GOVERNING LAW IN TRANSNATIONAL CORPORATE CONTRACTS: A COMPARATIVE STUDY (UZBEKISTAN & GERMANY)

Аннотация

This article examines the role, selection, and implications of governing law in transnational corporate contracts, focusing on the comparative legal frameworks of Uzbekistan and Germany. The study explores how contractual parties determine applicable law, the interaction between domestic legislation and international instruments, and the practical considerations influencing parties’ choices in international commerce. Special emphasis is placed on predictability, party autonomy, enforceability, and the impact of public policy constraints. The research also analyzes how globalization has transformed private international law and the governance of cross border business relationships. The paper concludes that while both Uzbekistan and Germany emphasize party autonomy, they differ in legal traditions, interpretive methods, and regulatory constraints, which shape the practical outcomes of governing-law clauses in corporate practice. The study contributes to understanding how multinational firms can optimize contract drafting, dispute resolution, and commercial strategy through informed choices of applicable law.1 Key words: Governing law; transnational contracts; private international law; party autonomy; Uzbekistan; Germany; corporate contracting; conflict of laws; international commerce; enforceability; jurisdiction. The expansion of global markets and increasing integration of cross-border business operations have amplified the significance of governing law in transnational corporate contracts. As multinational corporations enter more complex agreements involving supply chains, technology transfers, investments, joint ventures, and long term commercial cooperation, the legal framework governing these transactions becomes central to risk distribution, predictability, and dispute management.2 Governing law also known as applicable law or choice of law clause determines which national legal system regulates the rights and obligations of the parties. It influences issues such as contractual validity, interpretation, remedies, liability limitations, and termination procedures.3 A well-drafted governing-law clause is therefore essential for legal certainty and commercial stability. While international instruments such as the Hague Principles on Choice of Law in International Commercial Contracts and the UN Convention on Contracts for the International Sale of Goods (CISG) have contributed to harmonization, national legal systems retain substantial autonomy. Consequently, major differences persist regarding the scope of party autonomy, the limits imposed by mandatory rules, the application of public policy exceptions, and the treatment of foreign law by domestic courts.4 These differences require comparative analysis to understand how various legal traditions approach governing law and how businesses can strategically navigate these variations. This paper compares Uzbekistan and Germany two jurisdictions with distinct historical, legal, and economic trajectories. Germany represents a civil law system with strong integration 1 Michaels, R. (2020). The Governance of International Commercial Contracts. Oxford University Press, pp. 12 - 19. 2 Vogenauer, S. (2017). Contract Law in International Trade. Hart Publishing, pp. 33 - 41. 3 Ferrari, F. (2019). Interpretation of Contracts in International Commerce. Kluwer Law International, pp. 55 - 60. 4 Hartley, T. (2021). International Commercial Litigation. Sweet & Maxwell, pp. 44 - 52. 556 ResearchBib IF - 11.01, ISSN: 3030-3753, Volume 2 Issue 11 into the European Union’s regulatory framework, particularly the Rome I Regulation, which shapes governing law principles in contractual matters. Uzbekistan, although also a civil law jurisdiction, reflects a post-Soviet legal tradition undergoing reforms aimed at improving its investment climate, contractual freedom, and international commercial integration.5 Examining these two systems reveals important contrasts and similarities that shape transnational contracting practices. The article proceeds by explaining the theoretical foundations of governing law, detailing the legal frameworks of both jurisdictions, comparing their approaches, and analyzing practical implications for corporate actors. The conclusion offers recommendations for enhancing predictability and efficiency in cross-border contracting involving Uzbek and German entities. Governing law plays a foundational role in determining the legal architecture of cross- border agreements. A transnational contract typically involves parties from different states, each with its own substantive legal rules, interpretive traditions, judicial practices, and regulatory constraints.6 Without a clear governing law clause, courts or arbitral tribunals must rely on conflict of law rules, which may lead to uncertainty, increased litigation costs, and inconsistent outcomes. This uncertainty can hinder international investment and commercial cooperation. The principle of party autonomy, w