Characterization of Applicable Laws

This is a two-part essay dealing, in the first part, on the question of theories in private international law while the second part discusses the characterization of applicable laws as either to substance or procedure. In the first part several theories postulated by eminent jurists are analysed ending with the conclusion that there is no single theory which completely and effectively underpins the application of law when there is conflict with a foreign law. In discussing the distinction between substance and procedure several instances of ambiguity and the methods employed by the courts to resolve it are assessed. It concludes that there characterizing the two is difficult and that there are no clear lines of division.

Theories; lex fori; lex causae; rights; remedies; substance; procedure; choice-of-law rules; characterization; foreign law; conflict

Private International Law

THEORIES

The development of private international has been greatly shaped by doctrines resulting from the written opinions of jurists from several countries. [1] While some of these theories have the same origins and are therefore quite similar in their postulations others are very divergent. This essay will examine some of the theories postulated and analyse the extent of their adequacy as guiding principles for the courts when a foreign element is found in a case. The position of this essay is that in applying private international the courts cannot rely on any single theory because of the peculiarities of each case. To support this view some of the prominent theories over the years will be discussed starting for the earliest theories and ending with the latter ones and conclusions will be drawn from the analysis of theorists themselves alongside some common law cases.

The acquired or vested rights theory was proposed by Huber, a Dutch jurist (Morris paras 21-008-21-010) and expanded on in latter times by Dicey (England) and Beale (USA) both common lawyers. It has its roots in the principle of territoriality. It proposes that a judge must be guided and adhere to the laws of his own territory in deciding matters and can neither directly sanction foreign laws nor enforce foreign judgement. [2] Huber’s theory expresses the principle of territorial sovereignty more forcefully than any other theorist. It can be summarized as stating that every state’s laws are only enforceable within that state and that all dwellers within the state are bound by the state’s laws whether their residency is permanent or temporary. [3]

He further asserts in a rather contradictory manner that ‘sovereigns will so act by way of comity that rights acquired within the limits of a government retain their force everywhere…’ He limits this apparent conflict by the proviso that acts of sovereigns should not undermine the powers of other states. [4] This theory does not consider the administration of international private law as an exception because the judge is merely enforcing rights which properly accrue to the claimant under a foreign law or judgement. It is, therefore not the foreign law which is given extra-territorial recognition but the rights arising under it. [5] This is further supported by Sir William Scott in Dalrymple v Dalrymple [6] . The matter for determination was whether Mrs. Gordon was the wife of Mr. Dalrymple and Sir Scott stated that the applicable principles of English in such matters would be to determine what Mrs. Gordon’s marriage rights were in the country in which those rights originated and thus apply them. [7]

Despite the fact that it is deeply reflective of a major aim of private international law which is the protection of rights arising in foreign jurisdictions, this theory has received severe criticism and is unpopular in modern times. [8] A notable flaw relates to the assertion that this theory sees private international as enforcing rights accruing under a foreign law but not the law itself. The defect here is that in a common law jurisdiction the choice-of-law rules can operate in such a manner that a person might be adjudged to have a certain right under a foreign law but the court giving judgement may in fact grant a right that is not valid under the same foreign law. Furthermore, when a foreign law is enforced this does not only validate the right acquired under the law but also validates the legal system supporting such a right. [9] It is further opined that the basis for the formulation of this theory is flawed in itself. The issue under attack here is the premise that a conflict is created by recognising foreign law on one hand and adhering to the principle of territorial jurisdiction on the other hand. There is no conflict because even the rules of the choice of law are part of the territorial laws of a country and the court is within its rights to apply them. [10]

Savigny, in his theory of the ‘Natural Seat of the Obligation’ also leans towards the view that territory should be the determinant factor when deciding which rule of law is applicable to each case. [11] Story’s doctrine of Comity seems to be based majorly on Huber’s theory with the distinction that it de-emphasises territoriality. That is just one of several variations or theoretical positions held by the proponents of this theory which either negate some vital effects of the theory or are totally incompatible with its application. This is proof that a single position cannot be relied on.

The Local Law Theory originates from Walter Wheeler Cook and takes the stance that private international law is derived from what the judges have done over the years rather than being built on principles or the opinions of jurists and philosophers. His view is that direction on how a case will probably proceed and be decided should be based on past judicial approaches to similar matters. This method which stresses practice by the courts rather than theoretical statements has been described as ‘scientific empiricism’. [12] This theory cannot be entirely credited to Cook as he formulated it from the judgement of Judge Learned Hand in the case of Guinness v Miller. [13] Even so, there are significant differences in the approach of these two to the same theory. [14] Citing Milliken v Pratt [15] , where a right created by Massachusetts was enforced by the court rather than a right originating from the jurisdiction of Maine he posited that a court would always apply its own law in any case and not a foreign law. [16] This argument negates the vested or acquires rights theory.

The decision in Slater v Mexican Nat. R. Co. [17] as stated by Born is that ‘the general and almost universal rule is that the character of an act as lawful or unlawful must be determined by the law of the country where the act is done.’ [18] He regards the decision in Milliken as being an extreme adherence to this principle but if Cook’s theory is applied it would appear that it is the location of the forum and not the place where the act takes place that will determine the applicable law. Lorenzen, however, asserts that ‘the rules of Conflict of Laws are not based upon, nor are they derivable from, any uniform theory of territoriality.’ He expands on this by pointing out that in different cases the law applied varies; sometimes it is the law of the situs, in others it is the place of contract and others are decided by the law of domicile. In concluding this discourse he states that theories are as abundant as writers and there should thus be no obligation on the courts to seek to adopt any one method. [19]

Graveson discusses the Lex fori theory which is very similar to the theory of acquired rights and is based on the same principles. He describes it as the ‘earliest and yet the most influential principle’. [20] It was first propounded by Franz Kahn a German and later Bartin and Professor Niboyet. The law to be administered here is simply that which guides the affairs of the particular court such that no ambiguity arises as to which rules to apply. Bartin’s argument in favour of this theory is that judges are bound by oath to the duties of their own legal system and none else and can therefore only administer same. The two valid exceptions to this rule are the lex situs and lex loci contractus principles. Lex situs applies to property cases so as to define the property as movable or immovable while lex loci contractus in applied in cases of contract by correspondence and serves to ascertain which law would have final jurisdiction. Where no corresponding law exists in the lex fori then the court is must classify it by employing the rules of a similar law within its jurisdiction. [21]

This theory was propounded on the basis of simplicity in determining which rules will apply but that is only in theory because it raises more questions. Situations arise where the court has had to apply a system which appears to be either a fusion of the theories or abandonment of all for a yet undefined theory. One instance is in Re Berchtold [22] where a Hungarian who held interest in freehold English property which was on trust for sale died intestate in England. He was domiciled in Hungary and by English laws of intestacy concerning movables it was the law of domicile which was to apply here and this was Hungary in this case. English Intestate law with regard to succession of immovables is the lex situs rule. The court chose to administer the lex situs rule as to determining movable and immovable property and thus treating the freehold as money. This case illustrates the futility of trying to propose a single theory as a guide in private international law. What the court did in this case was to decide on the most logical means of dealing with the property.

There is ordinarily one rule guiding the choice of Law in the conflict of laws and this is termed the jurisdiction-selecting rule. It basically means that the vital question is as to which jurisdiction the decision of a matter should come under. Sometimes the effect of this method has been that once this choice is made there is no mention made either by the judge or the reporter as to what point of conflict (if any) existed between the likely laws. This was the situation in the cases of Chateney v Brazilian Telegraph Co [23] and Re Duke of Wellington [24] . There may in fact have been only a false rather than true conflict as discussed by various authors.

O’ Brien rightly points out that it is only theoretical that the aim here is purely the selection of jurisdictions because parties to a case do not simply seek the right forum for their matter but the law which would best protect their interest. [25] While Cavers wrote extensively on the short-comings of this method and in favour of the rule-selecting rule he also points out in another work that the rule-selecting rule is also flawed particularly because it may not contribute to harmony between nations. [26] The rule-selecting rule is the method of choosing which of more than one applicable rules should be applied in a matter.

From the fore-going we find that Cook destroyed the vested rights theory as did Lorenzen and Arminjon [27] and Dicey severely critiqued Story’s theory of Comity and so did Collins [28] . This is in essence a critique of Huber’s theory. Indeed there is little agreement between theorists. The frustrations of trying to decide what would be the most appropriate system to adopt as a guide in these conflicts has given rise to even more postulations in modern times and most notably on America such that it has been termed the American Revolution. [29]

These more recently advanced ideas have not resulted in any general agreement. The American Restatement (Second) of the Conflict of Laws, S 6(2) outlines ‘factors relevant to the choice of the applicable rule of law’. These have been re-grouped and summarized by as comprising a ‘public aspect and ‘private’ dimension. [30] The public aspect ‘considers the interests of countries involved’ while the private ‘reflects the interests of the parties and the justice of the case’.

An in-depth analysis of these methods cannot be made in this paper but the proliferation of methods, following the many theories propounded, is evidence that a single solution still eludes the courts. Currie who was also the main proponent of the Governmental interest analysis opined that ‘we would be better off without a choice-of-laws rule’. [31] This analysis concludes similarly that while each theory may be relevant to resolving the conflicts none is totally sufficient.

SUBSTANCE AND PROCEDURE

The determination of what constitutes substance and procedure, also defined as ‘right and remedy’, is another crucial issue in the conflict of laws. Substance is concerned with the rights and duties of the party and their validity while procedure relates to rules of evidence in the trial of a matter. [32] Crawford more expansively lists the components of procedure as ‘jurisdiction, procedure in court itself, evidence and miscellaneous matters pertaining to litigation.’ [33] This discussion focuses on these characterizations and agrees with the view that there is no clear demarcation between the two. [34]

The issue of distinction may seem a simple matter if viewed in the light of cases like Chaplin v Boys [35] and Don v Lippmann [36] . The decision in these cases gives the clear-cut view that matters of substance may be governed by foreign law but procedure is restricted to the law of the forum. [37]

Confusion exists nevertheless because this distinction is not always clear as seen in the case of Leroux v Brown. [38] This case concerned the application of section 4 of the Statute of Frauds Act (1677) which provided at the time that action could not be brought to enforce certain unwritten contracts and agreements. Though it was found that in French law – the applicable law – the contract in issue was valid the matter was being decided in England and by this Statute no action could be brought. The English court held that this was a rule as to procedure not substance and therefore the oral contract was unenforceable. It blunts the aim of private international law when the recognised right of a foreign litigant is thus disregarded particularly as this is not done in the protection of public policy but in an attempt to hold onto rigid rules of procedure. [39]

In some complex cases the split between substance and procedure has been effectively employed so that some measure of cohesion is achieved and neither is compromised. This was the situation in Re Flud [40] , where it was decided that the issue of whether illness affected the testamentary capacity of the deceased fell under German Law because it was classified as substantive. The matter of burden of proof, however, was classified as procedural because it related to rules of evidence and English law was thus applied.

The difficulty in ascertaining how a rule is to be classified does not always end with such a justifiable resolution as seen in the above case, indeed the courts are not always inclined to compromise. Collier disapproved of the rigid stance taken by English courts in many cases. [41] Sometimes, courts have used this classification of aspects of a case as procedural to apply internal lex fori where there is no clear justification for this other than their belief that their own law is more suitable. [42]

A strict application of characterization was also employed in decisions involving statutes of limitations. Consequently proceedings were very convenient for the courts because they respected the rules of classification but were in effect a denial of justice. An instance is that a party may have contractual rights under the lex causae but be time-barred from claiming this right under the procedural law of the forum. The rights which have been identified by the substantive law could, therefore, be denied under the rules of procedure. The approach of the courts in such matters was to treat the limitation as purely procedural so that the right could be granted so long as they existed. [43] This system was practised so generously that even when the foreign law being applied bars the remedy the right was still granted by the court of forum and vice versa. [44]

The Foreign Limitations Period Act 1984 brought a change to this system with its provisions that if a foreign law was applicable to a contract then its laws on limitations would apply whether such rules have been classified as relating to substance or procedure. The exception to this rule is where the application of foreign law would be at variance with public policy mainly by causing a party undue hardship. [45]

One area that would seem to be unambiguous is the matter of remedy for breach of the rights of a party but even here several factors abound which has contributed to the problem of characterization. The general rule is that only remedies which exist in English Law can be obtained in English courts even when a right is established under the lex causae. Here we see that the lex fori encroaches into the lex causae such that the worth of the remedy due to a party can be significantly affected to an extent that it might result in no remedy at all. [46]

In determining damages there are specific areas which have been designated as matters of substance; these include the question of remoteness of damage and the type of loss for which damage can be recovered. The decision as to the amount or quantification of damage has been classified as a procedural matter and therefore to be resolved under the forum law. Explicit as this may appear it is not always so definite in practice. While, in one case deductions of certain sums from damages were held to be procedural, [47] placing a limit on damages was held to be substantive in another case [48] . This is illustrative of the difficulties in understanding what the boundaries are.

Forsyth after attempting a neat classification based on both theoretical positions and common law ended by stating that these divisions could only be regarded as guidelines but individual cases will be resolved according to the court’s decision. [49] This is an admission that the lines are often blurred between the two and that regard must be had to the results to be achieved. Castel similarly declares that substance and procedure are not ‘inalterable categories’ and no fixed lines of division can be drawn between them and the courts must therefore look at the objectives in each case. [50]

It can be concluded that the courts, when they are so inclined, have widely exercised discretion in shifting the boundaries where they consider it appropriate to do so. This proves the fluid nature of these distinctions and the ineffectuality of trying to restrict the application of law on this basis.