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Chapter Three : Positive Rules of Conflict of Laws1

Introduction

Though the Egyptian legal system does not contain a specific legislation on conflict of laws, most of the Egyptian rules of the conflict of laws can be found in the Egyptian Civil Code. However, many other rules of conflict of laws can be found in other different statutes such as the Commercial Code Act no 17 /1999 and the Arbitration Act no 27 /1994. These rules of conflict of laws are therefore qualified as positive rules.

The Egyptian Positive rules for the conflict of laws cover two main categories of relations. The First category includes matters relating to persons while the second group is concerned with pecuniary transactions. It is to be noted that both topics share similar questions of formality which can be solved by similar rules.

Therefore, this chapter will contain the following three sections:

Section One : Conflict of laws in Formality.

Section Two: Conflict of laws in Personal Status

Section Three: Conflict of laws in Assets.

1 This part is an update and an addition to a previous treaties on private

international law published by Prof. Dr. Hisham A. Sadek, Prof.Dr Ibrahim N. Saad, Prof. Dr. Hafiza E. Al Haddad, Dr. Nader M. Ibrahim, Private International Law: Selective Basics Under Egyptian Law, 1st edition, Alexandria 2000/2001. I thank them all for allowing me to perform the update and addition to their valuable work and I would like to express my gratitude for their permission.

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Section One : Conflict of Laws in Formality.

1-Introduction

Formality is a term general refers to "procedure" in contrast to "substance". The Majority of modern legal systems have been settled on the adoption of the "Locus Regit Actum" rule in regard to matters of formality. This rule means that "...when a legal transaction complies with the formalities required by the law of the state where the transaction is done, it is also valid in the state where it is to be given effect although by the law of that state other formalities are required..."2

The Egyptian law adopted the above mentioned rule in Art (20) of the Civil Code. However, the contracting parties were permitted to apply to of formality irrespectively, the law of the state in which the transactions were concluded, the law applicable to the matters of substance, i.e. Lex Causae, the law of the parties common domicile or the law of the parties common nationality.

Art (20) of the Civil Code provides that: "Contracts between living persons are governed as regards their formalities by law of the state in which the contracts are concluded. They may also be governed by the law regulating the substantive issues of a contract, by the law of the common domicile of the parties or their common law of nationality"

2 See BLACKS LAW DICTIONARY (6th ed.1990) 941.

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2- Historical Background

Questions of conflict of laws first appeared in the middle ages within the context of business relations among the cities of north Italy. Therefore, the first solutions for conflict of laws can be traced back to the Glossoe of the old Roman law doctrine (Glossators). In the 12th and 13th century those lawyers subjected all transactions to the law of the place where they have been made. However, these early glossators did not differentiate between "substance" and "formality". The distinction did not take place until the times of the roman glossator, Curtius, in the later 15th century.

Curtuis is considered to be the first lawyer to differentiate between "substance" and "formality" in transaction. This accidently took place by when he explained the application of the "Locus Regit Actum" rule to the substance of the transaction. He founded the application of that rule upon the implied will of the parties. This interpretation opened the path for the party autonomy rule that was advocated by the French lawyer, Dumoulin, in the 16th Century. Dumoulin, argued for the recognition of the contracting parties authority to subject their contract to law other than the law of the place of contract. I.e. Lex Loci Contractus. His argument was that an express will is better for consideration that an implied will.

At the 16th century it was settled the "Locus Regit Actum" rule was applicable only to the formal aspects of transactions. The substantive aspect of transactions was allowed be governed by another law at that time. It is worthy to mention that the the "Locus Regit Actum" rule

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disappeared temporarily in the era of the domination of the territorial school which prevailed in the 16 th century. Under such school, conflict of laws was solved by analyzing the laws themselves and not by analyzing the transactions and since that most of the laws were considered territorial the transaction's formality became subject to the law of the where the transaction was created.

The the "Locus Regit Actum" rule reemerged in modern time under practical reasons. These reasons aimed at facilitating the creation of transactions. They took into consideration that the concerned parties may face difficulty in knowing the details of formalities in other laws beside that of the place where the transaction was created. In addition, some types of formalities cannot be satisfied in any place. E.g. interference of a public notary.

3- Is the "Locus Regit Actum" rule Facultative?

Those who explained the application of the "Locus Regit Actum" rule through the territorial application of law have, logically, reached the conclusion that this rule is a mandatory one. However, such conclusion does not suit the modern philosophy for the "Locus Regit Actum" rule which is the facilitation. This philosophy directs towards considering the "Locus Regit Actum" rule as a facultative rule.

The Egyptian legislator opted for the modern philosophy. This can be induced for the facility which has been granted to the Egyptian judge to apply the law which applicable to the substance, or the law applicable

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to the common domicile of the contracting parties, or their law of common nationality, which ever validates the transaction, i.e. Lex Validatus. Therefore, The Egyptian positive rule applicable to formality is not as the rest of the traditional conflict of law rues, neutral. It is rather of a material objective.

4- What is meant by the concept of formality?

Distinction between "substance" and "formality" can be of no importance when the contracting parties satisfy the formality requirements provided for under the law applicable to "substance". However, the applicable law to "substance" can different than that which is applicable to "formality", hence it is useful to highlight the criterion by which distinction is made between these different matters.

(a) Matters excluded from formalities

i- Matters of procedure.

The dominant doctrine differentiates between the concept of "formality" and "matters of procedure". Matters of procedure contain the required procedures for filing a lawsuit before the court which relates to the judicial authority of the state while formality is concerned with the actives of the individuals. Although both formality and procedure may eventually be subject to the same law, i.e. the law which is applicable at the place of the procedure and the law applicable at the place where the transaction is created, only formality can be subject to another applicable law. The "Locus Regit Actum" rule is facultative rule but procedure cannot be subject to other law other than that of the place of procedure., i.e. the Lex

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Fori, because it is mandatory to follow that law in all matters relating to the filing a lawsuit before the court.

ii-Matters of Publicity

By the same token, matters of publicity are different than matters of formality. Publicity is required sometimes for the creation of rights such as the case with principal in rem rights (e.g. ownership) and sometimes publicity is required for the enforcement of the right against third parties as in the case with accessory in rim rights (e.g. pledge). Though matters can be subject to the same law i.e. the applicable law at the place of publicity (publicity) and law at the place of the creation of the transaction (formality). Only formality can be subject to another applicable law, because it is subject to a facultative rule. Nevertheless, publicity cannot be subject other law that the applicable law at the place of publicity, because this is a public rule of a territorial application.

(b) Matters which fall into the concept for formality.

Formality is the means by which the will is expressed to the external world. Such means can be required for the creation of the transaction or its evidence.

(i) Formality for Creation

Laws may require the satisfaction of certain formalities for the creation of certain transactions as in the case of the contract of donation of an immovable property and the contract of pledge. According to some scholars the decision of determining whether the formability is necessary for the creation of the transaction

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or as evidence should be left to the Lex Causae. Such interpretation finds support in Egypt in the explanatory memorandum of the Civil Code.

The explanatory memorandum of the Civil Code said that "... it should be take into consideration that the scope of the law applicable to formality.... covers only elements of external formality, however, essential mattes of formality, and determining the essential elements for creation of the transaction as in authentication and security-pledge are subject to nothing but the law applicable to the settlement of the transactions in substance.."3

Therefore, recourse has to be made to the law applicable to matters of "substance" in order to decide whether authentication is required for the creation of the transaction or not. If such authentication is required it should be satisfied even if it is not required by the law at the place of creation of the transaction. However, the place of creation of the transaction will decide the way according to which authentication should be satisfied. As a result, the concept of formality will be restricted to a narrow concept to contain what the explanatory memorandum called "essential matters", i.e. the question whether formality is required for the creation of the transaction or not.

Nevertheless, the above mentioned doctrine is criticized by some Egyptian scholars who argue for full recourse to the law applicable at the place of the creation of the transaction for determining whether authentication is an essential element for creating the transaction or not. 3 See Collection of Act Préparatoires, Part I , 269

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Their arguments are based upon the philosophy of facilitation which constitutes the modern background for the place of creation of the transaction. First, why should we burden the parties with authentication required by the law of substance while the law at the place of the creation of the transaction does not require such element?

Second, the parties may be ignorant of the rules of formality under the applicable law to the "substance" while they are aware only of the formality requirements at the place of transaction. Third, the other doctrine render the "Locus Regit Actum" rule idle, because if we restrict the parties choice of law to the application of the formalities provided by the law of "substance" what shall be left to the place of creation of the transaction. Fourth, what if the law of "substance" required a particular formality which cannot be satisfied in places other than the place of that law e.g. interference of a particular official clerk? Does not this lead to an impossible creation of the transaction at places other than the place to which the law "substance" pertains?

Consequently, adopting of a wide concept of formality is required to the extent of including the question of whether particular formality is required or not. Such a doctrine fits the requirements of facilitation and which are vital for international transactions. Hence, if the law of "substance" requires an authentic formality but the law at the place of the creation of the transaction does not require more than the existence of a customary formality then satisfaction of the latter law will suffice.

(ii) Formality for evidence

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The majority of the Egyptian scholars agree to the application of the "Locus Regit Actum" rule to the question of whether documentary evidence is required for the proof of the existence of a certain transaction, and the probative authority of the different means of evidence. Therefore, if the law at the place of the transaction does not require documentary evidence while the applicable law to the transaction's substance requires such evidence then the transaction may be proved by testimonial evidence.

Some of the Egyptian scholars argue for releasing the parties form the required documentary evidence provided for by the applicable law at the place of creation of the transaction if the Lex Loci does not require such type of evidence. Those scholars relay on the modern philosophy of the "Locus Regit Actum" rule which is facilitation of transactions.

Section Two : Conflict of Laws in Personal Status

1- Introduction

The treatment of the Egyptian statutory rules for conflict of laws in matters related o persons requires the discussion of the following: the preliminary topics, marriage, capacity, heritage and will. We shall devote to each of these topics a distinct subsection.

2-Plan

Subsection One : Introductory issues

Subsection Two: Marriage

Subsection Three: Capacity

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Subsection Four: Inheritance and Will

Subsection One: Introductory Issues

The Egyptian Quest to Independence & the Abolishment of Foreign Capitulations

Before examining the choice of law rules on Personal Status it is important for us to understand the historical background of those rules to highlight some of the above rules' unique aspects. During the period from the sixteenth century up to the nineteenth century the Mamluk and the Ottoman Empire resort to signing trade treaties with European and other Western powers to facilitate trade and entry of foreigner into Egypt and the adjourning provinces. This was a part of development strategy that aimed at encourage foreign investment.

Nonetheless, the European and other Western powers were interested in establishing a foothold in the region through the direct presence of their subjects and direct engagement of foreign firms in the day to day economic activity. Knowing that the Ottoman Empire was already facing dare economic situations, hence it was called "Europe's Sick Man", the Western powers demanded that their subjects receive preferential treatment vis-a-vis the local government. The foreigners were not subject to local law nor local courts but they were accountable only to consular courts established by their states. This preferential treatment included the establishment of a system known as "Foreign Capitulations".

In Egypt foreign capitulations were inherited from the Ottoman Empire. However, after the British Invasion

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of Egypt in 1882 there were fears among other European States that the British will move to abolish the foreign capitulations enjoyed by their subjects as a part of a British plan to consolidate their power in Egypt. Using their influence through their subjects, who were the creditors of Egypt's sovereign debt, the European powers succeeded in establishing the Mixed Courts System in align with the National Court System.

The Mixed Court System was in fact a judicial body composed of several courts organized in a hierarchy. The panels in those courts consisted only of foreigner judges. The Mixed Court was competent to hear cases where the plaintiff was a foreigner and applied the Mixed Civil Code that did not contain choice of law rules. On the other hand, the National Courts were only competent to hear a case when both parties are Egyptians and applied only the National Civil Code. Therefore, under the dual court system choice of law situations were only possible before the Mixed Courts. The Mixed Court's Council later on issued a set of procedural rules, known are the "Règlement d'organisation judiciaire mixte " which contained, ironically, the choice of law rules to be used by the Mixed Courts.

This state of affairs was not acceptable to the patriotic forces in Egypt and foreign capitulations, especially the Dual Court System, was a daily reminder to all Egyptians that their country was not independent and it is subject to foreign dominance. Thus, it was a share view among all political powers around the political spectrum in Egypt that the foreign capitulations must come to an end.

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It was not until 1936 when the United Kingdom sought to reach an agreement with the Patriotic Egyptian forces in order to answer some of their demands. The United Kingdom wanted to assure its position in Egypt ahead of an escalating military confrontation with Nazi Germany. As a result, both parties signed the Anglo-Egyptian Friendship treaty that explicitly called upon the abolishment of the Foreign Capitulations.

The United Kingdom mobilized its diplomacy to set out a conference held at Montreux, Switzerland in 1937. In that conference the foreign states that enjoyed foreign capitulations expressed their concerns for the future welfare of their citizens after the planned abolishment of the Mixed Courts System. In particular, the above states sought to have assurances that their subjects will not be governed by Islamic Shariah when an Egyptian Court faces choice of law situation involving a foreign party.

In order, to easy their worries the Egyptian Government did give the following assurances. First, as a general rule it was agreed that the concept of "Personal Status" as defined in Article 28 of the Règlement d'organisation judiciaire mixte will be retained. This allowed the application of foreign personal law to issues that are generally not considered a part of the "Personal Status" as it is understood under most Western choice of law doctrines such as inheritance, wills and other dispositions mortis causa.

Second, the Egyptian Government has agreed to retain the same choice of law rules that were included in Article 29 of the Règlement d'organisation judiciaire

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mixte4 through incorporating the same choice of law rules into the New Egyptian Civil Code promulgated in 19485.

4 Art 10 of Montreux Convention 1937 stated that " In matters of personal status, the statewhich is competent shall be determined by the law to be applied. The expression "personal status" refers to the matters specified in Article 28 of the Règlement d'organisation judiciaire mixte. The law to be applied shall be ascertained in conformity with the rules set out in Articles 29 and 30 of the said Règlement".

5 Art 29 of the Reglement stated the following Choice of law rules:

The status and capacity of persons shall be governed by their national laws.

The fundamental conditions of the validity of marriage shall be governed by the national law of each of the parties thereto.

In matters concerning relations between the husband and wife, including separation, divorce and repudiation and the effects thereof upon their property, the law to be applied shall be the national law of the husband at the time of the celebration of the marriage.

Reciprocal rights and duties as between parents and children shall be governed by the national law of the father.

The duty of support shall be governed by the national law of the party sought to be charged therewith.

Matters relating to legitimacy, legitimisation, and the recognition and repudiation of paternity shall be governed by the national law of the father.

Questions relating to the validity of adoption shall be governed by the national law of the adopting party as well as by that of the adopted person. The effects of adoption shall be governed by the national law of the adopting party.

Guardianship, curatorship and emancipation shall be governed by the national law of the person under the incapacity.

Inheritance and wills shall be governed by the national law of the deceased or of the testator.

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The Egyptian government even agreed to express state the rejection of the Renvoi in order to prevent the Egyptian Courts form using the foreign choice of rules that uses the domicile as a connecting criterion for personal status choice of law rules as a means to apply Islamic Sharia law on lawsuits involving foreigners6. Thus, the will be no change in the foreigners' legal status before or after the abolishment of the Mixed Courts because the same issues governed by their personal law will continue to be governed by the same law in the future.

The third assurance given by the Egyptian government is the adoption the "personal law" as a connecting criterion for all future legislations that affect the personal status of the foreigners. This continuous assurance was meant to address the foreign states' concern that the Egyptian Government might seize the opportunity after the abolishment of the foreign capitulations and enact new choice of law rules that might lead to the application of the Islamic Shariah on foreigners7.

Gifts shall be governed by the national law of the donor at the time of the gift. The rules of the present Article shall not affect provisions relating to the legal position of immovable property in Egypt.

6 This was done by incorporating Art 31 of the Reglement "The term "national law" shall be understood to mean the municipal law of the country in question to the exclusion of its provisions of private international law " into the Egyptian Civil Code.

7 DECLARATION BY THE ROYAL EGYPTIAN GOVERNMENT

"The undersigned, acting in virtue of their full powers, make the following declaration:...............

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1- The Concept of " Personal Status "

As we have seen earlier, the concept of "Personal Status" under Egyptian choice of law rules is an enlarged concept unlike that adopted under other choice of law rules. According to the Article 28 of the Règlement d'organisation judiciaire mixte Personal Status include" suits and matters relating to the status and capacity of persons, legal relations between members of a family, more particularly betrothal, marriage, the reciprocal rights and duties of husband and wife, dowry and their rights of property during marriage, divorce, repudiation, separation, legitimacy, recognition and repudiation of paternity, the relation between ascendants and descendants, the duty of support as between relatives by blood or marriage, legitimization, adoption, guardianship, curatorship, interdiction, emancipation and also gifts, inheritance, wills and other dispositions mortis causa, absence and the presumption of death."

This enlarged definition of "Personal Status" drove some scholars to suggest replacing the term "Personal Status" with "Personal Status" in order to reflect the true

3. PERSONAL STATUS

The Royal Egyptian Government, having already, and more particularly in the Establishment Treaties which it has concluded with Iran and Turkey, spontaneously adopted the principle that, in matters of personal status, the personal law should apply, intends to adopt the same principle with regard thereto in the future.

As regards the rules of procedure, which the Royal Egyptian Government intends to enact for cases of personal status, these will be applied provided that no substantive rule of the foreign national law prevents their application."

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meaning of the concept. Personally, I find that such alteration is not necessary since as we have seen earlier on the characterization of any concept used in the Egyptian choice of law rules is done according to the Egyptian law.

2- Applicable Law to "Personal Status "

Personal Status is governed by the personal law ( Lex Personae). In most Common Law jurisdictions Lex Personae is the law of domicile (Lex Domicilii) while in most of the Civil Law jurisdictions it is the law of nationality (Lex Patriae). The domicile is the place in which a person has voluntarily fixed his residence while nationality is the individual's allegiance to a particular state.

As we have seen the concept of Personal Status is defined under Egyptian Law according to the Montreux Convention 1937. This same thing applies the selection of personal law as a connecting criterion for the choice of law rules used by the Egyptian Legislator designed the Personal Status choice of law rules.

An Appraisal of the Lex Patriae

As we have seen earlier, the foreign states agreed with the Egyptian Government to use Lex Patriae as a choice of law criterion. This in turn, drives us to evaluate how suitable was the choice of Lex Patriae as a choice of law criterion.

(a) The Advantages of Lex Patriae

Lex Patriae as a choice of law criterion has two main advantages. First, it is easily ascertainable because a

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person's nationality is usually officially documented either through the person's possession of a passport or other equivalent documents such as birth certificates, school records, etc. The Judge does not have to conduct an extensive investigation, which is usually needed to determine a person's domicile, to determine a person's nationality. This saves the Court time and effort allowing it to deal with the issue swiftly before examining the substantive aspects of the dispute.

Second, a change of nationality is usually well evidenced since a person normally cannot change his nationality without recourse to a set of official procedures that will produce official documents to establish the occurred change of nationality.

Nonetheless, the application of Lex Partriae can be criticized for the following: First, as a result of increase social mobility it is now uncommon to find persons who hold dual nationalities. This could be the outcome of deliberate immigration form one state to another or the person himself was the product of a mixed marriage. In the latter case, the child may receive two nationalities, his mother's nationality and his father's nationality8. In addition, if the person is born in state that encourages immigration he will receive that state's nationality as well.

Second, it is possible that the person in question belongs to a state that contains several distinct legal units and the test of nationality may not, by itself, give us an

8 This is now possible under the Egyptian Nationality Law which gives the right to pass the Egyptian nationality to the children of an Egyptian parent whether that parent is the child's mother or father. See Law no 154/2004.

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answer. Some jurisdictions follow a federal system which leaves some areas of the law for the federal units to regulate such as family law in the United States. Using Lex Partriae will cause the Court to conduct an extensive search over the applicable law. However, the Egyptian Legislator has provided us with a solution which is to delegate the matter to the internal choice of law rules in that Jurisdiction.

The third, as is all too obvious today a person may be stateless either as a result of being a member of a society that does not adopt documentation as a means for recording data or being an illegal alien who deliberately concealed his identity.

(b) Difficulties in Ascertaining Nationality

Resort to Lex Partriae can be difficult. This takes place in cases of multinational persons, stateless persons and persons without a know nationality.

(i) Multinational Persons

In case that the person in question has the Egyptian nationality among other nationalities that he pertains then the Egyptian nationality will prevail over those nationalities according to Art 25 (2) of the Civil Code. However, if the Egyptian nationality is not among other nationalities that a person pertains then we will resort to the de facto nationality. This is the solution adopted by the International Court of Justice (April 6, 1955).

A de facto nationality can be ascertained through several elements such as the person's domicile, interest, social relations, his participation in public affairs and his

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intentions. The explanatory memorandum of the Egyptian Civil Code supports such solution. The determination of the de facto nationality is a fact left to the court to decide (trial courts and the appellate courts). However, we support granting the Court of Cassation the authority to review the lower court's findings on the de facto nationality.

(ii) Stateless Persons and Persons without Known Nationality.

If the person in question is stateless i.e. he does not enjoy a nationality of a state or his nationality is unknown then his personal law will be the law of the place to which the person has the closest connection. This usually turns out to be the law of domicile. If it was difficult to determine the person's domicile, recourse will be made to his place of residence. This solution finds support in the explanatory memorandum of the Civil Code.

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Subsection Two Marriage:

1- Introduction

Marriage is a status conferred by the law upon a union between a man and a woman whereby they assume certain rights and duties. Treatment of conflict of laws in matters of marriage requires determination of the applicable law to the marriage's conclusion, effects, nullity and dissolution. In addition, the treatment of the exceptional application of the Egyptian law to the marriage contract will be relevant. Therefore, this subsection will be divided into the following headings:

i- The Validity of the Contract of Marriage

ii-Effects of Marriage

iii- Nullity of Marriage

iv-Dissolution of Marriage

v-Exception application of the Egyptian Law

Heading One: The Validity of the Contract of Marriage

(a) Formal Validity

According to Egyptian law the formal aspects of marriage are like any other formality governed by Art(20) of the Civil Code. In pursue of Art(20) formality is valid according to any of the following laws: the law of the state in which the contract made, the law applicable to matters of substance, the law of the common domicile of the contracting parties or the law of their common nationality. Since that the substantive aspects of the

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marriage are governed by the law of the common nationality of the spouses then the connecting factors for the formal aspects of the marriage are: the law of the place of conclusion, the law of the common nationality of the spouses and the law of the common domicile.

The Place of Conclusion ( Lex Loci Celebrationis)

Marriage is formally valid if it is made according to the formality requirements at the place where the marriage was concluded. In such a case the marriage had satisfied the local formality. The Egyptian law recognizes many types of local formality for valid marriages.

The first type is the official formality and it is made through the interference of a public official. Here we have several different forms for the marriage depending on the spouses' nationality and their faith. In case of marriage between Egyptian Muslims the public official is the Mazoon, while in the case of Egyptian Non-Muslims sharing the same sect and denomination the official clerk is the deputized authenticator. Foreigners and Egyptian Non-Muslims who do not share the same sect and denomination satisfy the official formality by recourse by the public notary.

The second type of formality for marriage in Egypt is the Islamic customary. However, satisfaction of the Islamic customary formality is still disadvantageous since that is does not proved the spouses with the same rights and duties as in the formal marriage.

Therefore, marriage between foreigners in Egypt is formally valid as long as it is made in accordance with

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the official or the customary types of formality for marriage in Egypt. By the same token marriage between Egyptians taking place abroad is formally valid if it is made in accordance with the formality requirements at the place of the marriage. However, purely non-Muslim and religious formality is not valid in case of a marriage between Muslim spouses or in case the husband is Muslim.

The Law of the Common Nationality

In addition to the local formality, the marriage can be formally valid if it satisfies the formality requirements under the law of the common nationality of the spouses. If the spouses do not share the same nationality then the formality requirements of the nationality laws of both spouses must be satisfied.

Diplomatic or consular formality is considered among the national forms. As a result, the marriage made by foreigners in Egypt or by Egyptians abroad is valid when it is made at their authorized embassy or consulate. If one of the spouses is Egyptian the consular formality by the Egyptian consulate abroad prerequisites permission by the Foreign Minister ( Art (16) of the Decree by law 8/5/1925). The Egyptian Consular service is available to all Egyptians regardless of their faith.

The Law of the Common Domicile

Formal aspects of marriage can be valid if they satisfy the legal requirement at the law of the spouses' common domicile. Therefore, foreigners domiciled in Egypt can validly conclude marriage in accordance with

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the Egyptian official or customary forms even if they were accidently residing outside Egypt.

Legal Category of the Contract of Marriage Formal Validity

The Lex Fori determines what constitutes formality in the contract of marriage because it is a matter of characterization. According to the dominate Egyptian doctrine the Egyptian Lex Fori which will decide the formal aspects is the Islamic law because it is the common law in matters of marriage.

According to our general legal rules formality is whatever affects the expression of the person's will to the external world. It is worth to remind the reader that we have previously supported leaving the determination of formality as necessary prerequisite for the creation of the transaction to the law applicable to the formal aspects of the transaction.

Consequently, the witness requirement is a formal aspect of the marriage because it not related to the consent to enter into the marriage but it is related to the publicity of the ceremony. Also, due to the civil aspect of marriage under Islamic Sharia the applicable law in Egypt the religious ceremony is considered among the formal aspects of the marriage.

However, the requirement of the parent's consent to their minors' marriage is a substantive issue because it completes the minor's consent. The evidence of marriage is subject to the law applicable to the formal aspects of

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the marriage. Namely, this law will be applicable to the required means of evidence for establishing the existence of the marriage and it will determine the probative power of each means of proof.

(b) Substantive Validity of the Contract of Marriage

The Connecting Factor

The validity of the substantive aspects of the marriage is left to the spouses' law of the common nationality. There will be no problem for the application of this rule of law in case both spouses enjoy the same nationality. The problem is when the spouses do not share the same nationality. Shall the spouse' law of common nationality mean that the court should apply the laws of both spouses cumulatively? or shall the court resort to distributive application of the spouses laws by applying the requirements of each spouse's law to that spouse only?

Cumulative application was suggested as a means for protecting the martial relation. However, modern doctrine supports distributive application; this avoids the application of a combination of the legal requirements that may end up by being more severe than those of any of the spouses' laws. We support the modern doctrine; however we should confess that sometimes the distributive application will not be possible as in the case for the prohibitions and other forms of negative requirements which is usually called 'martial forbiddances". For example, observance of a prohibition against marriage between spouses of different creeds in

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one spouse's personal law requires its application to the other spouse even if the other spouse's law does not recognize such negative requirement.

Legal Category

What is considered as a substantive aspect is a question left to the law applicable to matters of characterization the Lex Fori. As we have suggested before, the Egyptian law will be the which determines what is considered a formal aspect of the marriage and what is considered a substantive aspect of the marriage. We remind the reader that we have concluded that witness requirement and religious ceremony to be among the formal aspects of the marriage. However, the essential elements for the contract of marriage are left to the concept of matters of substance.

Effects of the Public Policy

When the applicable foreign law is against the Egyptian public policy then the Egyptian judge will not apply it. Foreign laws applicable to the substantive aspects of marriage are the most vulnerable laws to such alienation due to their highly possible conflict with Islamic Sharia which constitutes the basics of the public policy in Egypt. As an example, our mandatory Islamic law rules do not allow a female Muslim to marry a non-Muslim male.

It is to be noted that public policy is operative only with foreign Muslims or an Egyptian Muslim who got nationalized after marriage. According to the Egyptian conflict of law rules, Art 14 as we shall see later on, if one of the spouses is an Egyptian at the time the marriage

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was concluded that the substantive aspects of that marriage will be governed by the Egyptian law.

Heading Two : The Effects of Marriage

Connecting Factor

According to Egyptian law Art13 "... the effects of marriage, including its effects upon the property of the spouses, are regulated by the law of the country to which the husband belongs at the time of the conclusion of the marriage...". Therefore, the connecting factor for the effects of the marriage is the nationality of the husband at the time of concluding the marriage. This means that we have adopted one law to govern the effects of the marriage to avoid the problematic consequences of the distributive and cumulative application of the spouse's personal laws.

The national law of the husband is supported by the fact that the husband is the master of the family. It is worth to mention that the Egyptian legislator has adopted the application of the national law of the husband at the time of the conclusion of the marriage. In choosing such a moment for determining the applicable law the Egyptian legislator conclusively solved the problem of the mobile conflict which takes place when the husband changes his nationality at the time he files a lawsuit.

The positive solution that the Egyptian legislator adopted here was found unconstitutional in other countries. In Germany, such solution was ruled to be in violation with the principle of equality between women and men. Other suggested connecting factor is the application of the law of the matrimonial domicile.

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Legal Category

The legal category of effects of marriage includes two different groups, the personal and pecuniary effects of the marriage.

(a) Personal Effects of Marriage

Personal effects of marriage may be purely personal and may include certain pecuniary aspects. Purely personal effects of marriage include the wife's obligation to obey her husband, to be present at the marital domicile and the service to husband and children. Also they may include the husband's duty to act justly among his wives, if polygamous marriages were permitted, and the wife's right to hold the family name of her husband.

However, the personal effects that contain some pecuniary aspects include the right of the wife to her dower, and the right of each spouse to matrimonial alimony. They also include the payment of damages to the other spouse to the other spouse in case of breach of the contract of marriage.

Nevertheless, the alimony pendete lite paid to the wife is subject to the Lex Fori. An alimony pendete lite is a temporary alimony, which a husband by a court order pays his wife for maintenance while the spouses are pending a suit for divorce. Such alimony is established for the conservation of public safety and order in the community, and therefore its rules of law are directly applicable regardless to the connected foreign laws to marriage. Actually such rules of law belong to the mandatory rules of law.

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According to the dominant doctrine, the wife's lack of capacity subsequent to her marriage is considered as an effect of marriage. This characterization is based on the fact that such lack of capacity is not established for the protection of the wife but rather for the protection of the family. Therefore, such lack of capacity will be subject to the law of the family's master, the husband. Nevertheless, the Egyptian trade law 17/1999 adopted the wife's law of nationality to determine her capacity to trade. According to Art 14 "... the law of state to which a married woman belongs by her nationality shall regulate her capacity to trade.."

Nevertheless, in order protect bona fide persons trading with foreign married businesswomen Art 14 (2) of the Egyptian Commercial code provides that "A Foreign wife exercising trade as a profession shall be assumed to be exercising it with her husband's permission. If the applicable law allows the husband to object to her exercise of trade as a profession, or withdrawals his previous permission then that permission shall be recorded in the register of trade and shall be published in the register's journal. The objection or withdrawal of permission shall have no effect except form the date of completing such publication..."Besides, ".. The objection or withdrawal of the permission shall not affect the acquired rights by the bona fide party...."

(b) Pecuniary Effects of the Marriage

We mean with 'pecuniary effects of the marriage', the matrimonial regime recognized by certain legal systems, as in the French system of régime matrimonial. By virtue of this legal system the spouses will arrange the

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system by which their matrimonial estate will be organized, before, through and after marriage. The matrimonial regime is unknown to the Egyptian laws (whether the laws applicable to Muslims or those which are applicable to non-Muslims). This explain the Egyptian legislator's adoption of a legislative qualification for such concept.

According to Egyptian law, in principle, the matrimonial regime is subject to the law applicable to the effects of marriage, i.e. the national law of the husband at the conclusion of the marriage. However, the above-mentioned rule is restricted by the obligatory respect of the law of the place of the property, the Lex Rei Sitae. The Lex Rei Sitae is applicable to possession, ownership and other rights in rem on the matrimonial regime regardless of the husband's national law.

In addition, bona fide third parties should not be harmed by the application of the husband's law to the matrimonial regime. In this context art 15 (1) of the Egyptian trade code provides that " ....A foreign wife practicing trade shall be supposed to have got married according to a the system of separation of estates unless otherwise stipulated by the terms of the pecuniary agreement between both spouses...".In order to support the publication of the peculiar aspects of the matrimonial regime art 15 (2) provides that ".... the terms of pecuniary agreement between the two spouses shall not be invoked against third parties except after its notarization by recording it in the register of trade and publishing its summary in the register's journal.."

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However, the bona fide third party should not be harmed by the fact of not publishing a suitable matrimonial regime to his interests. Therefore, the Egyptian trade code provides that "...in case of neglecting the publication of the pecuniary terms of agreement between the two spouses, the third party may prove that the marriage had taken place according to a matrimonial regime more suited to his interests than the system of separation of estates". Also, according to art 15 (4) "...a court ruling pronounced abroad concerning the separation of estates shall not be invoked except from the date of recording it in the register of trade and publishing its summary in the register's journal.."

Contracts between Spouses

Besides the matrimonial regime which is subject to the applicable law to the effects of marriage, there are other pecuniary transactions between the spouses and which may take the form of sales, hire, donation and matrimonial companies i.e. contracts between spouses. Some of the scholars supports subjecting the contracts between spouses to the law of autonomy as in the case with any other contractual relationship. Nonetheless, we support applying the law governing the matrimonial regime to those contracts especially when such law imposes restrictions on contracts between spouses. These restrictions should be observed because they were laid down for the purpose of protecting the matrimonial relationship.

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Heading Three Nullity of Marriage

1-Applicable Law

It happens that a formal or a substantive requirement for the marriage may not be satisfied and subsequently the marriage will be considered null and void. The question is which law shall decide the effects of such nullity? According to the dominant doctrine the nullity of the marriage is subject to the law whose requirements were not fulfilled. Therefore, in order for a marriage to be considered as a null under the Egyptian private international law it must not fulfill the requirements of either the law governing the formality of the marriage or the law governing the substance of the marriage , which called the essential elements in English law.

2-Effects of the Nullity of Marriage and Matrimonium Putativum

In principle when a marriage is judicially declared null it will be considered as if it did not exist. However, some legal systems do not apply the nullity effect retroactively and they do tolerate some of the legal effects generated by the null marriage. Such toleration is required to protect the good faith of one of the spouses and the rights of the children resulted from the null marriage. In such a case the null marriage will be considered as a valid marriage in the period preceding the declaration of nullity. This is known as Matrimonium Putativum. Nevertheless, the question is to what law will govern the Matrimonium Putativum?

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According to the dominant doctrine Matrimonium Putativum is governed by the same law that led to the nullity of the marriage because Matrimonium Putativum is an effect of nullity. However, the logical base of the above mentioned doctrine is not sufficient to overcome the practical obstacles such as in case if the nullity of the marriage was caused by the national law of both spouses who do not share a common nationality. Therefore, we prefer to characterize the concept of Matrimonium Putativum as a matter related to the effects of marriage and apply the husband's national law at the time the marriage was concluded. It is worthy to mention that the concept Matrimonium Putativum is regarded as a matter of public policy and if the husband's national law does not recognize such a concept then that law will be substituted with the forum's law.

Heading Four : Dissolution of Marriage

1-Connecting Factor

According to art 13 (2) of the Egyptian Civil Code : "...Repudiation of the marriage is governed by the law of the state to which the husband belongs at the time of repudiation, whereas divorce and separation are governed by the law of the state to with the husband belongs to at the date of initiating the proceedings...". Dissolution of the marriage is recognized by the Egyptian legal system and it may take one of the following forms: repudiation, divorce, separation.

Repudiation is the voluntary dissolution of the marriage and it is non-judicial because it is made by an informal procedure conducted outside the courts. Under

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Islamic shaira a husband may be able to divorce his wife by uttering the work "talaq" with the intention of dissolving the marriage. However, divorce or more particularly divorce by decree is a dissolution of the marriage after a judicial interference.

Separation or divorce a mensa et thoro is the dissolution of the marriage by which the spouses are separated and forbidden to live and cohabit together, without affecting the marriage itself. This is why such type of dissolution is sometimes qualified as being a divorce for bed and bread.

The applicable law to the marriage's dissolution is the law of the husband, and unlike the effects of the marriage it is the law of the husband at the moment of repudiation and it is his law at the time of lodging his lawsuit in case of divorce or separation unlike the effects of the marriage. The above mentioned connecting factor has been criticized for allowing the wife to be taken by surprise due to the husband's change of nationality at the time of the repudiation or at the time of lodging the lawsuit in case of divorce or separation.

It is true that the change of the connecting factors with the intention to curtail illegal the applicable law is considered fraud upon law and it is punished but such fraud is sometimes difficult to prove. In addition, the above mentioned connecting factor does not observe the principle of equality between women and men. Therefore, some legal systems adopted other connecting factors such as the German legal system which adopted the place of matrimonial domicile.

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2- Legal Category

The Legal Category of dissolving the marriage includes: conditions for dissolution, its consequences and procedure.

Conditions of Dissolution

The legal category of the dissolution of marriage includes its legal conditions e.g. who can seek the dissolution, the grounds for dissolution, the burden of proof, the means of proof and its probative power. However, the procedure for presenting the proof before the court is subject to the forum's law because it is a matter of procedure. Also, determining what constitute a repudiation, divorce or separation is governed by forum's law because it is a matter of characterization

Consequences of Dissolution

The legal category of the marriage's dissolution also includes the consequences of the dissolution and namely its personal consequences. The personal consequences of the marriage dissolution include the divorced wife's alimony , the divorced wife's domicile, the preceding period of separation which is converted into divorce, the divorced wife's right to keep her ex-husband's family name and the right to receive damages for breach of contract of marriage.

However, the pecuniary consequences of the marriage dissolution, the matrimonial regime, are excluded from the effects of the dissolution and they belong to the pecuniary effects of the marriage which is

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governed by the husband's law of nationality at the time of concluding the marriage.

Excluded Matters: Procedures for Dissolution

The procedural matters are governed by the forum's law, the Egyptian law, according to art (22) of the Egyptian Civil Code which states that "... all questions of procedure are governed by the law of the statein which the lawsuit is brought or in the statein with the proceedings are taken place..." However, some laws requires religious or legislative interference in order to obtain divorce. Though characterization of such matter is left to the forum's law the modern doctrine characterize such interference as procedures subject to the forum's law.

Sometimes interlocutory procedures takes place during the divorce or separation lawsuit such as temporarily alimony , alimony pendete lite, residence of with and her receipt of daily support property. These matters are directly subject to the forum's law because they fall into the scope of the forum's law mandatory rules.

Effects of Public Policy on Dissolution of Marriage

The applicable foreign laws in matters of dissolving the marriage which contradicts with the Islamic sharia are not necessarily against the public policy in Egypt. This is a normal consequence of the Egyptian recognition for the application of other religious rules to matter of persons. However, Islamic sharia as an ingredient of the Egyptian public policy may be engaged

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if the applicable foreign law does not recognize the foreign Muslim right to divorce under the Islamic sharia. Therefore, a foreign Muslim husband enjoys in Egypt the right of informal repudiation , Talaq, even if he does not have that rigth under his own personal law because in this case his personal law will contradict with the Islamic sharia.

Heading Five : The Exceptional Application of the Egyptian Law

1-Legal Provision

After establishing the rules of the conflict of laws in matters of conclusion, effects and dissolution of the marriage, Art 12; 13;14 of the Egyptian Civil Code, the

Egyptian legislator declared a general exception by which the Egyptian law will be applicable if one the spouses was Egyptian at the date of marriage. Art 14 provides that ".... if in the dispute one of the spouses was an Egyptian at the time of concluding the marriage then the Egyptian law alone shall apply except as regards to the legal capacity to marry...."

2- Exception To Substantive Aspects of the marriage

According to the Egyptian rule of the conflict of laws in substantive aspects of the marriage the applicable law is the national law of both spouses. This exception means that if one of the spouses was Egyptian when the marriage was concluded then the Egyptian law will be the only applicable law. The preparatory works of the Egyptian Civil code revealed that there was a concern about the nullity of a marriage concluded between an

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Egyptian husband and a foreign non-Muslim wife if the latter denied the validity of that marriage.

The above mentioned precaution is criticized for providing an unnecessary protective mechanism. The protection provided by the public policy defense is sufficient because it will allow the Egyptian court to disregard the foreign non-Muslim wife's personal law if it contradicts the Islamic Sharia. Additionally, the exception does not protect all Egyptians. It protects only those who enjoy the Egyptian nationality before concluding the marriage but not those who acquired the Egyptian nationality after concluding the marriage. Ironically, this exception provides protections to those who enjoyed the Egyptian nationality at the time their marriage was concluded and lost it subsequently!!!

Needless to say that the application of the Egyptian law does not necessarily mean that the Islamic sharia will be applied. the Egyptian legal system recognizes the application of the dual religious rules of non-Muslim spouse if either one enjoys the Egyptian nationality and both shared the same sect and denomination.

3- Exception to the Effects of the Marriage

The effects of the marriage is governed according to Art 13 (1) by the husband's personal law at the time the marriage is concluded. As a result, the exception is not applicable unless the wife was an Egyptian when the marriage was concluded. The rasion d' etre behind this exception was to unify the laws that governs the marriage substantive aspect and effects. However, this exception is criticized because wives who acquired the Egyptian

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nationality after the conclusion of their marriage will not be eligible to use this exception

4- Exception to the Dissolution of the Marriage

This exception means that the application of the Egyptian law will be applied if either spouse was an Egyptian when the marriage was concluded regardless of their nationality when the repudiation or the dissolution proceedings were initiated

Section Three: Capacity

1-Legal Provision

According to Art 11 of the Egyptian Civil Code: "... the status and the capacity of persons are governed by the law of the state to which they belong by reason of their nationality. However, if one of the parties in a transaction of a pecuniary nature, which is concluded and has effect in Egypt was a foreigner lacking capacity due to a reason that is not apparent and which cannot be easily detected by the other party than this reason will have no effect on the foreigner's capacity...."

2-Connecting Factor

Capacity is subject to the national law of the person in question. The application of the national law is justified by the need to protect that person. The national law in question is the person's law at the time the transaction was created.

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3- The Concept of "Capacity"

(a) Excluded Matters

The following matters are excluded from the category of capacity:

a- Capacity to enjoy: which is the ability to acquire rights and assume obligations and it is subject to the law applicable to the right in question e.g. Lex Causae.

b- Forbiddance from disposition: or special incapability is subject to the law applicable to the transaction concerned with that forbiddance. e.g. forbidding judges and doctors from exercising certain transactions.

(b) Included Matters

The included mattes among the concept of capacity are those which are related to the idea of capacity to exercise which is the ability to exercise rights and assume obligations. Therefore, these matters will include:

a-Age of majority

b-Extent of the capacity of the incapable

c-Incidents of incapacity such insanity, feeble mindedness, prodigality and imbecile.

d-Obstacles to capacity such as absence, double or serious disability, conviction of a felony.

A remark should be made to the fact that incidents and obstacles of capacity are required to be declared by court decisions. Therefore, such court decisions should be

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recognizable and enforceable in Egypt so that it could be given effect.

4-The Exception

(a) Lizardi Case

This is the exception was developed by the French case Lizardi. Lizardi was a twenty three years old Mexican who bought jewelry from a French merchant in France. The French merchant accepted a promissory note as a payment for the jewelry that Lizardi bought from him. However, we the note became due Lizardi refused to pay it and he used his incapacity under the Mexican law , the age of majority was 25 years under the Mexican law at that time, as a defense against the merchant's claim for the unpaid price. The French Cour de Cassation recognized that it should disregard the Mexican law because it was not acceptable to assume that a French citizen will be aware of all the law of the world. The court concluded that the contract of sale should remain valid as long as it was not made recklessly. The Lizardi case laid down a principle that protects parties with good faith who rely on ostensible situations in order to secure the stability of transactions in national markets.

(b) Positive Provision

The Lizardi case principle was adopted in Art 11 that states "... however, if one the parties in a transaction of a pecuniary nature, concluded and have effects in Egypt is a foreigner without legal capacity and such lack of capacity is due to a reason that is not apparent one which cannot be easily detected by the other party then

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that reason shall have no effect on that foreigner's legal capacity..."

(c) Requirements of the Exception

in order to use the above exception there should be the following :

a- A pecuniary transaction

b- The transaction is concluded and produces its effects in Egypt

c- Lack of capacity is due to an obscure reason

d-the other contracting party was acting in good faith

(d) The Effects of the Exception

If the requirements for the exception was fulfilled then the foreign national law will be disregarded and will be substituted with the Egyptian law.

(e) Particularity of Capacity to Trade

The capacity to trade is determined under Egyptian law according to Art 11 of the law 17/1999 which provides : "...1- The following, whether Egyptian or foreigner, shall be qualified and eligible for the exercise of trade:

a-Once he completes twenty one years of age even though the law of the state to which he belongs by his nationality considers him as a minor at that age

b-Whoever reaches the age of eighteen years under the conditions prescribed in that law of the state to which

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he belongs by his nationality after obtaining the permission of the competent Egyptian court.

2- A person who is less than eighteen years old shall not exercise the profession of trade in Egypt even though the law of the state to which he belongs to by his nationality considers him a major or allows him to exercise trade

3- A minor who is authorized to trade shall have the complete legal capacity to fulfill all legal disposition required by his trade ...."

It is a opportunity to remind the reader the married foreign females is determined by their national law according to Art 14 of the trade law 17/1999

Section Four Inheritance and Will

1- Legal Provision

Art 17 (1) of the Civil Code states that ".... inheritance, wills and other depositions taking effect after death are governed by the national law of the ancestor, the testator or the person disposing of property at death...:

2- Inheritance

(a) Connecting Factor

The Egyptian law adopts a wide concept of personal status which includes inheritance and will among items of that concept so that it could be governed by the person's nationality law. This attitude is justified by the need for one applicable law to all matters of

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succession regardless of the type of property within the state i.e. whether the property is a movable or an immovable.

(b) Concept of Inheritance

Protection of the rights of creditors and third parties on succession belongs to the concept of the property status, and procedure for inheritance is subject to the forum's law.

(c) Included Matters

Matter of Inheritance include :

a- conditions for inheritance: Death of the ancestor, lost persons, life of the heir, unborn children.

b- persons eligible for receiving inheritance, their status and shares. This also include the case of forbiddance from inheritance such as murder, different faiths, Hagb, Rad and Owl

c- The nature of the succession process whether it was obligator or compulsory.

(d) Matters Related to the Status of Property

There are certain matters which are not included in the legal category of inheritance and they are subject to Lex Rei Sitae. These matters are

a- The ancestor's creditors rights on the property under succession

b-Publication of the right to inherit

c- Co-ownership between heirs.

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(e) Vacant Succession

The determination of the vacant succession is left to the forum's law because it is a matter of characterization. Under the Egyptian law, vacant successions exist when no one makes a claim against the property of the ancestor as a heir or when all the eligible heir have renounced the estate. According to Islamic sharia vacant successions belongs to the public treasury and this rule is applied because there are not any heirs not because it is a matter of inheritance.

3-Will

The will is a transaction by which a person express his wish to dispose his property in a certain way after his death. This transaction is made by the testator's unilateral will and it is not compulsory because it can be revoked during the testator's life.

(a) Connecting Factor

The will is governed by the testator's national law at the moment of his death. However, there are some issue that require a special treatment.

(b) Substantive Issues in the Will

There are two types of substantive issues in the will. The first type relates to the concept of succession while the second type relates to the concept of the will as an transaction. Issues of will that relate to the concept of succession includes the testator's discretion, determining the possible will-successors, cases of forbiddance from enjoying a right under the will and the legal effects of the will.

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Substantive issues that are not included in this conflict of law rule are the capacity to exercise the will and vices of consent. Some scholars support the application of the testator's national law at the time of death to these issues. However, we support another opinion. We believe that the testator's capacity to exercise the will should be governed by both the law of the testator at the moment of making the will and the testator's national law at the time of death. In regards to the vices of consent we support applying the testator's national law at the moment of creating the will.

(c) Issues Related to the Status of Property

The law of the property's site will govern the publication of the will and the creditor's rights in the property. That law will also govern the co-ownership between the heirs and will-successors.

(d) Formal Issues of the Will

The required formality for the will shall be determined according to Art 17 (2) of the Egyptian Civil Law which states that ".... the national law of the testator at the time the will was made.. The same law will govern the form of other dispositions taking effect after death..."

(e) Effects of the Public Policy on the Applicable Law on Inheritance & Will

Foreign laws applicable to inheritance and wills can be disregarded if they violate the public policy. This can take place is the following situations:

a- Denial of inheritance due to sexual or racial discrimination

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b-Allowing heirs who had deliberately killed their ancestor to inherit

c-Allowing illegitimate children to inherit

d-Allowing inheritance between a Muslim and non-Muslim

e-Denying females the right to inherit

f-Favoring the elder son.

Section Three Conflict of law rules in Pecuniary Rights

1- Introduction

Pecuniary rights are those which have a monetary value or forms the person's wealth. Usually, private international law scholars in Egypt treat this topic under the heading of "obligations". Here the concept of obligations is used with its widest sense i.e. the concept covers both topics of personal and real rights. The topic of personal rights is usually treated under the heading "the applicable law to obligations". However, since that obligations are divided according to their sources into contractual and non-contractual sources the dominant doctrine in Egypt teats the conflict of laws in three different sub headings which are the applicable law to contractual obligations, the applicable law to non-contractual obligations and the applicable law to the status of property

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2- Plan

This section will contain the following :

Subsection One: The applicable law to contractual obligations

Subsection Two : The applicable law to non-contractual obligations

Subsection Three: The applicable law to status of property

Subsection One : The Applicable Law to Contractual Obligations

1- Introduction

Contractual obligations are those which are based on contracts. Most of the international business transactions are conducted through international contracts. As a result, the proliferation of free market concepts has increased the likelihood of conflict of law issues raised by international contracts.

2- Positive Provision

The determination of the applicable law to international contracts depends of the competent forum whether it was a court or an arbitration panel. We will concentrate on the first case which determining the applicable law to an international contract before a court. According to Art 19 of the Egyptian Civil Code "...the contractual obligations are governed by the law of the domicile when such domicile is common to the

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contracting parties, and in the absence of a common domicile by the law of the place where the contract was concluded. These provisions are applicable unless the parties agree, or the circumstances indicate that it is intended to apply another law. However, contracts relating to immovable are governed by the law of the place in which the immovable in situated..."

We will start our analysis of this article by pointing to its correct construction since that it was, unfortunately, poorly drafted. Art 19 clearly adopts the party autonomy choice of law rule for contracts. According to this rule that parties are free , within certain limits, to choose any law to govern their contract whether their choice was express, in the form of a choice of law clause within the contract in question, or a tacit choice of law that can be inferred from the circumstances surrounding the conclusion of the contract itself.

However, if the parties were not able to reach an agreement on the law governing the contract the Egyptian Judge should revert to any of the alternative choice of law rules contained in Art 19 which are , the contracting parties place of common domicile, the law of the place where the contract is concluded respectively9.

9 Under Rome I Regulation on the Law Applicable to Contractual Obligations No 593/2008 of 17 June 2008 Article 3 "..1. A contract shall be governed by the law chosen by the parties. The choice shall be made expressly or clearly demonstrated by the terms of the contract or the circumstances of the case. By their choice the parties can select the law applicable to the whole or to part only of the contract..."

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3- Connecting Factor

According to the Art 19 a distinction must be made between an existing choice of law , express or tacit, and the absence of an agreement on choice of law.

I- An Existing Express Choice of Law

The correct construction of Art 19 direct us to search for the parties' express choice of law before searching for the parties' implied choice of law through conducting an examination of the circumstances surrounding the contract.

(a) Express Choice

The Egyptian legislator, like most modern legislators, gave the parties the right to choose the law governing their contract. This freedom of choice is based on the parties freedom to tailor their contract specifically for their needs10. In addition, an express choice of law for the contract has its advantages. First, the parties will be able to determine beforehand the rules applicable to their contract. This eliminates the uncertainty about the applicable law to the contract11. Second, express choice of law is more efficient in terms of costs and time when a dispute arises between the parties before the Court or the Arbitration panel. The Judge, or Arbitrator, will focus on applying the chosen law and not on finding the law applicable to the contract which the parties' tacit consent was inclined to choose.

10 Peter M. North, "General Course on Private International Law", Receuil Des Cours, Volume 220, Year 1990, page 153 11 Ibid

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(b) Extent of Freedom of Choice.

The extent of freedom given to the parties to choose the law governing their contract is an issue that is heavily debated between choice of law scholar between those who see that parties are completely free to make their choice and those who prefer setting some restraints on the parties freedom of choice such as selecting the law of a state that has a genuine connection to the contract..,etc.

What makes this debate relevant under Art19 is that there is no limits imposed by the wording of the article on the parties' freedom of choice. Therefore, it is acceptable to say that once the parties choose a foreign law that law becomes incorporated into the contract as a contractual stipulation. Consequently, the parties may adopt certain rules and leave others. The parties my adopt rules form several different foreign laws , depecage, and they may even detach their contract from the ambit of any national law, contract sans loi . This is supported by the modern legislations on contractual choice of law12.

However, there is within the choice of law scholars those who believe that the parties freedom in choosing the law of their contract is not absolute. They restrict the parties choice of law by requiring that the chosen law should be connected to the international contract in question. Otherwise, all choice of unconnected laws will be disregarded13. The same applies to the parties choice 12 Recital 13 of the Rome I Regulation stated that " This Regulation does not preclude parties from incorporating by reference a non-state body of law or an international convention”. 13 subsection 2 § 187 of the Restatement (Second) of Conflict of Laws (1971) states that ".... The law of the state chosen by the parties to govern their

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of international customs and rules known as Lex Mercatoria14 or the parties attempt to freeze the rules chosen by inserting a "Gel de Droit" clause15.

In my opinion, it does not matter whether the parties have absolute freedom to choose the law of contract or if their freedom is subjected to certain requirements in order to have effect. The real issue at stake is the parties' ability to bypass the application of certain mandatory rules of a connected state or to enforce an agreement which is intrinsically against the public policy of that jurisdiction. If we reach an agreement that none of the above will be allowed then the debate about the parties' scope of freedom will lose its relevance.

This is currently the view adopted by the Rome I regulation. In subsection four, article three of the regulation there is an express statement that " Where all other elements relevant to the situation at the time of choice are located in one or more Member States, the parties' choice of applicable law other than that of a Member State shall not prejudice the application of provisions of Community law, where appropriate as implemented in the Member State forum, which cannot be derogated form by agreement.." This means that under Rome I regulation the parties can choose whatever rules they want to govern their contract with two main

contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either (a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or..." 14 Peter M North, Supra note (10 ) at 162. 15 Pierre Mayer et Vicent Heuzé, " Droit International Privé", 7e edition, Montchrestien, 2001 page 481.

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exception. First, the mandatory rules of a connected Member State. Second, the European Union Regulations and Directives that are applicable in the Member State where the dispute concerning the contract itself is being adjudicated. Here the parties freedom of choice is checked by preventing them from evading the mandatory rules.

(c) The Timing of Express Choice

The parties may choose the law governing their contract when the contract concluded or afterwards provided that the contract is valid from the outset according to one the connecting factors included in Art 19. However, floating choice of law clauses where the choice of law is dependent upon the occurrence of a certain event such as a clause stating that "the ownership of the goods shall be determined by the law of the place where it exists during maritime shipping"

Floating choice of law clauses may not provide us with an answer as to which law is applicable. Furthermore, floating choice of law clauses will give rise to the following problem: Which law should determine if the choice of law event has occurred?

(d) Validity of the Choice of Law Clause

The choice of law clause, as any other clause in the contract, must be valid in order to produce the required legal effect, which is submitting the contract to the rules of the applicable law. Although Art 19 did not state when should we consider the choice of law valid we can at least deduct from the general principles of law the following requirements:_

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1) The choice of law must be clear. A choice of law clause in a contract must be clear in indicating which law should govern the contract. If the clause is not clear then we might face a situation where the Judge will resort to applying a law according to the implicit choice made by the parties or to resort to the alternative connecting factors in Art 19. This lack of clarity will virtual render the choice of law useless.

2) The choice of law must be made in Bona Fide. If the choice of law clause was made in bad faith , either through use of misrepresentation, mistake, undue influence,...etc. then the clause will have no effect and it will be vitiated by the Court. The choice of law clause, as any other clause, is the product of the parties mutual consent so it comes to no surprise that a defective consent cannot produce a valid choice of law clause.

3) The choice of law must be legal. The choice of law clause as any other clause in the contract should not be used to attain illicit gains such as evading mandatory rules or to bypass the public policy of a certain jurisdiction16. As I have mentioned before, the parties' scope of freedom to choose the law for their contract is does not allow them to choose a law solely for the purpose of avoiding certain rules in order to give the parties to the contract the opportunity to maximize their gains17. Mandatory rules and the public policy will

16 Peter M North, Supra note (10 ) at 165 17 Article 9 of Rome I Regulation states that Article 9 "1. Overriding mandatory provisions are provisions the respect for which is regarded as crucial by a country for safeguarding its public interests, such as its political, social or economic organization, to such an extent that they are applicable to any situation falling within their scope, irrespective of the law otherwise applicable to the contract under this Regulation.

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always have an overriding effect over the law of contract chosen by the parties18.

II- An Existing Implied Choice of Law

According to Art 19 the choice of law may be express or implied although this poses a challenge for the Judge to ascertain the law chosen by the parties to govern their contract. This a de facto issue that is left to the trial court's full discretion as a fact finder and escapes the review by the court of cassation. Nonetheless we can give examples of circumstances that may lead to the deduction of an implied choice of law such as:

a-choice of the forum may indicate the choice of that forum's law because the choice of forum might reflect the parties' wish to entrust the resolution of any future disputes concerning the contract to the forum's law as it is applied by the forum.

b-The parties' usage of a certain terminology belonging to a certain law may indicate the parties intention to choose that law. In this case it is reasonable

2. Nothing in this Regulation shall restrict the application of the overriding mandatory provisions of the law of the forum. 3. Effect may be given to the overriding mandatory provisions of the law of the country where the obligations arising out of the contract have to be or have been performed, in so far as those overriding mandatory provisions render the performance of the contract unlawful. In considering whether to give effect to those provisions, regard shall be had to their nature and purpose and to the consequences of their application or non-application." 18 Frank Vischer, "General Course on Private International Law", Recueil Des Cours, Volume 232, Year 1992. page 154

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to expect that the parties' willful use of certain terms that has a certain legal connotation of a certain law could indicate their desire to choose that law to govern their contract .

c-The recourse to the authentication in a certain state may indicate the choice of that jurisdiction's law because authentication is a requirement to render a certain type of transactions effective vis-a-vis third parties. Usually, the parties to a contract will not burden themselves to authenticate their contract unless they wished to render it effective under the law of the place where the authentication took place. This in turn, leads us to conclude that the parties wish to have their contract governed by that law.

d- The parties' use of model contract which is drafted according to a certain state's law19 such as maritime insurance model contracts drafted by the Lyold's syndicates based on English law or grain future contracts prepared by Chicago Board of Trade based on the law of the state of Illinois.

IV-Criticism

The doctrine of implied choice of law is criticized for allowing the court to conclude the parties choice of law form silence. The Judge's conclusions is ,at best, second guessing the parties real intention without asserting his findings on credible evidence. Indeed, some choice of law scholars point that the absence of an express choice of law is an evidence on none choice of

19

Bernard Audit, "Droit International Privé", 3e edition, Economica, Paris, 2000, page 680.

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law. However, this criticism cannot be positively supported by the law in Egypt because the implied choice of law is clearly adopted within the wording of Art 19 of the Civil Code.

III-Clear Absence of Choice of Law

If there was no choice of law, express or implied, then we can resort to certain legislative localizations for the international contract. According to Art 19 the court will be obliged to apply the law of the parties common domicile and if there was not a common domicile then the court will apply the law of the place where the contract was made, Lex Loci Contratus

The legislative localization was praised for protecting the justified expectations of the contracting parties since they will know beforehand that the applicable law if they did not make a choice of law. Nevertheless, the above localization is criticized for making it easy for the court to apply a law that may not reflect the international contract's center of gravity. This goes against the philosophy of private international law. As a result, a substantial number of Egyptian conflict of laws scholars suggested alternative judicial localizations.

one of the solutions adopted by modern choice of law legislation is the application of the law of the place where the habitual residence of the party required to effect the characteristic performance of the contract. For instance, in contracts of sale it is the seller's habitual residence because his duty to deliver the goods and transfer ownership is the characteristic performance to be made under the contract of sale while in the contract of

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services it is the service provider's habitual residence..and so on20.

20 article 4 of Rome I Regulation Article 4 ".....1. To the extent that the law applicable to the contract has not been chosen in accordance with Article 3 and without prejudice to Articles 5 to 8, the law governing the contract shall be determined as follows: (a) a contract for the sale of goods shall be governed by the law of the country where the seller has his habitual residence; (b) a contract for the provision of services shall be governed by the law of the country where the service provider has his habitual residence; (c) a contract relating to a right in rem in immovable property or to a tenancy of immovable property shall be governed by the law of the country where the property is situated; (d) notwithstanding point (c), a tenancy of immovable property concluded for temporary private use for a period of no more than six consecutive months shall be governed by the law of the country where the landlord has his habitual residence, provided that the tenant is a natural person and has his habitual residence in the same country; (e) a franchise contract shall be governed by the law of the country where the franchisee has his habitual residence; (f) a distribution contract shall be governed by the law of the country where the distributor has his habitual residence; (g) a contract for the sale of goods by auction shall be governed by the law of the country where the auction takes place, if such a place can be determined; (h) a contract concluded within a multilateral system which brings together or facilitates the bringing together of multiple third-party buying and selling interests in financial instruments, as defined by Article 4(1), point (17) of Directive 2004/39/EC, in accordance with non-discretionary rules and governed by a single law, shall be governed by that law. 2. Where the contract is not covered by paragraph 1 or where the elements of the contract would be covered by more than one of points (a) to (h) of paragraph 1, the contract shall be governed by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence. 3. Where it is clear from all the circumstances of the case that the contract is

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This will help us achieve certainty when there is no choice of law made by the parties. The applicable law will be determined according to an objective criteria and it will be fixed according to the specific nature of the contract in question so that all contracts of sale will be governed by the law of the seller's habitual residence...etc The Judge will no longer indulge in second guessing the parties true intentions and by time uniformity will be established so that a series of default choice of law rules can be created to face the parties' lack of choice.

This solution can be supported under Art 24 of the Egyptian Civil Code since that Art 19 address the situations where

(a) Included Matters.

i-Formation of Contract

Art 19 did not define which legal issues are to be addressed by the law of contract. Nonetheless, the Egyptian choice of law scholars general agree that the following issues fall under the scope of Art 19. The formation of the contract, Consent, Expression of will and vices of the contract;

1. interpretation; 2. performance; 3. the consequences of a total or partial breach of

manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. 4. Where the law applicable cannot be determined pursuant to paragraphs 1 or 2, the contract shall be governed by the law of the country with which it is most closely connected..".

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obligations, including the assessment of damages in so far as it is governed by rules of chosen law.

4. the various ways of extinguishing obligations, and prescription and limitation of actions;

5. The consequences of nullity of the contract.. 6. Personal effects : which include defining the

contracting parties, beneficiaries, unilateral contracts

7. Objective effects : which include content of obligations, interpretation, performance, necessity of summons, validity of penal clauses, legal compensation, contractual liability, defense of non-performance, characteristics of obligations and transmission of obligations.

ii- Excluded Matters

Certain legal issues are not included despite their close relevance to contracts. These issues are excluded because according to the Egyptian Legislator they are dealt with other choice of law rules such as the capacity to contract and formality of contracts. Also, among other things the following contracts are excluded: contract of marriage, contract of adoption, contract of succession and contracts concerning an immovable according to paragraph two of Art 19.

4-Particular Contracts

Some contract have a distinctive legal nature which merits devising special choice of law rules either because the formation of those contracts are affected by a statutory mandate or because the Egyptian judiciary believed that the standard choice of law rule embodied in

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Art 24 will do violence to the administration of justice in absence of a statutory mandate.

(a) The Applicable law to International Contracts of Labor

Contracts of labor require special treatment under the conflict of laws because it is general accepted that the parties to labor contracts do not have full freedom to choose the law governing their contract. Labor law is characterized by the unmistaken presence of mandatory rules that interfere with every aspect of the contract of labor. Form the formation of the contract to the determination of the wage and finally the termination of the labor relation is almost governed solely by mandatory rules.

The draft for the Egyptian Civil Code contained a special conflict of law rule for international contracts of labor which was "...the law of the place of the central management of the labor..." that rule was later on omitted in favor of leaving the matter to be resolved through judicial improvisation. The majority of scholars in Egypt favored another rule according to which the international contract of labor was governed by the law of the place where the labor is performed. Nonetheless, the Egyptian cassation court adopted the rule contained in the Egyptian Civil Code in one of its rulings in 1967.

Some scholars see that a distinction must be made between the regulatory aspects of the contract of labor such as minimum wages, maximum hours...et which is governed by the mandatory rules and the non-regulatory aspects of the contract of labor which is not governed by

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the police rules and could ,therefore, be governed by the law chosen by the parties.

(b) The Applicable Law for Transfer of Technology Contracts

The Egyptian trade law defines in Art 72 the transfer of technology contract as "... an agreement in which the supplier of the technology undertakes to transfer technical know-how to the importer of technology against payment to be used in a special technical manner of production or development of a certain commodity, the installation or operation of machinery or equipment or for the provision of services. The mere sale, purchase, leas or rental of commodities shall not be considered a transfer of technology. Nor shall the mere sale of trademarks, patents or licensing agreements be considered a transfer of technology unless it was set forth as a part of or in connection to a transfer of technology...."

If such a contract was to be enforced in Egypt then it is subject only to the Egyptian law event when it is Egyptian. This contract will be governed by the Arts 72 - 87 and in case of lack of legislative provisions the court will resort to the general principles of Egyptian law. This is a prime example of using material rules to govern what should have been an international contract. In the case of transfer of technology contracts only the Egyptian law is applicable and there is no room for the parties to choose a law to govern their contract.

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(c) Contracts of Carriage

International contracts of carriage are governed by international conventions that determine the rights and duties of the parties to a contract of carriage. So far Egypt is a party to two main convention the United Nations Convention on the Carriage of Goods by Sea 1978 known as The Hamburg Rules and the Convention for Unification of Certain Rules Relating to International Carriage by Air 1929 known as Warsaw 1929 Convention.

i-The Contract of Carriage of Goods By Sea. According to Art 2 of the Hamburg Rules:

" 1. The provisions of this Convention are applicable to all contracts of carriage by sea between two different States, if: (a)The port of loading as provided for in the contract of carriage by sea is located in a Contracting State, or (b) The port of discharge as provided for in the contract of carriage by sea is located in a Contracting State, or (c) One of the optional ports of discharge provided for in the contract of carriage by sea is the actual port of discharge and such port is located in a Contracting State, or (d) The bill of lading or other document evidencing the contract of carriage by sea is issued in a Contracting State, or

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(e) The bill of lading or other document evidencing the contract of carriage by sea provides that the provisions of this Convention or the legislation of any State giving effect to them are to govern the contract. 2. The provisions of this Convention are applicable without regard to the nationality of the ship, the carrier, the actual carrier, the shipper, the consignee or any other interested person. 3. The provisions of this Convention are not applicable to charter-parties. However, where a bill of lading is issued pursuant to a charter-party, the provisions of the Convention apply to such a bill of lading if it governs the relation between the carrier and the holder of the bill of lading, not being the charterer. 4. If a contract provides for future carriage of goods in a series of shipments during an agreed period, the provisions of this Convention apply to each shipment. However, where a shipment is made under a charter-party, the provisions of paragraph 3 of this Article apply."

Therefore, if a contract of carriage of goods by sea fulfills any of the above requirements it will be governed solely by the Hamburg rules. On the other hand, if the contract of carriage of goods does not fulfill those requirement then we must return to the general provisions of Egyptian Maritime Law no 8 for 199021.

21 The Contract of Carriage of Goods by sea is governed by articles 196 -247

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ii- The Contract of Carriage of Goods By Air.

As in Maritime Transport, Air Transport in Egypt is governed by two sets of rules. The first set of rules is the Warsaw 1929 Convention and the subsequent altering protocols which Egypt has ratified22.

According to Article 1 of the Warsaw Convention "

"1. This Convention applies to all international carriage of persons, luggage or goods performed by aircraft for reward. It applies equally to gratuitous carriage by aircraft performed by an air transport undertaking.

2. For the purposes of this Convention the expression "international carriage" means any carriage in which, according to the contract made by the parties, the place of departure and the place of destination," whether or not there be a break in the carriage or a transshipment, are situated either within the territories of two High Contracting Parties, or within the territory of a single High Contracting Party, if there is an agreed stopping place within a territory subject to the sovereignty, suzerainty, mandate or authority of another Power, even though that Power is not a party to this Convention. A carriage without such an agreed stopping place between territories subject to the sovereignty, suzerainty, mandate or authority of the same High Contracting Party is not deemed to be international for the purposes of this Convention. 22 The Warsaw Convention has been altered by the Hague Protocol 1955, the Guadalajara Convention 1961 and finally the Montreal 1999 Convention which is still not in force in Egypt.

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6

3. A carriage to be performed by several successive air carriers is deemed, for the purposes of this Convention, to be one undivided carriage, if it has been regarded by the parties as a single operation, whether it had been agreed upon under the form of a single contract or of a series of contracts, and it does not lose its international character merely because one contract or a series of contracts is to be performed entirely within a territory subject to the sovereignty, suzerainty, mandate or authority of the same High Contracting Party.

Article Two of the convention also specify who is to be governed by the text of the Warsaw Convection " 1. This Convention applies to carriage performed by the State or by legally constituted public bodies provided it falls within the conditions laid down in Article 1.

2. This Convention does not apply to carriage performed under the terms of any international postal Convention."

Therefore, any contract of carriage by Air the does not fulfill the above requirements will not be governed by the Warsaw Convention but it will be governed by the Chapter Seven and Eight of the Egyptian Civil Aviation Law no 28 / 1981

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5- An Appraisal

After analyzing art 19 it is time to make our own appraisal of its suitability in solving the present day challenges imposed by choice of law in contractual obligations.

First, we must admit that Art 19 is poorly drafted to the extent that it's utility is severely impaired. The text of the article is focused on implied choice of law rather than on demonstrating the basic party autonomy choice of law rule. As I have demonstrated earlier Art 19 does not lay down the requirements of a valid binding choice of law clause nor does it determine the limits imposed on the parties choice of law. As a matter of legislative drafting more attention should have been devoted to express choice of law rule than the implied choice of law rule.

Second, it is no secret that Art 19 is now outdated and that Judicial application of that article has not yet succeed in accommodating the current updates in this field. As we have seen in Rome I Regulation, it is now acceptable for the Court to apply the mandatory rules of State other than that of the Forum or the chosen law if that state has sufficient connection with the performance of the contract. This is not the case with Art 19 which is silent on this issue.

In addition, Art 19 rests on the premises that the parties choice of law is limited to choosing a law that belongs to a certain legislation. This an outdated view because it is now acceptable for the parties to

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choose the rules of a model law or contract prepared by an organization, cherry-picking rules form various jurisdictions to govern various aspects of the contract.

Another aspect of Art 19's antiquity is the use of place of contract, the parties common domicile as alternative choice of law rules. The modern day practice proves that the place of contract or the parties common domicile is a futile solution because most contracts are done between contracting parties of different domiciles through exchange of communication.

The present modern choice of law doctrine resort to the law of the place where the habitual residence of the party required to effect the characteristic performance of the contract. Hopefully, the Courts will develop by time a number of alternative choice of law rules that reflect the intrinsic nature of the contract in question.

Subsection Two : The Applicable Law to Non-

Contractual Obligations

1- Introduction

The non-contractual obligations are obligations that results from non-contractual sources such as torts and unjust enrichment.

2- Legal Provision

According to Art 21 of the Egyptian Civil Code "...Non-contractual obligations are governed by the law

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of the state in whose territory the act gave rise to the obligation took place...However, when the obligation arises from a tort the provisions of the preceding paragraph shall not apply to an act which occurred abroad and which although is considered unlawful in accordance with the law of the state in where the act occurred if that act was lawful in Egypt..."

3- Connecting Factor

There are many possible applicable laws to any non-contractual obligation. For example, torts can be governed by the law of the place where the tort occurred , Lex Delicti Commissi, or the law of the place where the action for damages was brought which is the forum's law. Finally, the tort can be governed by the proper law of the tort Lex Propria Delicti. The above goes to unjust enrichment. Here we have the law of the place where the enrichment has occurred or the law of the place where the poverty occurred.

However, the Egyptian legislator choose to follow the steps of other legislators in that matter by selecting the law of the place where the act occurred regardless of whether it is a beneficial or a harmful act. This is said to be an application of the local law. Nonetheless, with torts the legislator made an exception. In order for the Egyptian court to use the above conflict of law rule it must ascertain that the unlawful act committed outside Egypt is also unlawful act according to the Egyptian law. Although, some writers argue that we did not need that exception because it finds its reasons in the concept of public policy.

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The local law in most cases can be easily ascertained and the parties will normally expect it. Nevertheless, there are incidents when the court might find it difficult to determine the local law because the location of the harmful act is not defined or if the elements of tortuous liability , injury and harmful act, are scattered among several jurisdictions. This occurs when the harmful act takes place in one state while the injury itself occurs in another jurisdiction. The same goes to unjust enrichment when the beneficial act occurs in one state and the poverty occurs in another jurisdiction.

As regards the places of accidents, harmful acts, some scholars suggested that we interpret the concept of local law widely so that it may include the concept of social milieu. According to those scholars the law of the local place does not necessarily govern the act in its material sense. For example suppose a groups of American students went to Canada for camping. Suppose that an accident occurred there which was caused by a harmful act committed by an American student by which another American student was harmed. In this case the applicable law is the American law not the Canadian law because all of the elements of this case points to a social milieu where the American law's application will be the appropriate. Despite that the dominate doctrine in Egypt supports the social milieu idea the text of the Art 21 prevents us from adopting that view. As regards to the problem of the scattered elements of the liability may suggestions were made in line with the search for the most connected law.

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4-Legal Concept.

The concept of non-contractual obligations covers the following:

a- Elements of tortuous liability : unlawful act, prejudice and causal link

b- Element of unjust enrichment : enrichment, poverty and causal link

Subsection Three: The Applicable Law to the Status of Property

1- Introduction

Private international law deals with rights in property which needs a choice of law rule to determine the law governing those rights either in rem rights or in personam rights. For several decades it was a given that the choice of law issues in those assets are governed by the famous Lex Rei Sitae choice of law rule .

Although this rule seems to be ,at first blush, simple and straightforward in reality it is not. First, this rule is used for both immovables and movables. Immovables are fixed by their nature but movables are not. Movables are by nature capable of being moved from one state to another which gives arise to the "mobile choice of law" problem. Second, this rule presupposes that the asset has a physical location but in reality there

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assets that do not have a physical location such as debts, negotiable instruments and intellectual property23.

Therefore, in order to address the matter properly we shall deal with choice of law in rights in physical assets, bearing in the mind the distinction between immovables and movables, and then we shall deal with choice of law issues in non physical.

I-Physical Assets

Physical assets are assets that occupy a certain space. The choice of law issues in those assets are governed by the Lex Rei Sitae choice of law rule as embodied in Art 18 of the Egyptian Civil Code "...the possession, ownership and other real rights in immovables are governed by the law of the place where the immovable property is situated and the law of place where the movable was situated at the time when the event giving rise to acquisition, loss of possession, ownership or other real rights in the movable....."

It is clear from the text of Art 18 that the Egyptian legislator chose, like most of the world's legislators, that the law of situs will govern solely24 all legal issues relating to rights in an asset whether it was a movable or immovable. It is the law of situs that defines what the rights in an asset and how it can be acquired created and transferred25. As we have seen earlier on, the law of situs governs the question of whether a particular asset is

23 Pierre Mayer et Vicent Heuzé, Supra note (15) at, page 429: 24 Bernard Audit, Supra note (19) at, page 633 25 Pierre Mayer et Vicent Heuzé, Supra note (15) at page 432

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classified as a movable or immovable26. Nonetheless, that does not mean that Art 18 is applied blindly to both types of physical assets without due regard to the differences inherent within their nature

(a) Immovables

The Lex Rei Sitate choice of law rule was devised specifically for Immovables because they have a fixed location that does not change periodically and the historical socio-economic and policitical significance of real estate. In fact, the Lex Rei Sitae choice of law rule was a manifestation of the State's exercise of its sovereignty over its natural resources by applying its law exclusively to address all legal issues relating to immovables situated within its borders27. In addition, practical reasons helped the dominance of the Lex Rei Sitate choice of law rule. The use of real estate as a valuable collateral for secured credit and the subsequent need to keep track of all transactions relating to a particular real estate to preserve the secured creditor's right in the collateral means that a recording system administrated by the State where the asset located becomes a necessity.

As a result, it is for the creditors' and the owners' best interest that the law of the State where the immovable is situated will govern all transactions that aim at altering the proprietary rights in, or establishing collateral over an immovable. Therefore, it does not surprise anyone to assume that there is a general consensus that the

26 Dicey & Morris, "The Conflict of Laws", edited by Lawrence Collins, Volume 2, Sweet & Maxwell, 1993, page 915 27 Pierre Mayer et Vicent Heuzé, Supra note (15) at page 430.

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transactions affecting real estate will always be governed by the Lex Rei Sitae.

Nonetheless, choice of law scholars have recognized that there is a need to distinguish between the contractual effects of a transaction that aims at altering the proprietary rights in, or establishing collateral over an immovable and the actually proprietary effects of the transaction. It is general agreed that the contractual effects of the transaction is governed by its own proper law, the Lex Contractus, while that proprietary effects of the transaction is governed by the Lex Rei Sitae28.

To illustrate I give this example. Suppose that a Dutch firm is interested in buying a building in Cairo to use it as a warehouse. Suppose also that the parties, the firm and the owner of the warehouse, agreed that the contract of sale will be governed by the Dutch law. In this case the Dutch firm's duty to pay will be governed by the Dutch law, the law of contract, because it is a contractual effect that does not alter the proprietary rights in the warehouse nor it establishes a collateral over the warehouse. On the other hand, the original owner's duty to transfer the ownership in the warehouse will be governed solely by the Egyptian law, the Lex Rei Sitae, because this duty aims at altering the proprietary rights in the warehouse.

Of course, there are instances when the above distinction between the contractual effects to the transaction and its proprietary effects cannot be implemented. This is the case when the law of contract creates a proprietary rights in the immovable that the Lex 28 Id., at 432; Dicey & Morris, Supra note (26) at page 967

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Rei Sitae does not recognize such as tenancy in common, a proprietary right recognize in most common law systesm, or when the law of contract requires formalities unknown to the Lex Rei Sitae29. It those cases, the Lex Rei Sitae prevails over the law of contract.

(b) Movables

However, difficulties may arise when the assets is a movable that can change its location at any given point of time. This gives rise to mobile choice of law problem because of the movable's constant change of location and the corresponding change in the Lex Rei Sitae30. Fortunately, there are solutions to this problem. First, according to Art 18 of the Egyptian Civil Code the place where the movable was situated governs all issues relating to the proprietary rights in the movable asset. Therefore, the validity of a transfer of ownership in the movable and the proprietary effects of that transfer is governed by the law of the state where the movable is at the time of the transfer31.

Consequently, if the movable was in Egypt and while it was within the Egyptian borders the owner of the movable decided to sell it before the movable was moved to India it is the Egyptian law which will determine the terms and conditions for transferring the ownership in that movable. If that transfer was valid according to Egyptian law then it will remain valid even after the movable moves to India and even if the above transfer was invalid according to Indian law and vice-versa.

29 Pierre Mayer et Vicent Heuzé, Supra note (15) at page 432 30 Id., at 438 31 Dicey & Morris, Supra note (26) at page 965

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Second, If we are dealing with a shipment of movables, such as merchandise and bulk cargo, which is in transitu then according to the dominate doctrine in Egypt the applicable law will be the law of the place of destination if the merchandise was shipped by road or rail and in case of cargo shipped on ships and airplanes we will apply the law of the flag regardless of the actual place where the cargo exists32.

Third, certain movables such as airplanes and ships have their own specific choice of law rules. The transaction that aims at altering the proprietary rights in, or establishing collateral over an airplane is governed by the law of the state where the airplane's register exist. The same applied to ships where transaction that aims at altering the proprietary rights in, or establishing collateral over a ship is governed by the law of the ship's flag33.

II-Non-Physical Assets

The Lex Rei Sitae choice of law rule was devised for assets that occupy a physical space but it was never intended to be used with non-physical assets which do not occupy a physical space because they are a mere legal fiction without any tangible existence34. Assets like debts, Intellectual property are now more valuable than any physical asset whether movable or immovable. It is true that some legal systems tend to deal with such assets as movables but does not helps overcome the fact that Lex Rei Sitae choice of law rule is based on a physical connecting criterion, the location of the asset itself.

32 Pierre Mayer et Vicent Heuzé, Supra note (19) at page 631 33 Id., at 431. 34 Id., at 429.

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As a consequence, choice of law scholars either devised a fictional location for the non-physical asset or devised new choice of law rules that are not based on the asset's location. An example of the first approach is shares and bonds issued by corporations. The shares and bonds are representative of the right to ownership in the corporation's capital and the right to demand payment of a certain sum of money. Neither of them have a physical location yet, choice of law scholars and courts decided that the place where the corporation's registrar is located will govern the proprietary rights in the shares and bonds35.

Another example for a fictitious location approach in non-physical assets is debts that are not embodied in negotiable instruments. The location of those debts for the purpose of determining the law governing their transfer is the debtor's place of residence36. The same principle applies to industrial designs which are governed by the law of the place where it was registered37.

Nonetheless, the Egyptian legislator chose to abandon this approach when it comes to negotiable instruments. According to Art 387 of the Egyptian Commercial Code " The form of any bill of lading is regulated by the laws of the territory in which the bill of exchange has been signed

If, however, the obligation entered into by means of a bill of exchange are not valid according to the provisions of the above law, but are in conformity with

35 Audi, Supra note ( 19) at 650; Dicey & Morris, Supra note (26) at page 931. 36 Dicey & Morris, Supra note (26) at page 924. 37 Pierre Mayer et Vicent Heuzé, Supra note (15) at page 430.

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the Egyptian law the circumstances that the previous contracts are irregular in form does not invalidate the subsequent contracts in Egypt"38.

The Egyptian legislator adopted a similar rule for cheques in art 481 of the Egyptian Civil Code" The form of any contract arising out of a cheque is regulated by the laws of the territory in which the contract has been signed

If, however, the obligation entered into by means of a cheque are not valid according to the provisions of the above law, but are in conformity with the Egyptian law the circumstances that the previous contracts are irregular in form does not invalidate the subsequent contracts in Egypt"

This means that debts embodied in negotiable instruments should be formally valid either according to the place where the instrument was made or according to the Egyptian law. These choice of law rules are based on novel legislative policies. First, they represent an exception form Art 20 policy of validating the contracts formally. We do not have here several alternative connecting criterion although that the formal invalidity of the negotiable instrument has a far reaching effect over the substantive validity of the contracts arising from the instrument. e.g. the contracts will no longer be valid as contracts derived from an obligation to pay an negotiable instrument if the negotiable instrument does not met the formal requirements in the law of the place where it is made. 38 Note that the same rule is applied to promissory notes by virtue of Art 470 of the Egyptian Commercial Code.

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Another novel aspect of the above rules is the use of Egyptian law's provisions as an escape device to avoid nullifying the formally invalid negotiable instruments despite the fact that those instruments were not made in Egypt and there it is not necessary that they have any physical connection with Egypt. This represents the Egyptian legislator's wish to move away from the fictitious location approach to a rule of validation approach to save the negotiable instruments based contracts.