Choice of law

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Choice of law is a procedural stage in the litigation of a case involving the conflict of laws when it is necessary to reconcile the differences between the laws of different legal jurisdictions, such as sovereign states, federated states (as in the US), or provinces. The outcome of this process is potentially to require the courts of one jurisdiction to apply the law of a different jurisdiction in lawsuits arising from, say, family law, tort, or contract. The law which is applied is sometimes referred to as the "proper law." Dépeçage is an issue within choice of law.

Contents

Sequence of events in conflict cases in Common Law jurisdictions

  1. Jurisdiction. The court selected by the plaintiff must decide both whether it has the jurisdiction to hear the case and, if it has, whether another forum is more suitable (the forum non conveniens issue relates to the problem of forum shopping) for the disposition of the case. Naturally, a plaintiff with appropriate knowledge and finance will always commence proceedings in the court most likely to give a favourable outcome. This is called forum shopping and whether a court will accept such cases is always determined by the local law.
  2. Recognition of foreign judgments. Even where a conflict of laws exists, the court will recognize the validity of a foreign judgment in most cases. Under U.S. law, this authority is part of the Full Faith and Credit Clause of the U.S. Constitution. Under international law, this authority is part of the doctrine of comity. The court will invoke comity by its discretion and will usually look to two factors before using its discretionary powers: did the foreign court have jurisdiction, and were fair procedures used in adjudicating the case? Under English law, it is the doctrine of obligation. Within the European Union the Brussels Recast Regulation determines jurisdiction and recognition.
  3. Characterization. The court then allocates each aspect of the case as pleaded to its appropriate legal classification. Each such classification has its own choice of law rules but distinguishing between procedural and substantive rules requires care. The court may have adopted a rule of law which prevents it from applying any procedural law other than its own. This can include the court's own choice of law rules. A danger exists if the choice of law requires that a case be heard elsewhere due to the forum's lack of expertise in deciding an issue of foreign law.
  4. The court then applies the relevant choice of law rules. In a few cases, usually involving family law, an incidental question can arise which will complicate this process. The United States has adopted a law that almost universally eliminates incidental questions involving family law. The Uniform Child Custody Jurisdiction and Enforcement Act (UCCJEA) requires states to apply the law of the "home state;" that is, the forum which originally determined custody and maintenance. A state court will only apply its own law when no parent retains a connection with the original jurisdiction and when substantial evidence is available in its forum to make a custody or maintenance determination.

Choice-of-law stage

The "traditional approach" looks to territorial factors, e.g. the domicile or nationality of the parties, where the components comprising each cause of action occurred, where any relevant assets, whether movable or immovable, are located, etc., and chooses the law or laws that have the greatest connection to the cause(s) of action. [1] Even though this is a very flexible system, there has been some reluctance to apply it and various "escape devices" have developed, which allow courts to apply their local laws (the lex fori ) even though the disputed events took place in a different jurisdiction. The parties themselves may plead the case either to avoid invoking a foreign law or agree to the choice of law, assuming that the judge will not of his or her own motion go behind the pleadings. Their motive will be pragmatic. Full-scale conflict cases take longer and cost more to litigate. However, the courts in some states[ vague ] are predisposed to prefer the lex fori wherever possible.[ citation needed ] This may reflect the belief that the interests of justice will be better served if the judges apply the law with which they are most familiar, or it may reflect a more general parochialism in systems not accustomed to considering extraterritorial principles of law. One of the most common judicial strategies is to skew the characterization process.[ citation needed ] By determining that a claim is one involving a contract instead of tort, or a question of family law instead of a testamentary issue, the Court can change the choice of law rules. For example, if an employee is hired by an employer in State A, is injured due to the employer's negligence in State B, and files a lawsuit to recover for the injury in State A, the court in State A might look to the employment contract to see if it contained a clause that governed the employer's duty of care with respect to the employee. If so, the court may be able characterize the claim as a breach of the contract, instead of a tort, and apply the law of the State A either because it was the place where the contract was made (the lex loci contractus ) or, if it were the place where the wage or salary was to be paid, where the contract was intended to be performed (the lex loci solutionis ).[ citation needed ]

In this context, since the 1960s, the courts in the United States began developing a number of new approaches, as well as new escape devices.[ citation needed ] This reflects the number of different laws that might be relevant in any given case before an American court. There is significant interstate trade and social mobility, and with the laws of each state of the Union representing a possible opportunity for conflict, it was necessary to produce a coherent system that could be applied in the courts of all fifty states.[ citation needed ]

Renvoi

To limit the damage that would result from forum shopping, it is desirable that the same law is applied to achieve the same result no matter where the case is litigated. The system of renvoi, which literally means "send back", is an attempt to achieve that end.

Traditional approach

The traditional approach is based on the idea that the territorial sovereignty of states must be respected. For example, when an event happens in a state that gives rise to a lawsuit – if two parties are involved in an automobile accident, for example – that state in which the accident occurred provides the parties with certain "vested rights". These rights include such things as the ability of a plaintiff to file a lawsuit, the imposition of a statute of limitations to prevent a defendant from being subjected to a lawsuit after too much time has passed, limitations on recovery, and specified burdens of evidence. These so-called vested rights compete with the policy claims of other states for their laws to be applied. What follows is a generalised summary of the rules. The approach in the U.S. is rather different (see Conflict of laws in the United States).

Status

Status is relevant for a wide array of issues. Self-evidently, unless the proposed litigant has legal personality, there will be no jurisdiction. It will also be relevant to immigration, entitlement to social security and similar benefits, family law, contract, etc. The choice of law rule, the law of the domicile ( lex domicilii ) if the forum is common law or law of nationality ( lex patriae ) or habitual residence if the forum is civil law, applies to determine all question of status and its legal attributes. The lex fori determines the domicile, nationality or habitual residence, and applies that law to establish an in rem set of rights and capacities. Thus, under some laws, the status of illegitimate affects the rights of inheritance in the case of an intestacy, etc. As to corporations, the choice of law rule is the law of incorporation (the lex incorporationis ) for all matters of capacity, validity, shareholders' rights, etc.

Contracts

The choice of law rules for contracts are more complicated than the law affecting other obligations because they depend on the express or implied intentions of the parties and their personal circumstances. For example, questions as to whether a contract is valid may depend on the capacity of the parties to enter into a contract. This could be decided by reference to the lex domicilii, lex patriae or habitual residence of the parties, or for policy reasons, by reference to the lex loci contractus (where the contract was made). But, if the contract was made electronically, where the contract was actually made must first be decided either by the lex fori or the putative proper law depending on the forum rules. There may also be problems if the parties selected the place where the contract was made in the hope of evading the operation of some mandatory provisions in another relevant law.

On the other hand, deciding matters relating to performance will usually depend on the lex loci solutionis. Another unique characteristic of contracts is that the parties can decide which law should apply for most purposes, and memorialize that decision into the contract itself (see forum selection clause and choice of law clause) although not every jurisdiction will enforce such provisions. For the harmonising provisions on contractual obligations in EU law, see the Rome Convention (contract).

The Rome I Regulation constrains the choice of law for special types of contracts. With a view to the weaker parties, such as consumers, employees and insurants, special choice of law rules are laid down by articles 5-8. The most important rules for companies, mostly closing contracts with consumers, are listed in Art. 6. Art. 6 (I) defines the consumer contract as a contract where the consumer acts as a private person whereas the businessman acts for his commercial purpose. This articles also says that in absence of an explicit choice of law, a protected consumer contract is governed by the law of the consumer's habitual residence. In Art. 6 (II) the involved parties are given the possibility of a free choice of law. But the choice of law is legally void, if the consumer protection is limited by this choice. [2]

Tort

The presumptive rule for tort is that the proper law applies. This is the law that has the greatest relevance to the issues involved. In public policy terms, this is likely to be the law of the place where the key elements of the "wrong" were performed or occurred (the lex loci delicti commissi ). As established in the case of Boys v Chaplin [1969], both plaintiff and defendants were British Soldiers Residents Stationed in Malta. Having an accident in Malta the court looked at the Lex Loci relating to its dual action-ability.

Family law

As to marriage, both formal and common law, the general rule is the lex loci celebrationis determines its validity, i.e. the law of the place where the marriage is celebrated, unless the purpose of the marriage offends a public policy of the domicile/nationality/habitual residence state. Hence, some states limit the capacity of their citizens to celebrate a monogamous marriage to a person of the opposite biological sex, or prohibit marriage between degrees of consanguinity, etc. Questions of nullity and divorce straddle Family Law and status because the outcome of the judicial proceedings affects status and capacities, and also overlap with the more general question of when the courts of one state will recognize and enforce the judgments of another state.

Property

The rule for immovable property (called real property in common law states) is that the lex situs applies to all questions of title. Movable property (called personal property in common law states) claims are governed by the law of the state in which the property is located at the time the rights are supposedly created. An important distinction, however, must be made for a contract which has some incidental effect on property, both immovable and movable, such as a loan with property pledged as a collateral. If the property is incidental to the contract, then the contract is evaluated under traditional choice of law principles for a contract. If, however, the primary purpose of the contract is to transfer the property, then the entire contract will be evaluated under the law of the state where the property is located.

Trusts and succession

Where an inter vivos or testamentary trust includes immovables, reference must be made to the lex situs on all aspects relating to title and land use. Similarly, title to movables including choses in action, should be determined by lex situs, i.e. the law of place where each item is located at the time the trust is created. Once created, all questions of administration are governed by the law specified in the trust instrument. In the unlikely event that the instrument is silent, the trust would be governed by the proper law.

All questions of prenuptial trusts and transfers are determined by the law of the transferor's domicile, nationality or habitual residence at the time of the marriage.

All questions relating to wills (and, as an incidental question, any testamentary trusts which the will purports to create), are governed by the law of domicile, nationality or habitual residence at the time of death. Questions of title affecting immovables are determined under the lex situs.

Illustration: Mr. "Z" died in US leaving immovable properties in US and other immovable properties in Kilimanjaro Tanzania. "lex situs" the law applicable would be of the place where the immovable is located. that is to say those in US to be administered according to the US laws and those in Tanzania according to the laws of Tanzania.(2013)

Related Research Articles

Conflict of laws is the set of rules or laws a jurisdiction applies to a case, transaction, or other occurrence that has connections to more than one jurisdiction. This body of law deals with three broad topics: jurisdiction, rules regarding when it is appropriate for a court to hear such a case; foreign judgments, dealing with the rules by which a court in one jurisdiction mandates compliance with a ruling of a court in another jurisdiction; and choice of law, which addresses the question of which substantive laws will be applied in such a case. These issues can arise in any private-law context, but they are especially prevalent in contract law and tort law.

Forum non conveniens (FNC) is a mostly common law legal doctrine through which a court acknowledges that another forum or court where the case might have been brought is a more appropriate venue for a legal case, and transfers the case to such a forum. A change of venue might be ordered, for example, to transfer a case to a jurisdiction within which an accident or incident underlying the litigation occurred and where all the witnesses reside.

In law and conflict of laws, domicile is relevant to an individual's "personal law", which includes the law that governs a person's status and their property. It is independent of a person's nationality. Although a domicile may change from time to time, a person has only one domicile, or residence, at any point in their life, no matter what their circumstances. Domicile is distinct from habitual residence, where there is less focus on future intent.

<span class="mw-page-title-main">Forum selection clause</span> Contract clause which requires disputes to be resolved in a given manner or court

In contract law, a forum selection clause in a contract with a conflict of laws element allows the parties to agree that any disputes relating to that contract will be resolved in a specific forum. They usually operate in conjunction with a choice of law clause which determines the proper law of the relevant contract.

In conflict of laws, renvoi is a subset of the choice of law rules and it may be applied whenever a forum court is directed to consider the law of another state.

Characterisation, or characterization, in conflict of laws, is the second stage of the procedure to resolve a lawsuit that involves foreign law. The process is described in English law as Characterisation, or classification within the English judgments of the European Court of Justice. It is alternatively known as qualification in French law.

In all lawsuits involving conflict of laws, questions of procedure as opposed to substance are always determined by the lex fori, i.e. the law of the state in which the case is being litigated.

Incidental questions in private international law with respect to the problems and elements discussed below

In the conflict of laws, the validity and effect of a contract with one or more foreign law elements will be decided by reference to the so-called "proper law" of the contract.

In conflict of laws, the choice of law rules for tort are intended to select the lex causae by which to determine the nature and scope of the judicial remedy to claim damages for loss or damage suffered.

Conflict of laws in the United States is the field of procedural law dealing with choice of law rules when a legal action implicates the substantive laws of more than one jurisdiction and a court must determine which law is most appropriate to resolve the action. In the United States, the rules governing these matters have diverged from the traditional rules applied internationally. The outcome of this process may require a court in one jurisdiction to apply the law of a different jurisdiction.

In conflict of laws, the term lex loci is a shorthand version of the choice of law rules that determine the lex causae.

In modern society, the role of marriage and its termination through divorce have become political issues. As people live increasingly mobile lives, the conflict of laws and its choice of law rules are highly relevant to determine:

Conflict of marriage laws is the conflict of laws with respect to marriage in different jurisdictions. When marriage-related issues arise between couples with diverse backgrounds, questions as to which legal systems and norms should be applied to the relationship naturally follow with various potentially applicable systems frequently conflicting with one another.

In contract law, the lex loci contractus is the Law Latin term meaning "law of the place where the contract is made". It refers to resolving contractual disputes among parties of differing jurisdictions by using the law of the jurisdiction in which the contract was created.

In conflict of laws, habitual residence is the standard used to determine the law which should be applied to determine a given legal dispute or entitlement. It can be contrasted with the law on domicile, traditionally used in common law jurisdictions to do the same thing.

<span class="mw-page-title-main">Hague Trust Convention</span> 1985 treaty on international trust law

The Hague Convention on the Law Applicable to Trusts and on their Recognition, or Hague Trust Convention is a multilateral treaty developed by the Hague Conference on Private International Law on the Law Applicable to Trusts. It concluded on 1 July 1985, entered into force 1 January 1992, and is as of September 2017 ratified by 14 countries. The Convention uses a harmonised definition of a trust, which is the subject of the convention, and sets conflict rules for resolving problems in the choice of the applicable law. The key provisions of the Convention are:

<span class="mw-page-title-main">Convention on the Law Applicable to Contractual Obligations 1980</span> Choice of law in contract disputes

The Convention on the Law Applicable to Contractual Obligations 1980, or the "Rome Convention", is a measure in private international law or conflict of laws which creates a common choice of law system in contracts within the European Union. The convention determines which law should be used, but does not harmonise the substance. It was signed in Rome, Italy on 19 June 1980 and entered into force in 1991.

<i>Tolofson v Jensen</i> Supreme Court of Canada case

Tolofson v Jensen, [1994] 3 S.C.R. 1022 is a landmark decision of the Supreme Court of Canada on conflict of laws in tort. The Court held that the primary determiner in selecting a country's law in tort should be the lex loci. The case was decided with Lucas v Gagnon.

<span class="mw-page-title-main">Jurisdiction under the Brussels I Regulation</span>

The Brussels I Regulation contains a jurisdictional regime: the rules which courts of European Union Member States use to determine if they have jurisdiction in cases with links to more than one country in the European Union. The basic principle is that the court in the member state of the party that gets sued has jurisdiction, while other grounds exist, which are diverse in content and scope, and are often classified in descending order of exclusivity and specificity. The original Brussels Regulation (44/2001) is, with regard to jurisdiction rules, very similar to the 2007 Lugano Convention, containing the same provisions with the same numbering. Numbering and certain substantial issues are different in the 2012 recast version of the Regulation, which has applied since 1 January 2015 (1215/2012).

References

  1. "Conflict of laws - Choice of law". Encyclopedia Britannica. Retrieved 2021-02-18.
  2. Koch, Harald; Magnus, Ulrich; Winkler von Mohrenfels, Peter: IPR und Rechtsvergleichung §5 No.15-16. C.H. Beck, München 2004, ISBN   3-406-50945-2. (in German)