Depecage

A dépeçage takes place when the laws of different countries or territories apply to the separate, severable and distinguishable provisions of a contract. Contracts are typically governed by one system of law, technically known as the lex contractus. However in contracts incorporating an international dimension, the parties may wish to provide that certain parts of the contract are governed by one system of law, and further provide that another system of law governs other, notionally distinct and severable parts of the contract.

For example, a contract for the sale of goods may (say) be governed by the laws of England. The contract may utilise finance sourced from the United States, and incorporate security in the United States and payment provisions centred in New York. Accordingly, the parties may elect to choose that the law of the contract will be the laws of England, with the exception of matters relating to payment and the security taken under the Agreement. In this way, the parties have delineated different systems of law to different parts of the contract. This is dépeçage.

Equally, where the parties to contract do not expressly select the system of law to apply to a contract, principles of dépeçage may determine a similar result as the foregoing in an appropriate case. These principles originally formed part of the common law in England in conflict of law and choice of law principles, and see an extended life in the Rome Convention up until January 2009, and thereafter in Rome I Convention.

Usage: The dépeçage consisted of an application of the laws of England and the law of California.

Related Words: contract; lex contractus; locus standi; quid pro quo; Rome Convention.