59; "Die Freiheiten…", 25; Dominique Bureau and Horatia Muir Watt, "Droit international privé", in Partie Générale (Paris: Presses Universitaires de France, 2010), 454; Christoph Schmid, "Options under EU law for the implementation of a eurohypothec", 63: "such a transposition is mandated by the basic freedoms. Indeed, the restriction of the freedom of capital (which encompasses the right of a debtor to secure dept by mortgage) through the wholesale non-recognition of a foreign real property right is not proportional if the right could have been exercised, after the good has crossed the border, in the form of a similar national-security right"; Horst Eidenmüller, "Secured creditors in insolvency proceedings", in  38 removing the obstacle generated by the existence of different laws within the internal market. Or even, as sustained elsewhere, 39 to mortgages on immoveable property, since legal diversity in property rights makes the acceptance of a mortgage in a foreign Member State unattractive, distorting the freedom of movement of capital.
The fact that these areas are strongly ruled, in all Member States, by norms on the conflict of laws with stable connecting factors shall not be a hurdle: one of the features of private international law is its versatility, because its methods -and the election of its connecting factors -follow the political and economic circumstances. Therefore, rules on the conflict of laws which were universal have been replaced by new criteria, fulfilling different purposes -and the European Union has been impressively important in such tendency. 40 In conclusion: no doubts existing on the ability of professio iuris as a tool of promotion of the internal market -overcoming the barriers created by legal diversity, even when the application of restricting national regulation would be allowed by the Treaty -, it shall be recognised as one important device of European Institutions on this field. This recognition will probably have practical effects in the coming European instruments, possibly allowing the choice of law in areas like the personal status of individuals or property law. The purpose of achieving a proper functioning of the internal market makes predictable the persistence of choice of law as tool of European Union in the near future. . "Les conflits de lois et de juridictions dans un espace économique intégré -L'expérience de la Communauté Européenne". Recueil des Cours de l'Académie de Droit International, 253 (1995): 9-282.