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It is important to determine the applicable law in order to avoid surprises.
Parties can use choice of law clauses to do so. Mainly when discussing the
following it appears that jurisdictions can provide for different rules which
can ultimately result in costly differences: rules on liability, rules on how to
limit warranty, rules determining the time window within which warranty
claims must be enforced, rules setting out limits to contractual penalties, or
consumer protection aspects. To make an agreement, entrepreneurs must
have clarity on what jurisdiction shall provide the answers to their
questions.
Not choosing the applicable law usually would be negligent. If the parties
have not chosen the governing law in the contract answering the question
as to which law governs can be a very difficult legal issue leading to legal
uncertainty. If the parties do not include valid choice of law clause into the
agreement most jurisdictions provide the following rules:
Registered Office of Cloud Service Provider: The Cloud service
agreement is typically governed by the law of the country, in which
the Cloud service provider has its registered office.
Server Location / location of the datacentre: In some circumstances –
such as when procuring IaaS Services, the service may have a
significant connection to specific immovable infrastructure (e.g. a
datacentre). Then, the law at the location of the datacentre can be
relevant.
Choosing the governing law may be subject to constraints, namely if
minimum standards of public interest apply, including regulations such as
compliance matters, criminal law matters, tax law matters and questions as
to whether uploaded information is copyrightable or not. Also, choice of
legal rules may not be fully enforceable in agreements with consumers.
Where a court in the EU has jurisdiction for judging a dispute (and the case
is not a case of national law only, where both parties reside in the same
country court), there are no especially high requirements for the validity of
the choice of governing law. The parties may agree in writing (including
general Terms and Conditions), or orally on the choice of law. If the court of
jurisdiction is outside of the EU, the rules of the respective jurisdiction will
apply. It may be the case that there are special requirements for validly
choosing the applicable law to a contract.
