Lee A. Bygrave (red.) YULEX 2002 - Universitetet i Oslo

............................................................................
24 Emily M Weitzenböck
who is to effect the performance which is characteristic of the contract has, at
the time of conclusion of the contract, his habitual residence, or, in the case
of a body corporate or unincorporate, its central administration. If the contract
is entered into in the course of that party’s trade or profession, that
country shall be the country in which the principal place of business is situated
or the place of business specified in the contract.
According to the Giuliano-Lagarde Report [1980], the concept of characteristic
performance essentially links the contract to the social and economic
environment of which it will form a part. This is usually the performance for
which the payment is due, such as, depending on the type of contract, the
delivery of goods, the granting of the right to make use of an item of property,
the provision of a service. The obligation to pay for such performance,
on the other hand, should not be deemed to be the characteristic performance
of the contract.
Imagine a virtual enterprise made up a group of talented creative freelancers
which was contracted by a French firm to design and produce a promotional
brochure. The characteristic performance is the design and production of the
brochure by the VE. The proper law, according to Article 4(2), is the principal
place of business of the VE. If, as is often the case in practice, the VE has not
been set up as a separate legal person, but its members are based in the same
country – say, Italy – Italian law would be the applicable law. However, if the
VE members are situated in different countries (eg, Italy and Austria) and the
different stages of the design and production are being carried out in these
countries, then, although the characteristic performance of the contract is identifiable,
it points to two different countries. Such a situation makes the application
of Article 4(2) difficult, if not impossible. One would here try to see
whether the contract is severable and whether part of it has a closer connection
with another country (see infra regarding Article 4(5)).
Other situations may arise where it is complex and perhaps impossible to
determine the characteristic performance. In the example mentioned in section
4.2 infra, suppose that a VE is contracted to design and set up a website,
and to advertise, promote, maintain and upgrade it for a certain period. The
customer is not satisfied with the maintenance and upgrading of the website
and wants to sue the VE. Suppose that the VE does not have a distinct legal
personality but is made up of members established in different countries.
What is the characteristic performance in this case and which is the applicable
law? When this cannot be identified, the presumption in Article 4(2) cannot
be applied, and one must then try to identify to which country the contract
is most closely connected (Article 4(5)). The judge is thus left with a
margin of discretion to identify the predominant “pointers” or connecting