Applying foreign laws is essential when dealing with international legal cases, but the application of foreign laws is only done in certain cases. In those cases, it is the obligation of the competent state authority or the parties involved to apply the foreign laws, rather than just a choice or an option. The cases where foreign laws must be applied are:
1. When conflicting provisions refer to foreign laws
As mentioned earlier, conflicting provisions refer to either the choice of applicable law or the application of a specific law. Therefore, when conflicting provisions refer to foreign laws, those laws must be applied. This ensures the validity and enforcement of the provisions, as conflicting provisions are usually legal regulations issued by the state.
Foreign laws, when referred to by conflicting provisions, should be understood as the entire legal system of the foreign country, including both substantive laws and conflicting provisions. Therefore, when conflicting provisions refer to foreign laws, it may lead to the phenomenon of reverse reference and the application of a third country’s laws, as will be mentioned in point 4 below.
2. When unified conflicting provisions refer to foreign laws
Similar to conflicting provisions, when unified conflicting provisions refer to foreign laws, those laws must be applied. Unified conflicting provisions, although not established by the state, are agreed upon by the state along with one or more other countries (through bilateral or multilateral treaties) or are approved by the state’s participation (joining multilateral treaties). However, there is a small but important difference between the reference of unified conflicting provisions and ordinary conflicting provisions. When unified conflicting provisions are referred to, it only means the actual provisions of that country’s laws, not the entire legal system of that country, including conflicting provisions as in the case of ordinary conflicting provisions. Therefore, in the case of unified conflicting provisions, there is no reverse reference.
3. When the parties agree to apply foreign laws
This is a case where the application of laws is chosen by the parties themselves, and the foreign laws are applied not based on conflicting provisions. However, this does not mean that the choice is arbitrary. The choice of laws by the parties must be based on legal grounds or, in other words, must be allowed by the law. If the law does not allow such a choice, even if laws are chosen, the choice will not have legal validity. Allowing the parties to choose the applicable laws can be expressed in international treaties or national laws. To respect the agreement of the parties, the application of foreign laws is also limited to the actual provisions, similar to the case of unified conflicting provisions, and there is no reverse reference in this case.
In the case where conflicting provisions in international treaties and conflicting provisions in Vietnamese law regulate the same relationship or a specific group of relationships, especially when there are differences between these conflicting provisions, priority is given to the provisions in the international treaty.
4. When the competent authority determines that foreign laws are the most closely related legal system
Usually, the determination of the applicable law to regulate international legal relationships is based on conflicting provisions or the choice of the parties when allowed. However, if the above cases have been considered and the applicable law is still not determined, another solution has been provided to overcome this situation. In this case, the applicable law will be the law of the country that has the closest connection, as determined by the competent authority resolving the case. If the law that has the closest connection to the relationship is a foreign law, then that foreign law will be applied. This is a new provision that ensures the determination of the applicable law to resolve the case.