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1. CONFLICT OF LAWS (Outline) Professor P.K. Mukherjee
2. Conflict of Laws Legal significance of “conflict of laws”; what exactly is it? private international law: civil law characterization, not international law at all; each state has its own rules of conflict of laws (see J.G. Castel, International Law, Toronto: Butterworths, 1976 at p. 1). One might consider that the term “international” when referring to conflict of laws (or private inter- national law), was redundant, but most conflict texts concern themselves principally with national conflict law. (William Tetley, International Conflict of Laws, Common, Civil and Maritime, Montreal: Blais International Shipping Publications, 1989, Preface at p. xv.) English law approach: “The branch of English law known as the conflict of laws is that part of the law of England which deals with cases having a foreign element” (Dicey and Morris, The Conflict of Laws 12th. Edition, 1993 at p. 3; see also D.R. Thomas, Maritime Liens, British Shipping Laws, Vol. 14, London: Stevens & Sons, 1980 at p. 307; see also Tetley, supra,) “conflict of laws” interchangeably used with the expression “choice of law” which is defined as follows: [T]he body of law by which the court where the action is maintained determines or chooses which law to apply where a diversity exists between the applicable law of the court’s state (the forum state) and the applicable law of another jurisdiction connected with the controversy. (John A. Yogis, Canadian Law Dictionary, Barron’s Educational Series, New York, 1983, at p. 46.) “conflict of laws” means comparative law and vice versa: Comparative law and conflict of laws are inextricably tied together... one must know and compare the law of at least two jurisdictions before resolving any conflict which may exist between those laws. (Tetley, supra, at p. xvi.) The central question emanating from a conflict of law situation is – “What is the proper law to be applied by the court” (See PK Mukherjee, “The Law of Maritinme Liens and Conflict of Laws”, JIML 9[2003]6, at p. 546
3. Conflict of Laws 2. Principles of conflict of laws 2.1. Substance vs. Procedure The distinction between substance and procedure is one of “notorious difficulty”. (Thomas, supra, at p 320). As a general rule substantive matter is governed by the lex causae; procedural matter is subject to lex fori The rule is stated by Cheshire and North as follows: “One of the eternal truths of every system of private international law is that a distinction must be made between substance and procedure, between right and remedy. The substantive rights of the parties to an action may be governed by a foreign law, but all matters appertaining to procedure are governed exclusively by the lex fori.” The distinction between right and remedy is akin to the distinction between substance and procedure. Right is substance, remedy is procedure; but such distinction is not exactly a model of clarity. “The difficulty in applying this Rule lies in discriminating between rules of procedure and rules of substance.” (Dicey and Morris, supra, at p. 170 as cited in Tetley, supra, at p. 49)
4. Conflict of Laws 2.2. Modified version of Substance vs. Procedure Professor Tetley is of the view that “[T]he substance/procedure dichotomy should be discarded, and that it be replaced, if a distinction is necessary, by the distinction between substance and ancillaries on the one hand and formalities of the forum court on the other.” (Tetley, supra, at p. 47) Substantive matters are subject to their own proper law even if it is foreign law. Substance is defined as the legal relationships (contracts and torts/delicts) which have a proper law of their own which is usually not that of the forum. (Tetley, ibid, at p. 48) Procedure is form; in the present context these are formalities of the forum which include the conduct of trial and are administrative in character. Examples are the method by which a writ is drawn up and served, times and places of court sittings, conditions for civil jury trials, process by which witnesses are examined and testimony is admitted and processes regarding such matters as attachments, saisie conservatoire, in rem writs, mareva injunctions and giving of security in execution of judgments. (Tetley, ibid, at p. 45, 65 and 66). All these matters are subject to the lex fori. The US Restatement Second, 1969 does not attempt to distinguish between substance and procedure but defines procedure as the law with which the forum state has the most significant relationship. In effect forum formalities are distinguished from procedure. (Tetley, ibid, at p. 51-52)
5. Conflict of Laws 2.2. Modified version of Substance vs. Procedure (cont.) Ancillaries, although have been traditionally considered as procedural matters have a proper law of their own which may be a foreign law or the lex fori, but are usually the law of the subject matter to which they are ancillary. (Tetley, ibid, at p. 60). Examples of ancillaries are time limitations, presumptions, cross defences, rules of evidence, burdens of proof. (Tetley, ibid, at p. 48 and 60) Probative value of evidence is an ancillary matter which has its own proper law. In the opinion of Prof. Tetley, the Arrest Convention 1952 and the global Limitation of Liability conventions of 1924, 1957 and 1976 attempt to address the above issues in the following manner. The Arrest Convention appears to reflect a proper understanding of procedure as consisting of the formalities of the forum court. See for example, Art. 6.2, Art. 4, Art. 5 and Art. 7.2 & 7.3. The three limitation conventions generally deal with the substance vs. court formality distinction as well as the classic substance vs. procedure dichotomy. (Tetley, ibid, at p. 67) Because the substance/procedure distinction potentially results in a pro lex fori bias, and not all procedural matters are necessarily of the lex fori, the distinction, if one is to be made should be substance and ancillaries on the one hand and formalities of the forum court on the other. (Tetley, ibid, at p. 67). In every case the proper law of each legal relationship (contract or tort/delict) and of each ancillary should be determined individually. “The forum court should only apply the lex fori, if it is the proper law of the legal relationship or ancillary, or in the case of a genuine formality of the forum court system.” (Tetley, ibid, at p. 68).
6. Conflict of Laws 2.3. Lexcausae and lex fori The substantive lex causae is usually either a matter of contract or tort/delict, i.e., a claim may be one that is ex delicto or excontractu. “[W]here the claim is tortious in character, the notion of lex causae is particularised to the lex loci delicti commissi. In cases of groundings and oil spills, both of which are maritime torts, prima facie the lex loci delicti commissi will apply unless there is a convention that is applicable which provides otherwise. Thus if a grounding or stranding occurs within the territorial seas of a coastal state, the law of the coastal state will apply. There is no special convention that governs this subject matter. However, if the grounding led to an oil spill, convention law would apply ...” (See Mukherjee, supra, at p. 549; See also the cases of The Mary Moxham, (1876), 1 P.D. 107 and The Waziristan, [1953] 2 Lloyds Rep. 361 mentioned at that page.) When torts are committed on board a ship, if the ship is on the high seas the flag state law will apply in the case of a tort; if the ship is located within a maritime zone of a littoral state the notion of “internal and external consequences” will feature in the determination of what is the proper law. The predominance of flag state law in matters solely of internal economy is exemplified in the leading case of Lauritzen v. Larsen [(1953), 345, U.S. 571]. (Mukherjee, ibid,at p. 549-550).
7. Conflict of Laws 2.3. Lexcausae and lex fori (cont.) Where a matter is ex contractu there are four options that come into play. First, there may be a choice of law clause that governs the contract in question. Commercial maritime contracts such as charterparties, bills of lading, mortgages and ship sale/purchase contract usually contain a choice of law clause; as well the place of arbitration or litigation in the case of a dispute is expressly provided. Secondly, if there is no choice of law clause the intention of the parties may be implied from the contract. The third option is the flag state law where nothing is stated in the contract. The fourth option is the application of lex loci contractus. However, this general rule has its inherent flaws. It does not, for example, take into account the place of performance of the contract, or of payment, or the nationality or residential status of the parties. (Mukherjee, ibid, at p. 550; see in particular the footnotes at that page that cross refer to Tetley text). All matters of procedure or remedy are subject to the lex fori. (But see discussion above).
8. Conflict of Laws 2.4. Closest and most real connection This notion is also referred to as the “centre of gravity” or “contacts” approach. (See Yogis, supra, at p. 46). Prof. Tetley is a leading proponent of this notion. The “proper law of the contract” is defined by Westlake as “the law of the country with which the contract has its most real connection.” In Boissevain v. Weil, [1949] 1 K.B. 482 at p. 490-491 C.A “... the proper law of the contract ... 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 refers to “proper law of the tort” 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”. Dicey and Morris refers to “closest and most real connection” in contract and “the most significant relationship” in tort. (See Tetley, supra, at p. 10 and 11). According to Prof. Tetley, “The concept of “the most significant connection” or “the closest and most real connection”, principally the work of Morris in contract and tort, is, in my view, the greatest single contribution ever to the theory and practice of conflict law.”
9. Conflict of Laws 3. Forum non conveniens Prof. Tetley promotes consistency of methodology as the most desirable approach to solving conflicts problems. (Tetley, supra, p. 37-38). In his proposed methodology he rejects, inter alia, the distinction based on procedure and substance and on right and remedy, and emphasizes forum non conveniens as a possible final step in the methodology through which problems of incongruity can be cleared up. (Tetley, ibid, p. 43). The doctrine of forum non conveniens features largely in collision cases in the maritime context. The leading case is the Abedin Dever, [1984] 1 Lloyds Rep. 339. In this case the plaintiff’s ship Las Mercedes (LM) under Cuban flag and the defendant’s vessel Abedin Dever (AD) collided in the Bosphorus. Plaintiffs issued a writ in England which was served on a sister ship of AD alleging defendants were a fault and claiming collision damage. Defendants applied for a stay of proceedings on the ground that Turkey was a more convenient forum for the trial of the action. At trial Sheen J. found for the defendants. Plaintiffs appeal was upheld by the Court of Appeal. The House of Lords reversed the appeal decision and reinstated the decision of the trial court. In essence the House of Lords endorsed the doctrine of forum non conveniens in favour of the defendants on the basis that Turkey was the country with which the matter litigated had the closest connections, and it was the appropriate forum from the point of view of convenience and expense. In this case for the first time the term forum non conveniens was used. The House of Lords expanded and refined the legal position expounded by the House in the Atlantic Star [1974] A.C. 436 and MacShannon v. Rockware Glass Limited [1978] A.C. 975.
10. Conflict of Laws 3. Forum non conveniens (cont.) In Spiliada Maritime Corp. v. Cansulex Limited [1987] A.C. 460, the House of Lords summarized the English law position on the doctrine of forum non conveniens and stated a number of rules. Through this development it is well established that forum non conveniens has replaced the old doctrine of lis alibi pendens through the doctrine of forum non conveniens. In the European Union, the Brussels and Lugano Conventions and EC Council Regulation No. 44/2001 rely more on the lis alibi pendens doctrine and apply the Spiliada rules narrowly. The doctrine of forum non conveniens is viewed with suspicion by the civil lawyers. In their view the application of this rule does not provide certainty and predictability and can lead to arbitrary decisions. The English law position considers lis alibi pendens as mechanistic and without the flexibility inherent in the doctrine of forum non conveniens. Lis alibi pendens is akin to the “running shoes doctrine” which favours the party who institutes the legal action first.
11. Conflict of Laws 4. International conventions According to Prof. Tetley, hand in hand with the closest and most real connection as a theoretical concept or principle of conflict law, international conventions and national legislations have contributed immensely to the resolution of conflicts of laws. He refers particularly the Rome Convention on the Law Applicable to Contractual Obligations, 1980 (80/934 EEC in force since April 1991); and as of 1994, the date of publication of Professor Tetley’s text, 32 Conventions were open for ratification by the Hague conference on private international law of which 21 were in force at the time. (See Tetley, supra, at p. 27-34). Note that these figures have changed since. Prof. Tetley also refers to national legislation of a number of countries and to the continued role of legal scholars and commentators.