This Practice Note considers applicable law clauses also known as governing law clauses, proper law clauses or choice of law clauses. It considers the rationale for agreeing an applicable law clause, as well as factors to take into account. It also provides an insight into situations in which parties may change the applicable law clause in their contract as well as whether floating applicable law clauses and stabilisation clauses (specific types of clauses) are valid.
For an introduction to applicable law, see Practice Note: Applicable law—a guide for dispute resolution practitioners.
An applicable law clause expressly records an agreement, made during contract negotiations, as to the applicable law to be applied by the courts in the event the courts are required to determine a dispute between the parties to the contract.
A typical applicable law clause might read:
‘This agreement and any dispute or claim arising out of, or in connection with, it, its subject matter or formation [(including non-contractual disputes or claims)] shall be governed by, and construed in accordance with, the laws of [England and