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Conflict of laws

Conflict of laws (or private international law) is that branch of international law and intranational interstate law that regulates all lawsuits involving a "foreign" law element where different judgments will result depending on which jurisdiction's laws are applied as the lex causae.

In civil law systems, private international law is a branch of the internal legal system dealing with the determination of which state law is applicable to situations crossing over the borders of one particular state and involving a "foreign element" (élément d'extranéité), (collisions of law, conflict of laws). Lato sensu (at large) it also includes international civil procedure and international commercial arbitration (collisions of jurisdiction, conflict of jurisdictions), as well as citizenship law (which strictly speaking is part of public law).

There are two major streams of legal thought on the nature of conflict of laws. One group of researchers regard Conflict of Laws as a part of international law, claiming that its norms are uniform, universal and obligatory for all states. This stream of legal thought in Conflict of Laws is called "universalism". Other researchers maintain the view that each State creates its own unique norms of Conflict of Laws pursuing its own policy. This theory is called "particularism" in Conflict of Laws.

Private international law is divided on two major areas:

  • Private international law "sensu stricto" comprising conflict of laws rules which determine the law of which country (state) is applicable to specific relations.
  • Private international law "sensu lato" which comprises private international law "sensu stricto" (conflict of laws rules) and material legal norms which have direct extraterritorial character and are imperatively applied (material norms of law crossing the borders of State) - usually regulations on real property, consumer law, currency control regulations, insurance and banking regulations.

In common law systems, conflict of laws, firstly, is concerned with determining whether the proposed forum has jurisdiction to adjudicate and is the appropriate venue for dealing with the dispute, 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.

Terminology

Its three different names conflict of laws, private international law, and international private law are generally interchangeable, although none of them is wholly accurate or properly descriptive. The term conflict of laws is primarily used in jurisdictions of the Anglo-Saxon legal tradition (United States, England, Canada, Australia, etc.); private international law is used in France (droit international privé) as well as in Italy, the Spanish-speaking and Portuguese-countries and Greece; international private law is used in Germany and the other German-speaking countries (internationales Privatrecht)

Within local federal systems where inter-state legal conflicts require resolution, (such as in the United States), the term conflict of laws is preferred simply because such cases are not an international issue. Hence the term conflict of laws is a more general term for a legal process for resolving similar disputes, regardless whether the relevant legal systems are international or inter-state, though this term is also criticised as being misleading in that the object is the resolution of conflicts between competing systems rather than "conflict" itself. The term conflict of laws is usually used by common law countries, while for civil law countries the term private international law is more appropriate. The term private international law was coined by American lawyer and judge Joseph Story, but was abandoned subsequently by common law scholars and embraced by civil law lawyers.

History

The first instances of conflict of laws in the Western legal tradition can be traced to Greek law. Ancient Greeks dealt straightforwardly with multistate problems, and did not create choice-of-law rules. Leading solutions varied between the creation of courts for international cases, or application of local law, on the grounds that it was equally available to citizens of all states..

More significant developments can be traced to Roman law. Roman civil law (jus civile) being inapplicable to non-citizens, special tribunals had jurisdiction to deal with multistate cases. The officers of these specialized tribunals were known as the praetor peregrini. The Praetor peregrini did not select a jurisdiction whose rules of law should apply. Instead, they "applied" the "jus gentium." The jus gentium was a flexible and loosely-defined body of law based on international norms. Thus the praetor peregrini essentially created new substantive law for each case. Today, this is called a "substantive" solution to the choice-of-law issue.

An early private international law was established in classical Islamic law and jurisprudence as a result of the vast Muslim conquests and maritime explorations during the early Middle Ages giving rise to various conflicts of laws. A will, for example, was "not enforced even if its provisions accorded with Islamic law if it violated the law of the testator." Islamic jurists also developed elaborate rules for private international law regarding issues such as contracts and property, family relations and child custody, legal procedure and jurisdiction, religious conversion, and the return of aliens to an enemy country from the Muslim world. The religious laws and courts of other religions, including Christianity, Judaism and Hinduism, were also usually accommodated in classical Islamic law, as exemplified in Islamic Spain, Islamic India, and the Ottoman Empire.

The modern conflict of laws is generally considered to have begun in Northern Italy during the late Middle Ages and in particular at trading cities such as Genoa, Piza and Venice. The need to adjudicate issues involving commercial transactions between traders belonging to different cities led to the development of the theory of statuta, whereby certain city laws would be considered as statuta personalia "following" the person whereby it may act, and other city laws would be considered as statuta realia, resulting in application of the law of the city where e.g. the res would be located (cf. lex rei sitae).

Maritime law was also a great driver of international legal rules; providing for the enforcement of contracts, the protection of shipwrecked sailors and property, and the maintaining of harbours.

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.

The stages in a conflict case

  1. The court must first decide whether it has jurisdiction and, if so, whether it is the appropriate venue given the problem of forum shopping.
  2. The next step is the characterisation of the cause of action into its component legal categories which may sometimes involve an incidental question (also note the distinction between procedural and substantive laws).
  3. Each legal category has one or more choice of law rules to determine which of the competing laws should be applied to each issue. A key element in this may be the rules on renvoi.
  4. Once it has been decided which laws to apply, those laws must be proved before the forum court and applied to reach a judgment.
  5. The successful party must then enforce the judgment which will first involve the task of securing cross-border recognition of the judgment.

In those states with an underdeveloped set of Conflict rules, decisions on jurisdiction tend to be made on an ad hoc basis, with such choice of law rules as have been developed embedded into each subject area of private law and tending to favour the application of the lex fori or local law. In states with a more mature system, the set of Conflict rules stands apart from the local private civil law and adopts a more international point of view both in its terminology and concepts. For example, in the European Union, all major jurisdictional matters are regulated under the Brussels Regime, e.g. the rule of lis alibi pendens from Brussels 1 Regulation applies in the Member States and its interpretation is controlled by the European Court of Justice rather than by local courts. That and other elements of the Conflict rules are produced supranationally and implemented by treaty or convention. Because these rules are directly connected with aspects of sovereignty and the extraterritorial application of laws in the courts of the signatory states, they take on a flavour of public rather than private law because each state is compromising the usual expectations of their own citizens that they will have access to their local courts, and that local laws will apply in those local courts. Such aspects of public policy have direct constitutional significance whether applied in the European context or in federated nations such as the United States, Canada, and Australia where the courts have to contend not only with jurisdiction and law conflicts between the constituent states or territories, but also as between state and federal courts, and as between constituent states and relevant laws from other states outside the federation.

Choice of law rules

Courts faced with a choice of law issue have a two-stage process:

  1. the court will apply the law of the forum (lex fori) to all procedural matters (including, self-evidently, the choice of law rules); and
  2. it counts the factors that connect or link the legal issues to the laws of potentially relevant states and applies the laws that have the greatest connection, e.g. the law of nationality (lex patriae) or domicile (lex domicilii) will define legal status and capacity, the law of the state in which land is situated (lex situs) will be applied to determine all questions of title, the law of the place where a transaction physically takes place or of the occurrence that gave rise to the litigation (lex loci actus) will often be the controlling law selected when the matter is substantive, but the proper law has become a more common choice.

For example, suppose that Alexandre who has a French nationality and residence in Germany, corresponds with Bob who has American nationality, domicile in Arizona, and residence in Austria, over the internet. They agree to the joint purchase of land in Switzerland, currently owned by Heidi 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. Alexandre pays his share of the deposit but, before the transaction is completed, Bob 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). In reality, however, moves to harmonise the conflictual system have not reached the point where standardisation of outcome can be guaranteed.

Conflict of law rules in matrimonial cases

In divorce cases, when a Court is attempting to distribute marital property, if the divorcing couple is local and the property is local, then the Court applies its domestic law lex fori. The work of the Judge, and the lawyers in the case becomes much more complicated if foreign elements are thrown into the mix, such as the place of marriage is different than the territory where divorce was filed, or the parties nationality and residence do not match. Or there is property in foreign jurisdictions, or the parties have changed residence several times during the marriage. These are just a few examples, and each time a spouse invokes the application of foreign law, the process of divorce slows down, as the parties are directed to brief the issue of conflict of laws, hire foreign attorneys to write legal opinions, and translations of the foreign law are required, at an extensive cost to both sides.

Different jurisdictions follow different sets of rules, as outlined below. Before embarking on a conflict of law analysis, the Court must determine whether a property agreement governs the relationship between the parties. The property agreement must satisfy all formalities required in the Country where enforcement is sought.

Whereas commercial agreements or prenuptial agreements generally do not require legal formalities to be observed, when married couples enter a property agreement, stringent requirements are imposed, including notarization, witnesses, special acknowledgment forms, and in some countries, it must be filed (or docketed) with a domestic Court, and the terms must be “so ordered” by a Judge. This is done in order to ensure that no undue influence or oppression has been exerted by one spouse against the other. Upon presenting a property agreement between spouses to a Court of divorce, that Court will generally assure itself of the following factors: signatures, legal formalities, intent, later intent, free will, no oppression, reasonableness and fairness, consideration, performance, reliance, later repudiation in writing or by conduct, and whatever else concepts of contractual bargaining apply in the context.

In the absence of a valid and enforceable agreement, here’s how the conflict of law rules work:

  • Movable v. Real Estate - In general, applicable matrimonial law depends on the nature of the property. Lex situs is applied to immovable property (i.e., real estate), and the law of matrimonial domicile applies to movable property, provided there has been no subsequent change in the spouses’ domicile.
  • Full Mutability Doctrine - property relations between spouses are governed by their latest domicile. , whether acquired before or after the marriage. This is also the norm in England, except for a few cases where severe injustice results from a harsh application. In those cases, the Court also examines whether newly acquired property can be traced back to property owned before the change.
  • Immutability Doctrine - the original personal law of the parties at the time of marriage continues to govern all property including subsequently acquired property, regardless of a later change in domicile or nationality. This is the Continental approach in France, Germany and Belgium. Also, with certain reservations, see Art. 7 of the 1976 Hague Convention on Marriage and Matrimonial Property Regimes. Also in Israel: “property relations between spouses shall be governed by the law of their domicile at the time of the solemnisation of the marriage, provided that they may by agreement determine and vary such relations in accordance with the law of their domicile at the time of making the agreement”. Note that the Israeli application of the Immutability doctrine does not distinguish between personal and real estate property. Both are subject to the law of domicile at marriage.
  • Partial Mutability or Mutability of new Acquisition - this is the American approach to conflicts of law in matrimonial property division cases. Each movable property acquired during the marriage is subject to the parties’ domicile law at the time of acquisition, and not that of the original or intermediate domicile. What was acquired before the marriage is governed by the domicile law at marriage. Thus, if rights vested in a property when and where purchased, it would not be adversely affected by a later change of domicile.
  • Lex Fori - In many cases, Courts simply avoid this complicated and expensive analysis by applying its local law to the entire property relations, even if there is a foreign element. This is based on the assumption that laws around the world are basically similar in their treatment of marriage as a co-partnership. Since the partnership can be placed in the forum, the forum’s law applies to all its aspects.

Note that Lex Fori also applies to all procedural relief (as opposed to substantive relief). Thus, issues such as the ability to grant pretrial relief, procedure and form, as well as statutes of limitations are classified as “procedure” and are always subject to domestic law where the divorce case is pending.

Pre-dispute provisions

Many contracts and other forms of legally binding agreement include a jurisdiction or arbitration clause specifying the parties' choice of venue for any litigation (called a forum selection clause). Then, choice of law clauses may specify which laws the court or tribunal should apply to each aspect of the dispute. 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. Obviously, this judicial acceptance of subjective intent excludes the traditional reliance on objective connecting factors, but it does work well in practice.

The status of foreign law

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. 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. The theoretical responses to this issue are:

  • (a) that each court has an inherent jurisdiction to apply the laws of another country where it is necessary to achieving a just outcome; or
  • (b) that the local court creates a right in its own laws to match that available under the foreign law. This explanation is sustainable because, even in states which apply a system of binding legal precedents, any precedent emerging from a conflicts case can only apply to future conflicts cases. There will be no ratio decidendi that binds future litigants in entirely local cases.
  • (c) that the national court, when applying a foreign law, does not give an extraterritorial effect but recognizes, through its own "conflict of laws rule", that the situation at hand falls under the scope of application of the foreign rule. In order to understand this argument one must first define the notion of extraterritorial application of a rule. This notion is susceptible to two distinct meanings:

On the one hand, this notion is used to describe the situation where a local court applies a rule other than the Lex fori (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 British tort statutes and case law 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 does not 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.

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. Each judge is the guardian of his 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. 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.

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. 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. 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.

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. 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. 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, a court in which enforcement is sought may well accept the tribunal's decision. 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.

Harmonisation

To apply one national legal system as against another may never be an entirely satisfactory approach. 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. The deliberations of the conference have recently been the subject of controversy over the extent of cross-border jurisdiction on electronic commerce and defamation issues. 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 specialised 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. Even the EU, which has institutions capable of creating uniform rules with direct effect, has failed to produce a universal system for the common market. Nevertheless, the Treaty of Amsterdam does confer authority on the Community's institutions to legislate by Council Regulation in this area with supranational effect. Article 177 would give the Court of Justice jurisdiction to interpret and apply their principles so, if the political will arises, uniformity may gradually emerge in letter. Whether the domestic courts of the Member States would be consistent in applying those letters is speculative.

References

Further reading

  • American Law Institute. ''Restatement of the Law, Second: Conflict of Laws. St. Paul: American Law Institute.
  • 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.
  • Private Law, Private International Law, and Judicial cooperation in the EU-US Relationship] CILE Studies (Center for International Legal Education - University of Pittsburgh School of Law) http://www.law.pitt.edu/academics/cile/publications/books/contents2
  • Briggs, Adrian, The Conflict of Laws, Oxford: Oxford University Press 2002.
  • North, Peter & Fawcett James. (1999). Cheshire and North's Private International Law (13th edition). London: Butterworths.
  • Reed, Alan. (2003). Anglo-American Perspectives on Private International Law. Lewiston, N.Y.: E. Mellen Press.

See also

External links

  • American Society of Comparative Law http://www.comparativelaw.org/
  • ASIL Guide to Electronic Resources for International Law http://www.asil.org/resource/pil1.htm
  • Hague Conference on Private International Law official website.
  • Max Planck Institute for Comparative and International Private Law http://www.mpipriv.de
  • British Institute of International and Comparative Law (BIICL) http://www.biicl.org/private_international_law_seminar_series/
  • International Chamber of Commerce http://www.iccwbo.org/
  • International Court of Arbitration http://www.iccwbo.org/index_court.asp
  • International Institute for the Unification of Private Law (UNIDROIT) http://www.unidroit.org/
  • News and views in private international law - CONFLICT OF LAWS .NET
  • United Nations Commission for International Trade Law (UNCITRAL) http://www.uncitral.org/
  • U.S. State Department Private International Law Database http://www.state.gov/s/l/c3452.htm
  • Why the Hague Convention on jurisdiction threatens to strangle e-commerce and Internet free speech, by Chris Sprigman
  • EEC Rome convention 1980 http://www.rome-convention.org/instruments/i_conv_cons_en.htm

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