Autonomy in International Contracts - Case Study Example

The ways an exclusion clause could enter into a contractual agreement General overview Contracts are essential documents for all commercial relationship between two or more parties that are willing and ready to go into an agreement with the hope of enjoying some certain levels of relationship as indicated in the contracts. These relationships could be in business, employment, education and other service-related transactions. Normally, there are some exclusion clauses in the contracts that state clearly what the stronger party (in this case, an employer) would not undertake for the weaker party (in this case, an employee) if certain unforeseen problems suddenly happened to the weaker party. In recent years, it has become common that the weaker parties have often challenged the stronger parties for compensations in case some accidents or dangerous things happen to them in the course of carrying out their commercial relationship, even though they were statutorily excluded from their contractual agreement. This essays explains how these exclusion clauses could find their ways into a contractual agreement that the stronger parties would be willing to accept, although grudgingly. A legal case study For the purpose of explaining how exclusion clauses could become a part of a contract, the famous law case of Sayers v International Drilling Co. N.V is used. This is an example of an employment contractual agreement. Sayers, an English rig worker was hired in England by a Dutch subsidiary of a Texan oil drilling company to work on oil rigs abroad. He had an employment contract with International Driving Co. N.V that stated that if any injury occurs to him while working, he would accept the company's "Compensated Program" as his only remedy, and that he should waive any cause of action he might have in United Kingdom or under any other laws. But, suddenly, Sayers was injured when he was sent to work on an oil rig off the coast of Nigeria. The injury was as a result of his co-workers' carelessness. Sayers then decided to bring a legal action in tort against the Dutch company in England: this is an action expected to force the Dutch company to compensate him other than the "compensation program" stipulated in his contractual agreement with the company (Nygh, 1999). Possible ways the Dutch Company could include its exclusion clause in the contract Nygh (1999) explained that it is possible for Mr. Sayers to compel his employer in the ways described below to include an excluded clause into the contract: in this regard, offering compensations for injury suffered by an employee rather solely relying on limited "Compensated Program". (a) Broader classification: An employee that drags his or her employer to the court seeking an inclusion of a clause may do so on the reason that the excluding clause is inconclusive in its definitions. Take for example; International Drilling Co. N.V may have defined compensated "injury" as the one sustained in the course of duty. However, this classification could be extended to cover the injury caused by carelessness of co-workers, as in the case of Mr. Sayers, if his co-workers injured him in the course of their duty for the company. Indirectly, Mr. Sayers is involved in the process of carrying out such company's duty, even though he may be at rest when the mishap happened. Broader classification like this has compelled employers to re-consider their stance on excluded clauses. Another relative example was in the case of an employee that got injured while using the company's car on a weekend; meanwhile his company stated that all off-duty car accidents would be at the employee's liability. However, extending this classification to cover using the said vehicle to convey another employee on duty for the company could force their employer to accept removing the exclusion clause. In the court of law, cases like these are handled by lawyers who employed the principle of deconstruction to argue with the hope of extending the possible classification of an injury. A head injury may not only be an injury that directly affects one's head; it may include injuries in one's other parts of the body that would also affect the head. Employers always find themselves in a confused state as they fail to clearly define or classify an injury and its relative sub-classification. (b) Loopholes in Contractual agreement: Sometimes some employers offer contracts that have some loopholes which smart employees may utilize to sue the employers for some kinds of compensation. Some contracts include a clause of flexibility, in the sense that the contractual agreement could be re-written and changed in case some unforeseen problems arise. Laxity on the part of the employer may lead to unexpected liability for the employer. For instance, when there is a contract between an employer and an employee from different countries; if International Drilling Co. N.V, for example, recognizes the legal jurisdiction of United Kingdom, where Mr. Sayers is from, there may be complexity in legal interpretation of what amount of compensation Mr. Sayers could sue for, since United Kingdom has different Labour Laws from Dutch Labour Laws. This is a common problem for an international contractual agreement. It is vividly stated in the contract International Drilling Co. N.V issued Mr. Sayers that the company would not, for any occasion, contemplate offering anything more that a limited "Compensation Program" all its employees have accepted, including Mr. Sayers. However, it wasn't clear if the company offer different category of compensations to other employees, which might have encouraged Mr. Sayers to lodge a suit against the company for further compensations. In the court of law, International Drilling Co. N.V may be forced to pay more compensation to Mr. Sayers if there has been an occurrence of legal precedent in the company: that is, more compensations have been given to one employee at one instance or the other. All these issues boil down to having loopholes in the contracts. (c ) Application of lex delicti: lex delicti is a legal term which means "the law of the place where the tort was committed". It is a useful term used to refer to conflict of laws when something happened. In the case of International Drilling Co. N.V v Sayers, the appropriate lex delicti is Nigerian Laws where Mr. Sayers was injured. No matter what exclusion clause might have existed in the contract between Sayers and International Drilling Co., in as much as Nigerian Labour Laws have stipulations that support a foreign employer requesting for compensations for an injury sustained in Nigeria. Such an encouraging aspect of Nigerian Laws could force International Drilling Co. to re-think its exclusion clause that reject any request for further compensations apart from the statutory small "Compensation Program" indicated in the contract. Failure to accept the Nigerian court ruling may threaten International Drilling Co. licence of operations, which Nigerian Government may revoke as the company doesn't recognize its sovereignty and obey its court's rulings. One important observation is that Nigeria has been home to many foreign Oil Companies including Chevron, Shell, Exxon Mobil, and Agip. There are articles or sub-sections of Nigerian Labour Laws that recognize the right of a foreign employee suing his or her foreign employer in Nigerian Court for a tort that was committed on Nigerian soil or jurisdiction. In the light of the explanation above, it is possible that Mr. Sayers would have compelled his employer to include the exclusion clause that prevented any employee from seeking more compensation when an injury occurred. (d) sui generis solution: Instead of using all the means described above to press for further compensation from his employer, Mr. Sayers resolved to sue his employer in United Kingdom where sui generis was employed to resolve his issue (Nygh, 1999). Sui generis reflects the opportunity of making the choice of a law that would be used to compel one's employer into scrapping the exclusion clause in a contract. It is possible for the English court to decide and use its laws to support Mr. Sayers's claims against tort committed in Nigeria while working for International Drilling Co. N.V. In a similar vein, it is possible for English Court to refer Mr. Sayers' s case to the law that governs his contract with his employer. The importance of a choice of law is that it allows conflicts to be resolved amicably between two partners of a contractual agreement. International Drilling Co., N.V might have included in its contract a clause that allows English Court to arbitrate between it and Mr. Sayers. Comparing different ways of erasing an exclusion clause The four methods of forcing an exclusion clause into a Contract may not be all effective as some may be complex to pursue, or to expensive for the plaintiff to use. However, the most difficult one is employing lex delicti: the reason for this is that some countries have no laws that support any litigation between two foreign entities in their jurisdictions. So, it is cumbersome to hire local lawyers who have little or no knowledge of international laws; or they have never handled such a sensitive case in the entire course of their legal practice. Discovering the loopholes in a contract may boost an employee's bid to include an exclusion clause into an existing contract. This is made possible by catching the employer unawares in the area he/she has been lazy to totally exclude in the contract. Using sui generis may help an plaintiff from a third world country who may want to profit from an injury sustained while working for a rich, foreign company. But this may not always be the case in the United States, United Kingdom and Canada where the judiciary lays emphasis on transparency and justice. Courts in these countries may refer the case to the law governing the contract. And this was Mr. Sayers could not successfully get more compensation than what his company's "Compensation Program" offered. REFERENCES 1. Nygh Peter Edward (1999), Autonomy in International Contracts, Oxford: Oxford University Press. Read More