Most of the main markets let commercial parties choose the law that governs their contract, but none lets that choice override everything. In the EU and UK, Rome I gives effect to the chosen law subject to mandatory and overriding rules; the new UAE Civil Transactions Law expressly recognises an agreed law; US states allow a choice where the transaction has a reasonable relation to the chosen state. The forum clause is a separate decision, governed by different rules, and is often more important in practice.
Freedom of choice and its limits
In Germany and France, and in the UK under its retained version, Rome I makes the parties' chosen law govern the contract, whether the choice is express or clearly shown by the terms or circumstances, and the choice may cover only part of the contract. The UK kept Article 3(1) unchanged after Brexit. Rome I applies to contracts concluded after 17 December 2009 and does not govern arbitration or choice-of-court agreements, which need their own analysis.
The limits are what catch businesses out. If every other element of the deal is in one country, choosing a foreign law does not displace that country's non-derogable rules, and if everything is inside the EU, choosing a non-EU law such as New York law does not displace mandatory EU law. Separately, a court always applies its own overriding mandatory rules and may give effect to those of the place of performance where they make performance unlawful. Without a choice, a sale of goods is governed by the seller's law and a services contract by the provider's law.12345
Gulf and US approaches
Since 1 June 2026 the UAE Civil Transactions Law provides that the form and substance of contractual obligations are governed by the law the parties expressly agreed; without agreement, the parties' common domicile decides, then the place of main performance. The law replaced the 1985 Civil Code and states that it does not apply retroactively unless it provides otherwise, so contracts concluded earlier need checking. Saudi Arabia is different in practice: a 2025 US government assessment reports that enforcement of foreign judgments and awards can be refused where it conflicts with Sharia principles, so a foreign governing law is no guarantee of the result against a Saudi counterparty.
In the US, choice of law is mainly state law. Under the Uniform Commercial Code as enacted by each state, parties to a transaction with a reasonable relation to the state and another jurisdiction may choose either law. Some states have special statutes for large commercial contracts; these were not confirmed.6789
Choosing the forum
A jurisdiction clause decides where a dispute is heard and therefore which country's procedural and mandatory rules apply. Between EU courts, the Brussels I recast Regulation gives effect to a written choice of a Member State court and makes it exclusive unless the parties say otherwise. That regime no longer covers UK courts, so a clause choosing the English courts relies on other instruments, such as the Hague choice of court conventions, discussed in the disputes centre. Where the counterparty is in the Gulf or India, arbitration is often chosen because awards travel under the New York Convention more readily than court judgments.10
| Market | Rule | Limit or condition | Source |
|---|---|---|---|
| Germany, France (EU) | Rome I Article 3: chosen law governs | Mandatory rules (Art 3(3), 3(4)); overriding mandatory rules (Art 9) | EUR-Lex, Regulation 593/2008 |
| United Kingdom | Retained Rome I Article 3(1), unchanged | Assimilated-law version of Art 3(4) | legislation.gov.uk |
| United Arab Emirates (onshore) | Civil Transactions Law 2025, Article 19(1): expressly agreed law | In force 1 June 2026; no retroactivity unless provided | UAE Legislation Platform |
| Saudi Arabia | Not confirmed on an official text | Enforcement may be refused where contrary to Sharia (secondary source) | US State Department, 2025 |
| United States (state law) | UCC 1-301: choice allowed where reasonable relation | Applies to UCC transactions; exceptions in 1-301(c) | Cornell LII (model text) |
| India, Singapore | Not researched in this module | See gaps |
Decisions to make
- Where are the counterparty's assets, and will the chosen law be respected by a court there?48Mandatory and public-policy rules of the enforcing country can override the chosen law, as Saudi practice on Sharia shows.
- Is every other element of the deal in one country, or entirely inside the EU?3If so, the chosen foreign law cannot displace that country's or the EU's non-derogable rules.
- Was the contract concluded before or after 1 June 2026 if UAE law may apply?76The new UAE Civil Transactions Law is not retroactive unless it says so, so older contracts may still be read under the 1985 law.
- Court or arbitration, and if a court, is it exclusive?10Under Brussels I recast a chosen EU court is exclusive unless agreed otherwise; UK courts are outside that regime.
Documents usually needed
- Governing law and dispute resolution clauses, drafted together and checked against the place of enforcement
- Memo on mandatory and overriding rules in the place of performance (for example agency, consumer, employment or sanctions rules)
- Evidence of the parties' habitual residence and place of performance, for the default rule if the choice fails
- Signed authority of the signatory to agree the dispute clause, where local law requires it
- Arabic translation strategy for any contract that may be relied on in onshore Gulf courts
Common mistakes
- Choosing English or New York law for a purely domestic deal and assuming it removes local mandatory rules
- Assuming Rome I covers the arbitration or jurisdiction clause; it does not
- Relying on a pre-2026 understanding of UAE contract law without checking the 2025 Civil Transactions Law
- Using an EU-style exclusive jurisdiction clause for the English courts after Brexit without checking how it will be enforced
- Choosing a governing law without asking whether a judgment or award will be enforceable where the counterparty's assets are
Questions businesses ask
Can we choose English law for a contract with a German customer?
Yes. Under Rome I the parties' choice governs, but German overriding mandatory rules can still apply if the case is heard in Germany, and if all other elements are in Germany its non-derogable rules continue to apply.134
What this guide does not yet confirm
These points need checking with a qualified local professional before you rely on them.
- Saudi Arabia's rules on choice of a foreign governing law were not confirmed on an official text; the only claim is a secondary assessment of enforcement practice.
- India and Singapore choice-of-law rules (common law, no codified rule found) were not researched.
- New York General Obligations Law section 5-1401 (choice of New York law in large contracts) could not yet be checked and is not stated.
- The UAE Civil Transactions Law public order exception to Article 19 and the treatment of contracts concluded before 1 June 2026 were not reviewed in full; the official English text was truncated when read.
- France-specific rules (for example the Loi Toubon on French language) were not reached; Legifrance blocked automated access.
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 19 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
Under the Rome I Regulation a contract is governed by the law chosen by the parties; the choice must be made expressly or be clearly demonstrated by the terms of the contract or the circumstances, and it may cover the whole or only part of the contract. EU Member States (Denmark is not bound). Applies to contracts concluded after 17 December 2009 (Article 28). Arbitration agreements and agreements on the choice of court are outside its scope (Article 1(2)(e)).
The United Kingdom keeps Rome I as domestic law, and Article 3(1), under which a contract is governed by the law chosen by the parties, applies unchanged; Article 3(4) now refers to assimilated law instead of Community law. UK version of Regulation (EC) No 593/2008, amended by S.I. 2019/834 from 31 December 2020 and S.I. 2025/82 from 27 February 2025.
Under Rome I, where all other elements of the situation are located in one country, choosing another country's law cannot displace that country's rules that cannot be derogated from by agreement; where all elements are located in Member States, choosing a non-EU law cannot displace mandatory EU law. Article 3(3) and 3(4).
Rome I never restricts the overriding mandatory provisions of the law of the court hearing the case, and effect may be given to the overriding mandatory provisions of the country where the contract is to be performed in so far as they make performance unlawful. Article 9(1) to (3). Overriding mandatory provisions are those a country regards as crucial for safeguarding its public interests.
Where the parties have not chosen a law, Rome I applies the law of the seller's habitual residence to a contract for the sale of goods and the law of the service provider's habitual residence to a contract for services. Article 4(1)(a) and (b); other contract types and escape clauses are in the rest of Article 4.
Under the UAE Civil Transactions Law in force from 1 June 2026, the form and substance of contractual obligations are governed by the law expressly agreed by the parties; failing that, by the law of their common domicile and, if their domiciles differ, by the law of the place of main performance unless the circumstances show another law was intended. Federal; onshore UAE. Contracts on immovable property follow the law of the place where the property is located (Article 19(2)). Public order limits and the treatment of earlier contracts were not reviewed.
English text is an official translation; the platform states that the Arabic text prevails. The downloaded text was long and partly truncated when read.
Federal Decree by Law No. 25 of 2025 promulgating the Civil Transactions Law was issued on 1 October 2025, published on 14 October 2025, came into force on 1 June 2026 and repeals Federal Law No. 5 of 1985. Federal. Article 4(1) of the new law states that it does not apply retroactively unless it provides otherwise.
Dates from the legislation record; repeal and commencement read in the promulgating decree in the downloaded text.
Enforcement of foreign arbitral awards and foreign judgments has traditionally been time-consuming, and enforcement may be refused where it conflicts with Sharia principles; judgments from GCC and Arab League courts are enforced somewhat more readily.
Secondary (foreign government) source; the official Saudi text could not yet be checked run. Reused from sa-disputes-007.
Under Uniform Commercial Code section 1-301, when a transaction bears a reasonable relation to the enacting state and also to another state or nation, the parties may agree that the law of either shall govern their rights and duties. State law (each state enacts the UCC); applies to transactions within the UCC, such as sales of goods. Section 1-301(c) lists exceptions.
Read on the Cornell Legal Information Institute reproduction of the Uniform Commercial Code, which is a model text; each state enacts its own version, so confirm the enacted text in the state whose law applies.
Under the Brussels I recast Regulation, parties may agree that the courts of an EU Member State are to settle their disputes; the agreement must be in writing or evidenced in writing (or meet the other permitted forms), and the chosen court's jurisdiction is exclusive unless the parties agree otherwise. Regulation (EU) No 1215/2012, Article 25(1); applies from 10 January 2015 (Article 81). Arbitration is excluded (Article 1(2)(d)). Does not apply to choice of UK courts after Brexit.
Questions on this topic
10 statements on governing law and jurisdiction clauses
