Lavi v Asco and Others

JurisdictionBélgica
CourtCommercial Tribunal (Belgium)
Belgium, Commercial Court of Brussels (Ninth Chamber).

(Logie, Presiding; Posschelle and Pevtchin, Judges)

Lavi
and
Asco and Others

War and armed conflict Effects of war On private contracts Contract for supply of arms to belligerent State Arms export embargo by third State Status of embargo under international law Whether such legislation is a matter of international public policy Whether brokerage agreement relating to illegal arms sales enforceable in municipal courts

Economics, trade and finance Export embargo Legislative ban on arms sales to belligerent States Unenforceability of brokerage agreement relating to illegal arms sales International public policy The law of Belgium

Summary: The facts:The plaintiff, a United States citizen, acted as an intermediary in bringing together Asco Malta and Mr Kashani, representing an Iranian public body, for the conclusion of an agreement for the sale of arms in 1982. The plaintiff claimed commission under alleged brokerage agreements concluded with Asco Malta, its parent company Asco and Mr Shavit. The three defendants argued that the action was inadmissible because the agreements were void as contrary to public policy, since they concerned the sale of arms to Iran, which was a belligerent as it was then at war with Iraq. The plaintiff argued that the defendants could not invoke the illegality of the principal contract, in order to avoid payment of the commission, because of the maxim nemo auditur propriam turpitudinem allegans and because the brokerage agreements were separate from the principal agreement and therefore not tainted by illegality.

Held:The action was inadmissible since the brokerage agreements were contrary to Belgian international public policy.

(1) The maxim nemo auditur propriam turpitudinem allegans did not prevent a party from invoking the nullity of an agreement contrary to public policy, even if he had participated in that agreement, but merely prevented him from seeking its judicial enforcement. Section 1131 of the Civil Code had the effect of precluding the courts from considering any action to enforce obligations or agreements based on an illegal cause and such actions were to be declared inadmissible.

(2) The question of whether the underlying cause of an international contract was illegal was to be decided in accordance with the law of the contract. It was for the judge to determine the applicable law in the absence of any explicitly chosen lex contractus. Before examining this question, it was necessary to examine the contract from the angle of Belgian international public policy, which prevented giving effect in Belgium to rules of foreign law which would normally have been applicable by virtue of a conflict of laws rule.

(3) The Belgian Law of 11 September 1962 governing the sale of arms, as amended by the Law of 19 July 1968 concerning the import, export and transit of goods, was a matter of Belgian international public policy. These laws provided that such sales were regulated by ministerial decrees laying down a system of licences whose purpose was to guarantee the internal and external security of the country and the performance of treaty obligations affecting security, as well as to secure compliance with the decisions and recommendations of international organizations and respect for the general principles of law and humanity recognized by civilized nations.

The domestic legislation concerning arms sales therefore formed part of Belgian public policy. The statement that they were to be governed by the underlying principle of securing respect for the general principles of law and humanity recognized by civilized nations, constituted a reference to international public policy and an application of international jus cogens, even though international law did not...

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