#5193 - Halpern V. Halpern - Conflict of Laws BCL

Halpern v. Halpern

Facts

The claimants are the son (Israel) and grandson (Samuel) of the late Rabbi Joseph Halpern and his wife Frieda, also deceased. Their claim was to enforce a compromise alleged to have been reached between Israel and Samuel who at all material times acted for his father Israel with the defendants (four other sons and a daughter of Joseph and Frieda). The compromise was of an arbitration before a Beth Din composed of three rabbis which in the main was taking place in Zurich. The arbitration had been intended to settle issues, which had arisen after the deaths of Joseph and Frieda, between Israel (the first claimant) and his siblings relating to what he perceived to be his due inheritance. The first three defendants (Mordecai, David and Jacob) were the executors of both estates, but the dispute was not simply about the distribution of the estates (valued for probate, as we were shown but the judge was not, in the case of Joseph at 309,945 and in the case of Frieda at 210,000), but as to whether there were not other assets which should be brought by the defendants into account in considering what should be Israel's fair share.

The question before the court was as to the law applicable to this compromise arrangement.

Holding

Can there be a choice of “Jewish law”?

First I do not accept Mr Berkley's submission that the Rome Convention does not apply because the dispute as to which law applies relates to a law other than one of a country. That argument would be hopeless in my view, even if the choice was simply between Jewish law and English law, for the reasons I shall express below but in fact the contest in this case is between English law, Swiss law and Jewish law—in other words the situation does involve a choice between the laws of different countries. But the fundamental reason why the argument is hopeless is because the starting point for the Rome Convention was a point accepted by all countries party to that convention, that laws could not exist in a vacuum; by “laws” were meant laws enforceable in the courts of countries whether parties to the Convention or other states. Dicey & Morris, The Conflict of Laws, 14th ed (2006), vol 2, para 32–081 puts the matter succinctly and in my view correctly:

“General principles of law. Stabilisation clauses. Article 1(1) of the Rome Convention makes it clear that the reference to the parties' choice of ‘the law’ to govern a contract is a reference to the law of a country. It does not sanction the choice or application of a non-national system of law, such as the lex mercatoria or general principles of law. It is true that in international arbitrations, where a government is a party to a contract, the parties may choose as the governing law the ‘general principles of law’, or even public international law. Prior to the 1990 Act it had been said in England that ‘contracts are incapable of existing in a legal vacuum. They are mere pieces of paper devoid of all legal effect unless they were made by reference to some system of private law which defines the obligations assumed by the parties to the contract by their use of particular forms of words …’ [See Lord Diplock in Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50 , 65] It is suggested that a choice of lex mercatoria or general principles of law is not an express choice of law under the Rome Convention. So also in Shamil Bank of Bahrain EC v Beximco Pharmaceuticals Ltd the Court of Appeal held that a choice of the principles of Sharia law was not a choice of law of a country for the purposes of the Rome Convention.”

Further support for the view that the Convention had in mind the laws of a country, and that it was not intended that persons should be able to contract out of the Convention, is gained from other provisions of the Convention eg article 3(3) the inability to derogate from mandatory rules of a particular country and article 7 applying mandatory rules of another country “when applying under this Convention the law of a country”.

What is the applicable law?

Thus the rules of the Convention apply to the compromise agreement. That being so a choice has to be made as to which is the applicable law, and the choice can only be between the laws of different countries.

The compromise makes no express choice of the law of any country or indeed any express choice of law at all. Furthermore it cannot in my view be said that any implication of a choice of law of any country can be demonstrated with any certainty. It follows that one must move to article 4, applicable in the absence of choice. The material parts of article 4 provide:

“1. To the extent that the law applicable to the contract has not been chosen in accordance with article 3, the contract shall be governed by the law of the country with which it is most closely connected. Nevertheless, a severable part of the contract which has a closer connection with another country may by way of exception be governed by the law of that other country.

The choice lies between Swiss and English law and since no one has suggested that Swiss law is any different from English law, a decision as to which law is the applicable law is actually unnecessary. But if the issue did arise article 4(2) would seem to indicate that since Mordecai and the executor brothers resided in England that English law should be the applicable law. Again one notes that different laws may apply to different parts of the contract.

It follows that as a matter of English conflict of laws principles there can be no question of Jewish law being agreed either expressly or by implication as the applicable law of the contract. The applicable law is English law.

Incorporation of Jewish law

As a matter of English law it is possible to incorporate some provisions of foreign law as a term or terms of the contract.

It may be that for actual incorporation it is necessary to identify “black letter” provisions, but that seems to me to be another way of saying that there must be certainty about what is being incorporated. If one is dealing with foreign law that would require evidence as to that law and evidence as to how clear it is. “The principles of the glorious Sharia law” would seem to be a very uncertain phrase when, as I understand it, there can be different schools of thought as...