Which Law Is Applicable To Contractual Obligations Between Foreigners?
Applicable law in contractual debt relations
Contractual obligations are governed by the law expressly chosen by the parties. The choice of law that can be inferred beyond doubt from the provisions of the contract or the circumstances of the case is also valid.
Parties may agree that the chosen law shall apply to all or part of the contract.
The choice of law may be made or changed by the parties at any time. The choice of law after the conclusion of the contract shall be valid with retroactive effect, without prejudice to the rights of third parties.
If the parties have not made a choice of law, the law most closely related to the contract shall apply to the contractual relationship. This law shall be the law of the habitual residence of the characteristic performance obligor at the time of the conclusion of the contract, the law of the characteristic performance obligor’s place of business or, if there is no place of business, the law of its domicile for contracts concluded pursuant to commercial or professional activities, and if the characteristic performance obligor has more than one place of business, the law of the place of business that is most closely related to the contract in question. However, if there is a law that is more closely related to the contract according to all the circumstances of the case, the contract shall be governed by this law.