Conflicts Of Law

Conflict of laws is a set of procedural rules which determine which legal system, and the law of which jurisdiction applies to a given dispute. The rules typically apply when a legal dispute has a foreign element such as a contract agreed by parties located in different countries, although the foreign element may also exist in multi-jurisdictional countries such as the United States.

Generally, courts consider two matters where more than one jurisdictional laws may apply to a case.

1) Uniformity in results in their determination.

2) And to prevent forum shopping.

  • The forum is where the action is brought.
  • More than one jurisdiction may have an interest in the action.
  • The foreign state/government may have an interest in the action/outcome.
  • The forum court must decide which law should be applied to the action.
  • The courts must determine what is best choice of law for the parties.
  • What is the likely outcome?

I. State Law

Vested rights approach. The vested rights approach to choice of law issues dominated American choice of law analysis during the first half of this century. Under the vested rights approach, the location of the single most significant factor in a transaction identified the jurisdictional law that would be applied. When that right vested determined what forum law to apply.

Frequently a court must consider a set of facts that occurred in some state other than its own forum. In such situations the court will apply the foreign substantive law, but its own rules of procedure. Substantive matters are those that related to the right of action while procedural matters affect the remedy. Using its own conflict of law principles a forum decides whether the questions is one of substantive or procedural, because the distinction is nebulous and statutes of limitations have characteristics of both classifications. Therefore, it is difficult to place them clearly in either category.

Traditional substantive law approach.

  1. Contract issues, apply the place of harm law. Lex loci delecti.
  2. Tort issues, apply the place of wrong law.
  3. Real property. Apply the law where the land is located (situs) for in rem matters.
  4. Personal property. Apply the law where the plaintiff is domiciled for in personam matters. Applicable to community property, family law, probate, wills and trusts.

Traditional procedural law approach. Courts must decide whether the forum’s statute of limitations should be applied as a matter of procedure as affecting the plaintiff’s substantive right of action. The general rule is that the forum will not allow a remedy if under its own SOL the time for obtaining a remedy has passed. This denial of a local remedy to enforce a foreign right is not a denial of full faith and credit guaranteed by the federal constitution. The rationale is that applying the foreign procedural law will place an unreasonable burden on the judicial system of the forum and on the local lawyers involved.

Escape devices. A device that allowed judges to use the law of the forum if the foreign law was contrary to the public policy of the forum state.

  1. Characterization. How the court characterizes the law by analyzing all jurisdictions law of tort or contract.

Example: Statute of limitations. Courts generally characterize SOL as procedural and apply the law of the forum.

  1. Public policy. Which forum has a stronger interest? In any society, governmental entities enact laws, make policies, and allocate resources. This is true at all levels. Public policy can be generally defined as a system of laws, regulatory measures, courses of action, and funding priorities concerning a given topic promulgated by a governmental entity or its representatives.

Individuals and groups often attempt to shape public policy through education, advocacy, or mobilization of interest groups. Shaping public policy is obviously different in Western-style democracies than in other forms of government. But it is reasonable to assume that the process always involves efforts by competing interest groups to influence policy makers in their favor.

A major aspect of public policy is law. In a general sense, the law includes specific legislation and more broadly defined provisions of constitutional or international law. There are many ways that the law can influence how survivors of violence against women are treated and the types of services they receive. Likewise, legislation identifies areas in which research grants can be funded and often determines the amount of funding allocated. Thus, it is not surprising that public policy debates occur over proposed legislation and funding.

In this context, advocacy can be defined as attempting to influence public policy through education, lobbying, or political pressure. Advocacy groups often attempt to educate the general public as well as public policy makers about the nature of problems, what legislation is needed to address problems, and the funding required to provide services or conduct research. Although advocacy is viewed as unseemly by some in the professional and research community, it is clear that public policy priorities are influenced by advocacy. Sound research data can be used to educate the public as well as policy makers, thereby improving the public policy process.

  1. Renvoi. French for “to send back,” or “to return unopened.” Renvoi is a set of choice of law rules that are used when a court is directed to consider the law of another state or country. This is problematic because foreign choice of law may already be the law of the forum court causing an endless circular cycle.

The procedure for conflict cases

  1. Forum shopping. The court first decides if it has jurisdiction to hear the case, which will involve addressing the question of whether the plaintiff is attempting to manipulate the judicial system by forum shopping.
  2. Characterization. The court must analyze the case as pleaded and allocate each component to its appropriate legal classification, each which will have one or more choice of law rules attached to it.
  3. The court will then apply the choice of law rules. In a limited number of cases, usually involving family law issues, an incidental question may arise that will complicate this process.

To limit the damage that would result from forum shopping, it is desirable that the same law be applied to achieve the same result no matter where the case is litigated. The system of renvoi is an attempt to achieve that end. If a forum court is directed to consult a foreign law, the first question it must address is whether the matter is solely relevant to substantive provisions, or to the state’s procedural system of law as a whole, which would include that state’s choice of law rules. Forums that do not have renvoi provisions refer only to the specific provisions of relevant law. In this way, the same outcome is achieved no matter where the case is litigated so long as the second state would also have applied its own laws.

But if that second country actually has choice of law rules requiring it to apply the forum law, a difference in outcome might arise depending on where the plaintiff invokes jurisdiction. Whether a difference actually emerges depends on if the other state operates a single renvoi system.

Single renvoi system. A single renvoi forum always refers to the other law’s choice of law rules. If those rules would send the issue back to the forum court, the forum court will accept the first remission and apply its own laws. Thus, equality of outcome is always achieved so long as the competing laws operate different systems. Early French authorities support this approach (Forgo’s Case (1882) and Soulié’s Case (1910)). Similarly, Article 27 of the Introductory Law of the German Civil Code (1900) adopts it. But if both sets of laws operate with either no renvoi system or single renvoi systems, forum shopping will be a potential problem.

Double renvoi. There is another system called double renvoi or the Foreign Courts Doctrine that will also ensure parity of result so long as no other relevant law is using it. In this scenario, the forum court considers that it is sitting as the foreign court and will decide the matter as the foreign court would. In this system, there can never be more than two remissions, e.g. English forum refers to French law (a single renvoi system) so English law is applied (1st remission) and France accepts the remission (2nd and final). At present, only English law uses this approach. Because the doctrine is considered difficult and its results are sometimes unpredictable, its application has generally been limited to the validity of wills and intestate succession (the validity of transfers of real property); and retrospective legitimation by the marriage of the natural parents (validity of divorce decrees). However, there are indications in some states that it might also apply to two issues in family law, namely the capacity to marry and the formal validity of marriage.

In the U.S. most courts try to solve conflict of laws questions without invoking renvoi. In Re Schneider’s Estate, 96 N.Y.S.2d 652 (1950), is an example where renvoi is recognized as an option, in which the local court chose to apply the foreign country’s laws to decide the dispute in the local court. This is most likely to happen in cases involving immovable property or domestic relationships.

There are three main difficulties in cases where renvoi may be an issue:

  1. It gives undue weight to the evidence of the experts on foreign laws.
  2. The reference to the conflicts system used in other laws may reveal differences that would have arisen in characterization or in the choice of law rules to be applied. If these differences would lead to onward transmissions, the forum court will follow the references into third (or further) legal systems. This is unpopular because it requires the parties and the court to consider evidence of multiple legal systems.
  3. There may be an “inextricable circle” between sets of laws using either single or double renvoi systems which do not have adequate safeguards built in to guarantee when to stop accepting remissions.

Escape device criticism regarding forum shopping. By the late 1950’s, many courts were frustrated with the fixed and mechanical rule of vested right approach to conflicts of law, which resulted in new suggestions in dealing with conflict of law resolutions.

II. Modern Approach

Stare decisis. A rule of law where previous court decisions are authoritative in all future cases where the facts are substantially the same does not apply in modern conflicts of law. Reed v. Univ. of ND. Courts review questions of law as de novo. De novo is Latin for, “from the beginning.”

Rules v. standards analysis. Is it better to use traditional or modern approach?

  1. Statutory. States adopt a particular statute.
  2. Party autonomy. Court allows parties to determine which law to apply in contract disputes. The law may not be suppressive to the injured parties rights.
  3. Currie governmental interest analysis. To determine the law to apply the courts:
    1. Look at the interest of the forum and foreign state.
    2. Then look at the public policy.

False conflicts lead to different results.

Only one state has a true interest in applying its law. Determine which state’s interest should be advanced.

True conflicts. Both state have a legitimate interest in applying its own law. If a true conflict exists, the forum court’s law is used. Here, the court is concerned with the forum’s interest not the parties. To determine the forum’s interest?

  1. What was legislative intent in passing the statute?
  2. What is the forum’s interest? If forum law advances that state’s interest it will be applied.
  3. Restatement second most significant relationship test.

In the absence of a choice of law by the parties to a contract, the law of the state with the most significant relationship to the particular transaction will by applied. Although the Restatement gives general rules for particular types of contracts, a court can ignore these if it finds that another state has a more significant relationship to that particular contract.

The choice of law to use is determined by the state with the most significant relationship to the parties and issues involved. The contacts are to be measured by public policy principles:

  1. The needs of the interstate and international systems.
  2. The relevant policies of the forum.
  3. The relevant policies of other interested states.
  4. The protection of justified expectations.
  5. The basic policies underlying the particular field of law.
  6. Predictability and uniformity of result.
  7. Ease in application of the law to be applied.

Criticism of the restatement second. Judges that hear the same identical matter may make a ruling with different results because judges may disagree as to what is the most significant relationship.

American Law Institute publishes the restatements and is a private entity that has no legal force but is respected and recognized by courts. Restatements are persuasive but not binding authority.

  1. Leflar Choice influencing considerations. What is the better law? The last two considerations carry the most weight.
    1. Predictability of results. The decision should be the same regardless of where the litigation occurs, to prevent forum shopping. Was the choice of law predictable before the transaction occurred.
    2. Maintenance of interstate and international order. The forum state should apply the law in the best position to insist upon enforcement of its rule. Would a forum applying its own law disrespect the law of another state? If not, the factor would remain neutral.
    3. Simplification of the judicial task. The court should apply its own law unless there is good reason for not doing so. If the law of either state could be applied without difficulty this factor would remain neutral.
    4. Advancement of forum’s governmental interests. A belief that the court has a justified concern with advancing the governmental interests of its own state. Under this factor a court would not have to apply rules of law that are inconsistent with a state’s concept of fairness and equity.
    5. Application of the better rule of law. When the forum or foreign law is anachronistic or behind the times use the best choice of law to be applied. The better rule of law is the rule that makes the best socio-economic sense at the time the court makes its determination.

Decapage, Applies to class actions. Decapage is where courts will apply different laws to issues within one action. Here, the court may use the law of any applicable jurisdiction.

Renvoi. One way that courts deal with renvoi cycles is when an issue returns, the forum will apply its own internal law.

III. Constitutional Law

Escape device. Apply the state law unless the constitution is in conflict. Vertical. Federal conflict.

Horizontal Two or more state conflicts.

  1. Supremacy clause. The constitution trumps state law.
  2. Full faith and credit Is an understanding between courts of the states to honor and enforce each other’s laws. FFC is the extent that lawyers will go to avoid a state’s application of its own law. The focus is to not discriminate against the laws of another state.

Question: Is the state legitimately looking to enforce its interest or is it making an effort to discriminate against the other state’s interest? The latter goes against the concept of full faith and credit clause and is invalid. Full faith and credit is violated when one states uses its substantive law over another state’s procedural law. However, FFC does not require enforcement of every statutory right of another state.

  1. Due process. No property may be seized without due process. Notice, service of process and opportunity to be heard is constitutionally mandated.
  2. Privileges and immunities. Citizens of each state shall be entitled to all privileges and immunities of citizens in other states.

IV. Conflicts of federal and state law

How does a case get into federal court?

  1. Diversity of citizenship.
    1. Where a party is domiciled.
    2. Amount in controversy more than 75k.
    3. Federal question jurisdiction. A constitutional issue.

Erie analysis.

In diversity actions use the substantive law of the state. The purpose is to promote uniformity in decision-making and to prevent forum shopping. If the issue is procedural use the law of the forum.

  1. If the FRCP are involved and in conflict with state law apply federal law.
  2. If no FRCP or congressional statute is applicable:
  3. Outcome determination test. if federal law conflicts with state use state law. SOL are outcome determinative.
  4. Balancing test compare federal and state policy. If different results then federal law applies.

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