|Conflict of laws and |
private international law
|Substantive legal areas|
Conflict of laws (sometimes called private international law) concerns relations across different legal jurisdictions between natural persons, companies, corporations and other legal entities, their legal obligations and the appropriate forum and procedure for resolving disputes between them. Conflict of laws especially affects private international law, but may also affect domestic legal disputes e.g. determination of which state law applies in the United States, or where a contract makes incompatible reference to more than one legal framework.
Courts faced with a choice of law issue have a two-stage process:
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 case becomes more complicated if foreign elements are thrown into the mix, such as when the place of marriage is different from the territory where divorce was filed; when the parties' nationalities and residences do not match; when there is property in a foreign jurisdiction; or when the parties have changed residence several times during the marriage.
Whereas commercial agreements or prenuptial agreements generally do not require legal formalities to be observed, when married couples enter a property agreement (agreement for the division of property at the termination of the marriage), stringent requirements are imposed, including notarization, witnesses, special acknowledgment forms. In some countries, these 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, lack of oppression, reasonableness and fairness, consideration, performance, reliance, later repudiation in writing or by conduct, and whichever other concepts of contractual bargaining apply in the context.
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). In the EU, this is governed by the Rome I Regulation. 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 and will be determined by the law of the state where the choice of law clause confers its competence. Oxford Professor Adrian Briggs suggests that this is doctrinally problematic as it is emblematic of 'pulling oneself up by the bootstraps'.
Judges have accepted that the principle of party autonomy allows the parties to select the law most appropriate to their transaction. This judicial acceptance of subjective intent excludes the traditional reliance on objective connecting factors; it also harms consumers as vendors often impose one-sided contractual terms selecting a venue far from the buyer's home or workplace. Contractual clauses relating to consumers, employees, and insurance beneficiaries are regulated under additional terms set out in Rome I, which may modify the contractual terms imposed by vendors.
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 organization 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 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.
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.