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Conflicts of Law
Rutgers University, Newark School of Law
Sclar, Diana

Choice of Law Outline – Professor Sclar – Fall 2014

The Traditional Approach to Choice of Law

Section 1: Traditional Theory: A Survey of Jurisdiction-Selecting Rules

Traditional Theories Generally

1) Traditional Choice of Law Theory: The traditional theory requires that the case be characterized, or placed into a certain type of law.

a. Recovery Rule Definition: A recovery rule is a rule that is more favorable to the plaintiff.

b. Protective Rule: A protective rule is a rule that would otherwise make a contract invalid.

c. Freedom of Contract Rule: A freedom of contract rule is a rule that would make a contract valid.

2) Story’s Territoriality Theory of Choice of Law:

a. General Rule: The governing substantive rule was derived from the law of the place where the relevant events had occurred

b. Territoriality Principles:

i. Exclusive Sovereignty: Every nation possesses an exclusive sovereignty and jurisdiction within its own territory

1. Effect of Sovereignty: The laws of every state affect, and bind directly all property, whether real or personal, within its territory; and all persons, who are resident within it, whether natural born subjects, or aliens; and also all contracts made, and acts done within it

2. State’s Power to Regulate: A state may therefore regulate the manner and circumstances under which property within it shall be held, transmitted, transferred or enforced; the condition, capacity, and state, of all persons within it; the validity of contracts, and other acts, done within it; the resulting rights and duties growing out of these contracts and acts; and the remedies, and modes of administering justice in all cases calling for the interposition of its tribunals to protect, and vindicate and secure the wholesome agency of its own laws within its own domains.

ii. Limitation on State’s Power: No state can, by its laws, directly affect or bind property out of its own territory, or bind persons not resident therein, whether they are natural born subjects or others.

iii. Force of Non-Forum Laws: Whatever force and obligation the laws of one country have in another, depend solely upon the laws, and municipal regulations of the latter.

1. Tacit Consent: The force of the laws of one country depend upon the other country’s proper jurisprudence and polity and upon its own express or tact consent

2. Effect: A state may prohibit the operation of all foreign laws and the rights growing out of them, within its own territories. It may prohibit some foreign laws and it may admit the operation of others.

a. Express Law: When its own code speaks positively on the subject, it must be obeyed by all persons within the reach of its sovereignty

b. Implied Law: When its customary, unwritten or common law speaks directly on the subject, it is equally to be obeyed

c. Silence: When both are silent, then and only then can the question properly arise, what law is to govern in the absence of any clear declaration of the sovereign will.

3) Beale’s Theory of Vested Rights:

a. General Rule: When the accident occurs in one state, at that place and at that moment in time, the parties’ rights and obligations vis-à-vis each other vest and follow the parties around into whatever forum they go.

b. Vested Rights Theory: Law being a general rule to govern future transactions, its method of creating rights is to provide that upon the happening of a certain event, a right hall accrue

i. Condition to Occurrence: The creation of a right is therefore conditioned upon the happening of an event

ii. Effect of Right Created by Law: When a right has been created by law, this right itself becomes a fact

1. Recognition of Right: A right having been created by the appropriate law, the recognition of its existence should follow everywhere

2. Effect of Validity in Place of Making: Thus, an act valid where done cannot be called to question anywhere

c. Holmes’s Vested Rights Doctrine: The theory of the foreign suit is that, although the act complained of was subject to no law having force in the forum, it gives rise to an obligation, which like all other obligations, follows the person and may be enforced wherever the person may be found

4) Cook’s Local Law Theory:

a. General Rule: The forum should always apply its own law.

b. Local Law Theory:

i. The forum, when confronted by a case involving foreign elements, always applies its own law to the case, but in doing so adopts and enforces as its own law a rule of decision identical, or at least highly similar, to a rule of decision found in the system of law in force in another state or country with which some or all of the foreign elements are connected

ii. Choice of Law: The rule so selected being in normal cases the rule of decision which the given foreign state would apply, not to this very group of facts now before the court of the forum, but to a similar but purely domestic group of facts involving for the foreign court no foreign element

1. Domestic Rule: The rule thus incorporated in the law of the forum may be called the domestic rule of the foreign state, as distinguished from its rule applicable to cases involving foreign elements

2. Enforcement by Forum: The forum thus enforces not a foreign right but a right created by its own law.

Tort Actions

1) State’s Legislative Jurisdiction – Restatement Section 377, comment a: Each state has legislative jurisdiction to determine the legal effect of acts done or events caused within its territory

2) Traditional Vested Rights Approach – Place of Wrong Rule: The traditional rule, almost completely discredited now, is that the existence and the extent of tort liability was to be determined according to the law of the place of the wrong

a. Lex Loci Delicti: Lex loci delicti is latin for the law of the place of the wrong.

b. First Restatement Approach: These rules were the basis for Restatement (First) Conflict of Laws (1934)

c. Rationale and Criticisms:

i. Supporting Rationale: Since tort claims are transitory, in which a defendant may be held liable in any state where the plaintiff catches her, it was only fair that the defendant be judged according to the standards in effect where she acted rather than the standards where she was sued.

ii. Criticisms of the Place of Wrong Rule

1. Fortuitous Results: Focusing only on the law of the place of injury led to entirely fortuitous results, as where injuries were sustained in a car accident in one state involving parties who both resided in State B and were merely passing in that state.

2. Interference With Other States’ Policies: The rule frequently defeated the policies and laws of states having far more significant contacts with the parties and their injuries, such as domicile.

3. Other Considerations: In many case, it was appropriate to loo

m the car. Unless more than that was shown, the law of Ontario could not reach the defendant; the charge gave it extra-territorial effect

c. Wrongful Death (Alabama): The plaintiff in Carroll, injured in Mississippi by the Alabama negligence of a fellow servant, is removed to a hospital in Georgia, where he dies. His relatives sue for wrongful death. Georgia and Alabama abolished the fellow-servant rule, Mississippi has not

8) Employers Liability Acts and the Fellow Servant Rule (Alabama Great Southern Railroad Company v Carroll – Alabama):

a. Facts: Plaintiff, an Alabama resident, sued Defendant, an Alabama corporation for an injury occurring in Mississippi while under an employment contract which was made in Alabama. Alabama has an employers’ liability act but Mississippi does not. Defendant argued that, under the law of the place of the injury (Mississippi), the fellow servant rule provided a complete defense. However, plaintiff tried to counter that the Alabama statute, which abolished the fellow servant defense, had become part of the contract of employment which gave rise to the claim sued upon, thus Alabama law should apply as the law of the making. Contract or tort?

b. Traditional Theory for Tort Actions:

i. Determination of Place of Wrong: Where a negligent act is committed in one state but causes injury in another, an action seeking damages for injuries sustained as a result of the act may be brought only in the state in which the result is manifested, and not where the act was committed

1. Last Necessary Event Approach: Where the negligent act is committed in one state and takes effect (producing the result which it is the purpose of the law to prevent) in another state, the tort is committed in the state where the result is manifested and not where the act was committed.

ii. Recovery of Injuries in Another State: There can be no recovery in one state for injuries to the person sustained in another, unless the infliction of the injuries is actionable under the law of the state in which they were received

1. Qualification: This rule is subject, in some jurisdictions, to the qualification that the infliction of the injuries would also support an action in the state where the suit is brought had they been received within that state.

iii. Domicile and Citizenship Irrelevant: The citizenship and domicile of the parties are irrelevant in determining choice of law.

c. Fellow Servant Rule: Under the fellow servant rule, if the plaintiff was injured by a fellow servant of the master, the master is not liable

i. Extension to Corporations: This common law rule extended to corporations as masters so if any employee was injured through the negligence of another employee of the corporation, the injured employee could not recover