- El Salvador
- Sala Constitucional de la Corte Suprema de Justicia
- Cámara Primera de lo Civil de la Primera Sección del Centro
FREEDOM OF CONTRACT - PRINCIPLE OF PARTY AUTONOMY – CHOICE OF APPLICABLE LAW AND OF JURISDICTION - REFERENCE TO ART. 3.1 OF THE 1980 ROME CONVENTION – REFERENCE TO ART. 7 OF THE MEXICO CONVENTION – REFERENCE TO ART. 1.1. UNIDROIT PRINCIPLES.
The Cámara Primera de lo Civil de la Primera Sección del Centro (hereinafter, the “Chamber”), brought forth a claim before the Supreme Court, alleging that article 399-A of the Commercial Code of El Salvador is unconstitutional, since it conflicts with article 23 of the National Constitution, which consecrates the freedom of contract.
Article 399-A provides that in disputes arising from the application of the provisions of the Commercial Code concerning Commercial agency and distributorship agreements, the courts of the domicile of the agent, representative or distributor shall be competent to hear the case.
According to the Chamber, a right can be waived by the parties unless there is an express prohibition to do so, or unless it would harm a third party. If neither of those circumstances occur in a given case, the parties’ autonomy to freely waive a right that is recognized to them must prevail. According to the General principle of freedom of contract and party autonomy, the parties are free to decide on the law applicable to their contracts and on the Courts competent to resolve the disputes that may arise between them.
The Supreme Court requested the Legislative Assembly as well as the Solicitor General to issue a report on the subject.
Both the Legislative Assembly and the Solicitor General concluded that the Chamber’s claim should not be accepted because the principles of freedom of contract and party autonomy are not absolute, and according to the Legislative Assembly, one of the limitations of the two principles concerns the choice of the competent jurisdiction.
In its analysis, the Supreme Court thoroughly considered the principle of party autonomy in international contracts, its scope and limitations. The Court examined in particular article 3.1. of the 1980 Rome Convention on the law applicable to international contracts and article 7 of the 1978 Mexico Convention, both regarding the choice of the law applicable to international contracts. Moreover, the Supreme Court also referred to article 1.1 of the UNIDROIT Principles and the principle of freedom of contract therein laid down. The Supreme Court found that both principles have limitations and decided, in accordance with the view expressed by the Legislative Assembly and the Solicitor General, that the claim brought forth by the Chamber must be rejected and that article 399-A of the Commercial Code was not unconstitutional.