Kim on Overriding Mandatory Rules

How are overriding mandatory rules to be defined, in particular, how can they be distinguished from other mandatory rules? When shall a court apply overriding mandatory rules of a third country (other than the lex fori and the lex causae)? When should an international arbitral tribunal apply such rules? These questions have been struggled with over decades in various legal systems, and a plethora of answers have been given.

Min Kyung Kim has just published an insightful and thought-provoking book on these issues titled ‘Overriding Mandatory Rules in International Commercial Disputes’ (Hart 2025). The book is available in open access.

Kim provides a detailed report of case law and academic debates, retracing South Korean, German, English, Swiss and other legal systems, as well as international texts such as the Hague Principles on Choice of Law in International Commercial Contracts or the UNIDROIT Principles on International Commercial Contracts.

But she does not stop there. She also criticises these approaches, and this for very good reasons. Last but not least, she provides her own opinion on how these problems shall be dealt with. In the following, a short overview of her findings will be given.

What are ‘Overriding Mandatory Rules’?

Defining the term overriding mandatory rules seems to be as elusive as catching a fish with bare hands. Kim offers a list of some factors that may be used as a heuristic to identify them:

• the wording of the provision
• the legislative intent
• whether the provision’spurpose would be undermined if it were not applied regardless of the governing law
• whether the provision’s purpose can be achieved with a similar (equivalent or substitutable) rule of the otherwise applicable law
• whether administrative or criminal sanctions are imposed for violations of the provision.

Helpfully, she also lists factors that are unimportant

• whether there are special rules of Private International Law regarding the type of protection that the provision aims at
• whether the provision is a ‘universal’ or ‘representative’ form of legislation, meaning that it exists in all legal systems
• whether the provision is of a public or private law nature
• whether not applying the provision would run counter the forum’s notions of good morals or social order .

She then exemplifies the relevant criteria using South Korean law. This part may be less interesting for international readers; still, it is impressive to see that her test works across a wide range of very diverse provisions.

When Should a Court Apply a Mandatory Rule of a Third Country?

Kim examines this question against the background of a vast number of theories from Civil and Common law countries. She discusses the local data (or ‘lex causae‘) theory, the theory of territoriality, comity, governmental interest analysis, the ‘power theory’, as well as the ‘theory of the two-sided conflict-of-laws rules’. None of them withstands her excruciating analysis, which is guided by two seemingly conflicting requirements: First, that the applicable law should be previsible for the parties, and second, that it should reflect the legitimate interests of all states concerned.

The theory that comes closest to her ideals is the German theory of special connection, which was most faithfully implemented by Art 19 of the Swiss Private International Law Act. (Art 9(3) Rome I Regulation is dismissed because, as Kim explains, it ignores the legitimate interests of third states other than that of the place of performance and does not even correctly reflect the state of English law on which it has been modelled.) But even Art 19 Swiss PILA has its shortcomings, as Kim convincingly shows. Therefore, she drafts her own, very succinct and plausible rule, which is based on three criteria:

• the legislative purpose of the provision to be applied
• the close connection of the enacting state to the disputed issue, and
• whether the provision is legitimate in light of good morals and public order.

With regard to the consequences, she shows flexibility by allowing the court to recognise effects different from those provided by the law of the third country. Kim’s rule is a suggestion to the South Korean legislator, yet it would be useful if other legislators adopted it as well (hello Brussels!?).

And What About Arbitrators?

The question whether arbitrators can and should apply overriding mandatory rules of a law not chosen by the parties is arguably the hardest of all. Kim starts with the preliminary question whether disputes involving such rules are arbitrable. She joins here the US Supreme Court and the CJEU by pleading for a wide scope of arbitrability, combined with an ex post-court control of the award. She then makes clear that the arbitral tribunal has to power to apply third-country overriding mandatory rules even without an authorisation by the parties. Finally, she looks at the criteria for determining which rules should apply. In her view, the most persuasive is to consider or apply the overriding mandatory rules of third countries closely connected to the matter under arbitration.

Further Reflections

This short post cannot do justice to the breadth and depth of Kim’s thinking. The reader is well advised to look into the book itself. I do not suggest this lightly, as I know that everyone is short on time these days. But Kim’s work is a true reference in the best sense of the word. And since it is available in open access, you have no excuse to neglect it. Every discussion about overriding mandatory rules in the future must start with reading it.