Conflict of Laws in Civil Liability Arising from Unfair Competition in French Law, Rome II Regulations, and Iranian Law

One of the important issues of private international law is the conflict of laws in the determination of the governing law in tort law. This is because, on the one hand, there are no international uniform rules in the field of tort liability, and on the other hand, due to the fact that the basis of tort liability in the laws of different countries is different and is based on theories of fault, risk, and guarantee of right, as the case may be, and also due to the lack of agreement on the effective connecting factor in the legal events that are the source of this liability, there is a difference between the substantive rules and regulations of countries in this field. Therefore, the discussion of the governing law in the conflict of laws regarding tort liability and the question of which country's law should govern is important due to the substantive differences between the internal laws of countries. Because depending on which country's law the matter is subject to, the judgment of the matter will be different.
One of the above topics is finding the governing law for liability arising from unfair competition. In cases where an international factor is involved in unfair competition, the effects of this behavior are related to two or more countries. In this case, the said act may affect the market of one or more countries or harm the interests of one or more commercial competitors in one or more countries. Given that the rules governing unfair competition differ from country to country, this leads to a conflict of laws in this important and practical matter. Therefore, determining the governing law of civil liability arising from the harmful effects of this competition is of great importance. In this regard, the question is whether it is possible to determine and implement a conflict rule for unfair competition for all its cases, or whether it is necessary to use several conflict rules on a case-by-case basis? And what is the appropriate conflict rule in this regard?
In short, there are different views on the governing law of tort liability in the conflict of laws, the most important of which are the competence of: the law of the place where the tortious act occurred, the law of the place where the damage occurred, the law of the domicile of the injured party, the law of the domicile of the tortfeasor, the law of the common domicile of the injured party and the tortfeasor, the appropriate law, the law consistent with the interests of the state, and the law that has the most connection with the tortious event. In the case of unfair competition, most countries prefer to apply the law of the place where the damage occurred rather than the law of the place where the act occurred. Therefore, it is necessary to choose a criterion based on which the place of occurrence of the damage can be determined. A large part of the doctrine believes that one should look for the market that has been harmed by the act of unfair competition. The principle of connection with the law of the country whose market has been harmed has been accepted in the national legislation of many countries, including Austria, Switzerland, the Netherlands, Spain, and Belgium. However, in some other countries, including France, the silence of the law in this area has been filled by judicial practice.
In Iranian law, despite the fact that the legislator has laid down conflict rules for various categories of connections, including contractual liabilities, the Iranian legislator is silent on the issue of tort liabilities, including liability arising from unfair competition. There is also no judicial practice in this regard, and only through the obligation of Article 5 of the Civil Code (which expresses the territorial principle of laws) and the unity of criteria of Article 968 of the Civil Code (which relates to the governing law of contractual obligations) can the governing law of tort liability in the conflict of laws in Iranian law be inferred (the rule of local law, whether the law of the place where the tortious act occurred or the law of the place where the damage occurred, whichever is located in Iran).
The Rome II Regulations contain satisfactory conflict rules in this area that can be a guide for our legislators. Article 6 of the said Regulations uses different conflict rules as follows:
(a) The competence of the law of the country whose market has been harmed (paragraph 1 of Article 6);
(b) The competence of the law of the place where the damage occurred (paragraph 2 of Article 6 with reference to paragraph 1 of Article 4);
(c) The competence of the law of the common domicile of the tortfeasor and the injured party at the time of the occurrence of the damage (paragraph 2 of Article 6 with reference to paragraph 2 of Article 4);
(d) The competence of the law of the country that has the closest connection to the dispute (paragraph 2 of Article 6 with reference to paragraph 3 of Article 4).
By taking advantage of the Rome II Regulations, which are actually the latest development in determining and establishing conflict rules regarding extra-contractual liability, and which fulfill all the existing theories in this regard, we can reach this conclusion:
Since determining a specific law, such as the local law, as a general conflict rule for all cases of unfair competition, leads to unacceptable and unsatisfactory results, it is better to choose a rule such as the place of damage rule as the main conflict rule. Additionally, in specific cases (such as the existence of a common domicile of the parties at the time of the occurrence of the damage or the existence of a connecting factor that has the closest connection to the dispute), secondary conflict rules can be chosen to allow the judge more flexibility in finding better, fairer, and more equitable solutions.
In the Rome II Regulations, the conflict rules mentioned in the three paragraphs of Article 4 are presented as a main rule and two subsidiary rules. Combining the main rule and the subsidiary conflict rule in the case of the governing law for liability arising from unfair competition avoids the criticisms related to determining a single law (being rigid and inflexible) and also the criticisms related to the mere application of the appropriate law (unpredictability and judicial arbitrariness, and the subjectivization of judicial justice). Therefore, considering that each of these two conflict rules brings part of the reality to the table, combining them is more complete than not combining them, and it can help in better implementing justice and achieving a fair and equitable outcome in each case. This can be a valuable guide for our legislator in drafting separate conflict rules for the category of extra-contractual liability arising from unfair competition in the conflict of laws.
There is no independent research on the governing law of unfair competition in our law (Iranian law). Therefore, the most important objective in this work is, on the one hand, to offer a practical suggestion for domestic courts when confronted with the issue of conflict of laws in unfair competition, which causes difficulties for them due to the lack of resources and research texts in this field. On the other hand, the objective is to present essential information that can not only justify the necessity of adopting conflict rules related to unfair competition, but also serve as a valuable guide for the legislative branch when enacting said rules.
This research examines the development of French judicial practice from the twentieth century to the present day regarding the governing law of extra-contractual liability with an emphasis on unfair competition, followed by the Rome II Regulations and finally Iranian law. Ultimately, the method of combining the main and subsidiary conflict rules is presented as the most suitable approach in this conflict of laws. The research method used is a library-based, descriptive, and analytical approach.