Page:Australian Competition and Consumer Commission v Valve Corporation (No 3).pdf/26

 law with which the transaction has its closest and most real connection. As their Honours described the second stage, "the law itself will select a proper law" (442).

65 The test for "the system of law with which the transaction has its closest and most real connection" (438) is usually attributed to the speech of Lord Simonds in Bonython v Commonwealth [1951] AC 201, 219 although it was used earlier in the writings of Professors Westlake and Cheshire, and Dr Morris. Whilst the language of "closest and most real connection" trips off the tongue, the underlying concept is far from clear.

66 The second stage ("closest and most real connection") is commonly contrasted with the first stage on the basis that the first concerns the "objective intention of the parties" but the second is just an "objective test". That was how Valve approached the test in this case. In at least one sense, this is a false distinction. "Objective intention" is an oxymoron. Although it is commonly used in the law of contract, "intention" is a word which involves subjectivity of decision making. If the question is one of construction of a contract then, in truth, the question has nothing to do with the "intention" of the parties in the sense of their subjective decisions. The question of "objective intention" really involves the (objective) meaning of the contract, by the process of construction. The second stage of the test is also an objective test but, on the authority of Akai, it must be concerned with something other than solely considering the meaning of terms of the contract.

67 It was not always the case that there were two stages involved in the determination of the proper law of the contract. As Dr Mann observed, a debate raged for some time concerning which stage was the only test (Mann FA, "The Proper Law in the Conflict of Laws" (1987) 36 Int'l & Comp LQ 437, 444). Dr Mann said:

Dr Mann continued, explaining that "the practice had followed the former course" (ie objective meaning of the contract) until the decision of Lord Denning in Boissevain v Weil [1949] 1 KB 482, 490–491, which was then followed by Lord Simonds in Bonython v Commonwealth [1951] AC 201, 219. Dr Mann considered that the rise of the closest connection test was, in part, due to the influence of Dr Morris who had asserted that the only single test that could be applied to determine the proper law of the contract was the question