Comparative Study of Application of the Theory of Dépeçage to International Trade Contracts in Iranian, American and European Law

One of the crucial issues in international trade contracts is to determine which law is applicable to different aspects of the agreement and whether the applicable law is to be invoked during the execution of the contract and/or during settlement of disputes. In other words, determination of the applicable law in international trade contracts plays an important role with regards to the parties’ rights and liabilities. However, the question remains unsettled in various legal systems is whether the parties to an international trade contract can apply different laws and regulations to different terms and conditions in the same contract. There are various approaches regarding the choice of applicable law and different theories have been expressed relating to choice-of-law provisions. This research explores one of these theories called Dépeçage in private international law and conflict of law. Before early 1960s, the doctrine of lex loci deliciti was the generally accepted choice-of-law rule which determine the law of the place where the tort was committed as the appropriate governing law. However, this traditional rule is not suitable for international contracts where usually the parties located in different countries. Accordingly, “center of gravity” was the next conflict of law approach. The problem was not completely solved and the doctrine of “most significant relationship” was the new choice-of-law rule. However, it is not always possible to meet parties’ expectations by the application of one governing law to the entire case. As a result, Dépeçage became the next choice-of-law rule added to aviation litigation. The theory of Dépeçage is a concept in private international law that refers to the process of cutting a case into individual issues whereby each issue is constrained to a different applicable choice-of-law analysis. In other words, the theory of Dépeçage is the application of different laws to various legal issues arising from disputes. This research shows that there is an opportunity to gain many advantages by the application of the theory of Dépeçage in international trade contracts. However, adopting this theory ought to be treated with caution due to its disadvantages and the issues it may cause if not applied within a specific framework. Therefore, for appropriate application of Dépeçage, certain criteria such as protecting parties’ justified expectations and maintaining parties’ interests have to be met. Also, this theory shall not be applied in cases that lead to dissatisfaction of parties, destruction of legislative intention, or invalidation of a contract. Moreover, the applicable law that has the greatest concern for each issue must be applied to effectuate the purpose of each of the applied rules. In other words, choice-of-law values are significant principles for the application of Dépeçage. Lastly, judges and arbitrators must provide criteria and legal reasons for the application of Dépeçage in international trade contract during the dispute resolution process.