by Aparajita Mishra and Amit Shankar
Hidayatullah National Law University, Raipur, India.
Conflict of laws is that branch of international
law that regulates all cases involving a "foreign" law
element, where a difference in result will occur depending on which laws are
applied as the lex causae[1].
·
Firstly, it
is concerned with determining whether the proposed forum has jurisdiction
to adjudicate and is the appropriate venue
for dealing with the dispute[2],
and,
·
Secondly,
with determining which of the competing state's
laws are to be applied to resolve the dispute? It also deals with the enforcement of foreign judgments[3].
In justifying the reference to the foreign law, English Judges have
frequently used the term comity of nations “a phrase which is grating to the
ear, when it proceeds from a court of justice”[4]
In the opinion of Frederick Harrison in ‘Jurisprudence and the Conflict of
Laws’, “It starts up unexpectedly in any court and in the midst of any process.
It may be sprung like a mine in a plain common law action…”
The
first instances of conflict of laws can be traced to Roman law
where parties from foreign countries would go before a praetor perigrinus in Rome to plead their
case. The praetor perigrinus would
often choose to apply the law native to the foreign parties rather than Roman
law[5].
· The Rise of Nations
The scene regarding the international compatibility of laws changed with the rise of nationalism in the 18th Century when nation states and national laws developed.
· The early rules
Influenced by the personal law theory of the 13th century statutes, the Civil Code of France, 1804 at Art.3, third paragraph, invoked the law of the citizen for questions of status and capacity:
"The laws concerning the status and capacity of persons govern French citizens, even those residing in foreign countries.[6]"
Napoleon believed that, because
the French Civil Code was so superior, all French citizens should benefit from
it, wherever they were. He also believed that he was entitled to conquer the
world by war to impose his law and to bring peace. The modern field of conflicts emerged in the
United States during the 19th century with the publishing of Joseph Story's
treatise on the Conflict of Laws in 1834. Story's work had a great influence on
the subsequent development of the field in England such as those written by A.V. Dicey.
Much of the English law then became the basis for conflict of laws for most
commonwealth countries.
Drawing the lines
Courts
faced with a choice of law issue have a two-stage process:
Illustrating the enigma
Suppose that A, who has a French
nationality and residence in Germany, corresponds with B who has American
nationality, domicile in Arizona, and residence in Austria, over the internet.
They agree the joint purchase of land in Switzerland, currently owned by C who
is a Swiss national, but they never physically meet, executing initial contract
documents by using fax
machines, followed by a postal exchange of hard copies. A pays his share of the
deposit but, before the transaction is completed, B admits that although he has
capacity to buy land under his lex domicilii and the law of his
residence, he is too young to own land under Swiss law. The rules to determine
which courts would have jurisdiction and which laws would be applied to each
aspect of the case are defined in each state's laws so, in theory, no matter
which court in which country actually accepts the case, the outcome will be the
same (albeit that the measure of damages might differ from country to country
which is why forum shopping is such a problem)[13].
In reality, however, moves to harmonize the conflict system have not reached the point where
standardization of outcome can be guaranteed[14].
Many contracts and other forms of legally binding
agreement include a jurisdiction or arbitration
clause specifying the parties' choice of venue for any litigation[15].
Then, choice of law clauses may specify which
laws the court or tribunal should apply to each aspect of the dispute[16].
This matches the substantive policy of freedom of contract. Judges have accepted that
the principle of party autonomy allows the parties to select the law most
appropriate to their transaction[17].
Obviously, this judicial acceptance of subjective intent excludes the
traditional reliance on objective connecting factors, but it does work well in
practice[18].
Generally, when the court is to apply a
foreign law, it must be proved by foreign law experts. It cannot merely be
pleaded, as the court has no expertise in the laws of foreign countries nor in
how they might be applied in a foreign court[19].
Such foreign law may be considered no more than evidence,
rather than law because of the issue of sovereignty. If the local court is
actually giving extraterritorial effect to a foreign law, it is less than
sovereign and so acting in a way that is potentially unconstitutional[20].
The theoretical responses to this issue are:
On one hand, this notion is used to describe the situation where a local
court applies a rule other than the Lex fori[21]
(local law).
On the other hand, it could mean that the rule is being applied to a
factual situation that occurred beyond the territory of its state of origin. As
an example of this situation, one can think of an American court applying the
British Torts Statute to a car accident that took place in London where both
the driver and the victim are British citizens but the lawsuit was brought in
before the American courts because the driver's insurer is American. One can
then argue that, since the factual situation is within the British territory,
where an American judge applies the English Law, he doesn't give an
extraterritorial application to the foreign rule. In fact, one can also argue
that the American judge, had he applied American Law, would be doing so in an
extraterritorial fashion[22].
Once the lex causae
has been selected, it will be respected except when it appears to contravene an
overriding mandatory rule of the lex fori[23].
Each judge is the guardian of his or her own principles of ordre public
(public order) and the parties cannot, by their own act, oust the fundamental
principles of the local municipal law which generally underpin areas such as
labour law, insurance, competition regulation, agency rules, embargoes,
import-export regulations, and securities exchange regulations[24].
Furthermore, the lex fori will prevail in cases where an application of
the lex causae would otherwise result in a fundamentally immoral
outcome, or give extraterritorial effect to confiscatory
or other territorially limited laws[25].
In some countries, there is occasional evidence of parochialism when courts
have determined that if the foreign law cannot be proved to a
"satisfactory standard", then local law may be applied[26].
In the United Kingdom, in the absence of evidence being led, the foreign law is
presumed to be the same as the lex fori. Similarly, judges might assume
in default of express evidence to the contrary that the place where the cause
of action arose would provide certain basic protections, e.g. that the foreign
court would provide a remedy to someone who was injured due to the negligence
of another[27]. Finally,
some American courts have held that local law will be applied if the injury
occurred in an "uncivilized place that has no law or legal system",
as was the case in Walton v. Arabian American Oil Co.[28].
If the case has been submitted to arbitration
rather than a national court, say because of a forum selection clause, an
arbitrator may decide not to apply local mandatory policies in the face of a
choice of law by the parties if this would defeat their commercial objectives[29].
However, the arbitral award may be challenged in the country where it was made
or where enforcement is sought by one of the parties on the ground that the
relevant ordre public should have been applied[30].
If the lex loci arbitri has been ignored, but
there was no real and substantial connection between the place of arbitration
and the agreement made by the parties[31],
a court in which enforcement is sought may well accept the tribunal's decision[32].
But if the appeal is to the courts in the state where the arbitration was held,
the judge cannot ignore the mandatory provisions of the lex fori[33].
The term "proper law of the contract" was
first used over 100 years ago by Westlake, who defined it as "the law of
the country with which the contract has its most real connection."
In 1940, Morris and
Cheshire published an essay, titled "The Proper Law of a Contract in the
Conflict of Laws", and the term was taken up by that great innovator, Lord
Denning, in 1972 in Boissevain v. Weil[34],
where he said:
"According
to private international law, when a British subject who is residing in the
United States borrows dollars from an American, the validity of the contract to
repay - that is to say, the question whether it creates legal obligations or
not - depends on the proper law of the contract and that depends not so much on
the place where it is made, nor even on the intention of the parties, or on the
place where it is to be performed, but on the place with which it has the most
substantial connection."
Morris also introduced the term "proper law of the tort[35]"
in 1951 which he defined as:
"...
the law which, on policy grounds, seems to have the most significant connection
with the chain of acts and consequences in the particular situation before
us."
The "closest and most real connection" is seen in contract[36],
and in tort[37] "the
most significant relationship". It is also seen in the Restatement Second,
1969 as "the most significant relationship" in tort[38]
and in contract[39]. Russell J.
Weintraub has gone beyond the evaluating of interests and has developed
abbreviated choice of law rules for both torts and contracts[40].
Sec. 188 of the Restatement
Second of 1969 is as follows:
"The rights and
duties of the parties with respect to an issue in contract are determined by
the local law of the state which, with respect to that issue, has the most
significant relationship to the transaction and the parties under the
principles stated in sec. 6."
The theme runs like a
thread through Dicey & Morris and the Restatement Second. It was a finding
of extraordinary importance. It is the basic concept today of most conflict of
law legislation, national or international[41].
The concept of "the most
significant connection" or "the
closest and most real connection", principally the work of Morris
in contract and tort[42],
is the greatest contribution ever to the theory and practice of conflict law[43].
To apply one national legal system
as against another may never be an entirely satisfactory approach[44].
The parties' interests may always be better protected by applying a law
conceived with international realities in mind. The Hague Conference on Private
International Law is a treaty organisation that oversees conventions
designed to develop a uniform system[45].
The deliberations of the conference have recently been the subject of
controversy over the extent of cross-border jurisdiction[46]
on electronic commerce and defamation
issues[47].
There is a general recognition that there is a need for an international
law of contracts, for example, many nations have ratified the Vienna
Convention on the International Sale of Goods, the Rome Convention on the Law Applicable to Contractual
Obligations offers less specialized uniformity, and there is
support for the UNIDROIT Principles of International Commercial Contracts,
a private restatement, all of which represent continuing efforts to produce
international standards as the internet and other technologies encourage ever
more interstate commerce. But other branches of the law are less well served
and the dominant trend remains the role of the forum law rather than a supranational
system for Conflict purposes[48].
Whether the domestic courts of the Member States would be consistent in
applying those letters is speculative[49].
In a
recent decision, Richman v Ben-Tovim[50]
the Supreme Court of Appeal of South Africa decided that the mere physical
presence of the defendant in the foreign jurisdiction at the time process was
served is a sufficient basis for international jurisdiction in the context of
the recognition and enforcement of foreign judgements sounding in money. The
step may not be a conclusive dictate of unification but it definitely
symbolizes the concern and fortitude of the courts of law to walk the extra
mile for the unification of law through the conflict process.
Unfortunately, the interpretations of these utterances have circumstantially
yielded little to the minds interpreting Private International Law[51].
The conflict of law in spite of all odds keeps succeeding in the
endeavor to provide justice beyond frontiers, and the unification thereof.
* The Authors Aparajita Mishra and Amit Shankar are students in the third and fifth year of law respectively at Hidayatullah National Law University, Raipur, India.
[1] See generally North P. & Fawcett J. “Private International Law”, Edn.13, Butterworths, 2004, p.35-45.
[2] Eg Amin Rasheed Shipping Corpn v Kuwait Insurance Co. [1984] AC 50 at 65; Spiliada Maritime Corpn v Cansulex Ltd. [1987] AC 460 at 477, Societte Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] AC 871 at 895.
[3] Re Bonacina [1912] 2 Ch 394; and see now the Contracts (Applicable Law) Act 1990.
[4] De Nova (1964) 8 Am JLH 136, 141, citing the earlier American author, Livermore.
[5] George James P. & Teller Anna K. Conflict Of Laws 56 SMU L. Rev. 1283.
[6] Translation of the text from French.
[7] Monsanto Co. v. Boustany, 73 S.W.3d 225 (Tex. 2002).
[8] American Law Institute. Restatement of the Law, Second: Conflict of Laws. St. Paul: American Law Institute.
[9] See the Civil Jurisdiction and Judgements Act 1982.
[10] Dicey & Morris, The Conflict of Laws, Sweet and Maxwell, Vol. 1, edn.12 3rd impression, London, 1993.
[11] ‘Mancini’ advanced the lex patriae theory further in the second half of the nineteenth century, opening the door wider to the application of foreign law in conflicts cases.
[12] Lauritzen v. Larsen, 345 U.S. 571, 1953 AMC 1210 (1953), Hellenic Lines, Ltd. v. Rhoditis, 398 U.S. 306, 1970 AMC 994 (1970).
[13] For detailed discussion about these rules in different nations altogether, see generally writings by Cheshire & North and J.H.C. Morris in England; Scoles & Hay in the United States; Batiffol & Lagarde, Mayer and Loussouarn & Bourel in France; Castel, McLeod and Groffier in Canada; and Sykes & Pryles and Nygh in Australia.
[14] North, Peter & Fawcett James. (1999). Cheshire and North's Private International Law (13th edition). London: Butterworths.
[15] See generally e.g., Owens Corning v. Carter, 997 S.W.2d 560 (Tex. 1999).
[16] Nat'l W. Life Ins. Co. v. Rowe, 86 S.W.3d 285.
[17]
See generally Brokaw v Seatrain U.K. Ltd. [1971] 2 Q. B. 476 (C.A).
[18] Dicey and Morris on the Conflict of Laws (13th edition) (edited by Albert V. Dicey, C.G.J. Morse, McClean, Adrian Briggs, Jonathan Hill, & Lawrence Collins). London: Sweet & Maxwell 2000.
[19] See generally Mayo v. Hartford Life Ins. Co., 220 F. Supp. 2d 714.
[20]
Sprigman Chris, “Why The Hague Convention On Jurisdiction Threatens To
Strangle E-Commerce And Internet Free Speech” can be accessed at
http://writ.news.findlaw.com/scripts/printer_friendly.pl?page=/commentary/20010927_sprigman.html
[21] See also, The Arctic Explorer, 590 F. Supp. 1346, 1984 AMC 2413 (S.D. Tex. 1984).
[22] Brown Ian, “Conflict of Laws” Old Bailley Press, Second Edition, 2004.
[23] Amchem Products v. B.C. Workers, [1993] 1 S.C.R. 897.
[24] See also, Max Planck Institute for Comparative and International Private Law publication available at http://www.mpipriv.de
[25] Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 497 (1941).
[26] Russell J. Weintraub, Commentary on the Conflict of Laws 649-95 (4th ed. 2001).
[27] See generally, Gamogab v Akiba [2007] FCAFC 74 (18 July 2007).
[29] Reed, Alan. (2003). Anglo-American Perspectives on Private International Law. Lewiston, N.Y.: E. Mellen Press.
[30] William Tetley, "The On-Going Saga of Canada's Conflict of Law Revolution - Theory and Practice (1998-2001)” (2004) 24 IPRax Magazine, no. 5 (Sept.-Oct. 2004) 457-473.
[31] O.T. Africa Line Limited v. Magic Sportswear, [2004] EWHC 2441 (Comm.), [2004] All ER (D) 49 (Q.B.).
[32] Turner v. Grovit, [2004] 2 Lloyd's Rep. 169.
[33] Schneider Nat'l Transp. v. Ford Motor Co., 280 F.3d 532.
[34] [1949] l K.B. 482, at pp. 490-491 (C.A.).
[35] See supra note no.21.
[36] Dicey & Morris, 11 Ed., 1987, in contract (at Rule 180).
[37] Dicey & Morris, (at Rule 204, 11 Ed., 1987 and Rule 202, 12 Ed., 1993).
[38] Sec. 145 Restatement Second of 1969.
[39] Sec. 188 Restatement Second of 1969.
[40] See supra note no.27.
[41] William Tetley, Glossary of Conflict of Laws (P.I.L.) Terms.
[42] See also Vita Food Products, [1939] A.C. 277, (1939) 63 Ll.L. Rep. 21, 1939 AMC 257, [1939] 2 D.L.R. 1 (P.C.) and The Halcyon Isle, [1981] A.C. 221, [1980] 2 Lloyd's Rep. 325, 1980 AMC 1221 (P.C.)
[43] See “American Society of Comparative Law”can be accessed at http://www.comparativelaw.org/
[44] William Tetley, “A Canadian Looks at American Conflict of Law Theory and Practise, Especially in the Light of American Legal and Social Systems (Corrective v. Distributive Justice)”, 38 Col. J. Transnat’l L. 299-373.
[45] See also William Tetley, “Current Developments in Canadian Private International Law (1s996-1998)” (1999) 78 Can. Bar. Rev. 152-199.
[46] Magic Sportswear Corp. v. O.T. Africa Line Ltd., [2004] FC 1165.
[47] William Tetley, “New Developments in Private International Law: Tolofson v. Jensen and Gagnon v. Lucas”, (1996) 44 Am. J. Comp. Law 647-668.
[48] Fluor Australia Pty Ltd v ASC Engineering Pty Ltd. [2007] VSC 262 (17 July 2007).
[49] See Scoles F. Eugene & Hay Peter, Conflict of Laws 360-71 (2d ed. 1992).
[50] 2007 2 SA 283 (SCA); [2007] 2 All SA 234 (SCA).
[51] Jr. Haight Charles S. “ARBITRATION AND THE COURTS: SOME RECENT AMERICAN CASES”
Senior United States District Judge, for the Southern District of New York.