Effect of Foreign Law Supervening Illegality on Contracts

William Day has published an article in the Cambridge Law Journal which examines the rules by which a prohibition in the law of the place of performance can excuse performance even though performance remains lawful by the governing law. The rule first emerged at common law during the First World War (Ralli Bros v Compañia Naviera Sota y Aznar) and developed after the Second World War in cases on exchange controls and sanctions. There are similar rules under the Rome Convention and the Rome I Regulation, and the question of whether these override the Ralli Bros is highly controversial.

The effect of foreign law supervening illegality on contracts is likely to take on a renewed prominence given the varying measures in countries around the world to tackle Covid-19. This article will be useful to anyone wanting to understand the doctrinal requirements of these rules, how they interrelate, and the considerable scope for argument in disputes of this kind.

William wrote the article after having been involved in an LCIA and an ICC arbitration where the Ralli Bros rule was in issue between the parties. The article can be accessed on the CUP website (here) and will also be available on Westlaw shortly.

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