313. The power of the parties to an international contract to choose the legal system which will govern the contract constitutes a principle recognised in practically every system of private international law, known as “freedom of choice of law”⁴²². This notion includes the parties' freedom to configure their private relations freely and under their own responsibility. However, the extent of the freedom of choice of law in the systems of private international law of Latin America and even the Caribbean continues to be a controversial topic due to the fact that in certain cases it is connected to the specific consideration of the common law model on this issue⁴²³.

The most important manifestation of private autonomy is the freedom of contract, which grants to parties the right to decide by themselves whether or not a contract must be concluded, and with whom it must be concluded (freedom to draw up contracts), and what content the contract must have (freedom of design). In addition to this, thirdly, is the freedom of form, that is to say, the absence of obligation to conclude a contract in writing or in any other form.

The freedom of choice of law grants to the parties to a contract the freedom of choice of the law. As a result, the parties can decide by themselves to what law they are going to submit the legal relationship existing between them⁴²⁴. This free choice of the law in the sphere of positive law is exclusively authorised in the law of each State, and in does not results automatically from a principle of personal freedom, regardless of the form in which it is designed; as a result, it is the conflict rules of the forum and not the parties which determine the connecting factors of the contract with a particular legal system⁴²⁵. That said, there is no doubt that the idea of the contract is consistent with the fact that it is the parties themselves who decide how they wish to defend and balance out their interests. Hence, the freedom of choice of law is not merely a prolongation of private autonomy, but the very expression of an idea of autonomy and freedom beyond the positive law⁴²⁶. The freedom of choice of law is essentially justified, on the one hand, in the obtainment of a high degree of legal certainty, secondly, in the reinforcement of the principle of equality so that the parties adapt to the law in cross-border relations and, finally, in the principle of predictability of the applicable legal system⁴²⁷.

314. The autonomy of the will is also the main criterion for determining the law applicable to this matter in the Inter-American Convention on the Law Applicable to International Contracts, of 17 March 1994, signed in Mexico DF on 17 March 1994 in the Fifth Inter-American Specialised Conference on Private International Law (CIDIP-V). The Inter-American Convention was developed based on the experience of the Rome Convention of 1980, from which it deliberately distanced itself at least partially in some aspects, specifically in relation to the determination of the law applicable to the contract in the absence of the choice by the parties⁴²⁸. Although, conditioned by its limited acceptance, the Inter-American Convention has exercised much less influence than the Rome Convention on the legislators of other areas of the world, it is a compulsory reference point in America.

Indeed, the issue of the “international contract” was included for the first time in the agenda of the CIDIP-IV, which was implemented in 1989. The Conference established a series of basic criteria related to the applicable law concerning international contracts. After the discussion centred around the coexistence of a “regional” convention following the parameters of the Rome Convention of 1980 or the active and uniform participation of Latin American countries in the development of an instrument of universal unification adopted by an international body or in other initiatives, such as those put in practice by the Unidroit. Despite this absence of consensus, the Inter-American Legal Committee has adopted a regional solution and, in order to limit the focus to the issue of applicable law, has entrusted to the prestigious Mexican jurist, José Luis Siqueiros, the task of drawing up a preliminary draft bill of the Inter-American Convention on the Law Applicable to International Contracts, which was approved in 1991. Then the Inter-American Legal Committee, at the request of the Permanent Council, in 1993, drew up Draft Rules for the Regulation of International Legal Instruments, which was followed by a meeting of experts, concluded in the city of Tucson, Arizona, United States, in 1993. Here, the presence of the Professor F. Juenger of the University of California-Davis was decisive; and this presence justifies the distancing of the Mexico Convention from the Rome Convention, whose solutions were highly deficient in the opinion of the professor. In his opinion, the European authors, falling victim to the contemporary culture regarding the conflict of laws, was based on a vague principle (application of the law of the State with which the contract is “more closely connected”), which was completely unsatisfactory. As a result, the scales tipped in favour of the convenience of transferring to the judge, in the absence of choice by the parties, the task of locating the legal system more closely connected with the contract, enabling them to resolve the issue of applicable law on a case-by-case basis. The result was a new draft of the Convention on the Law Applicable to International Contracts, which was submitted as main working document to the deliberations of CIDIP-V, and which as a result gave rise to the Mexico Convention of 1994. However, the success of the Convention lies in its acceptance by the States that have participated in its drafting. Undoubtedly, the Convention has had greater success in academic forums. It is sufficient to point out that only five States have signed it (Bolivia, Brazil, Mexico, Uruguay and Venezuela) and that only two of these ratified it (Mexico and Venezuela). Thus, the text is in force in two countries (for its entry into force, only two ratifications were required).

315. The present article follows articles 7 and 8 of the Mexico Convention. The choice of the applicable law by the parties is an instrument which provides certainty and predictability. It takes into account the interests of the parties, for example, by providing them with the possibility to choose the legal system that they consider most appropriate for the content of their contract, due to its neutral character or on account of being useful for unifying the different contractual regimes. The principle of autonomy of the will in the determination of the law of the contract -freedom of choice of law - is included in section 1 of article 45 of the Model Law. This rule, which is also in line with the content of the Rome I Regulation, establishes a very liberal system of conditions for the exercise of the freedom of choice of law. Thus, it makes it possible for the choice to be made expressly as well as tacitly. Significant indications for determining a possible tacit choice are - and indeed these will have to be evaluated in the light of all of the circumstances - repeated references to specific provisions of a single legal system included in the content of the contract, as well as, in the event of a dispute, that the application and the challenge appear to be exclusively based on the law of a particular country, since the choice of the law of the contract by the parties can be made at any time. By itself, the mere designation in the contract of the courts of a country as having jurisdiction for hearing the disputes arising from the contract does not imply a tacit choice of the law of that country, even though it is one of the factors that must be taken into account when determining if the choice of the law can be clearly deduced from the terms of the contract. Furthermore, article 45 does not require the legal system chosen to be connected with the legal relationship established by the contract.

316. With regard to the time of the choice of the applicable law, article 45 considers the possibility for the parties to choose the applicable law at a later - or earlier - time than the conclusion of the contract, as well as for them to modify the legal system designated. In any case, the modification of the applicable law cannot affect the rights of third parties.

Furthermore, article 45 permits the parties to make a partial choice of applicable law, since the law that is chosen can govern “all or merely one part of the contract”. For the partial choice to be possible, there must be a reference to the part of the contract that is separable from the remainder.