Essays on Private Law: Foreign Law and Foreign Judgments [1 ed.] 9781442656673, 9781442651715

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Essays on

PRIVATE LAW Foreign Law and Foreign Judgments IAN F. G. BAXTER This book contains a series of essays on conflict of laws, including jurisdiction of the courts, choice of law, renvoi, property, recognition of family status, and recognition of foreign corporations. It is not a text-book, but an analysis and criticism of existing principles with recommendations for reform and for a different approach to the subject. In general, an approach is advocated that will be simpler and less abstract and doctrinaire than at present, and better integrated with the ordinary laws of the forum. The recommendations made could be thought of as principles on which to build a reform of conflict of laws or a model code. The first two chapters deal with jurisdiction and choice of law, two distinct topics, with different considerations of policy, which have not always been kept distinct by judges and text writers. The third chapter considers certain questions of legal interpretation, mainly in the con­ struction of money obligations expressed in a foreign currency. This shows a working out of the problems of contract analysis and interpretation which are dealt with more generally in other chapters. Another chapter discusses property law, a branch of the law which has been influenced, historically, by the doctrine of situs, and the recognition of status in family law and in corporation law. The concluding chapter draws together the main results of the preceding discussion and states some basic principles, one of which is that there is a need "for greater unity between the conflict rules and the general law," and for "allowing, where appropriate, the influence of legal systems other than that of the forum." Professor Baxter's discussion clearly shows that the complexity of current legal theory can lead to unjust rulings in the courts, and his case for greater simplification is argued compellingly. F . G. B A X T E R was educated at Aberdeen University, and is a Barrister-at-Law of Lincoln's Inn and Osgoode Hall. He has served as Director of the Commercial Law Programme of Osgoode Hall Law School, and of the Family Law Project, Ontario Law Reform Commission. In 1953 he joined the faculty of Osgoode Hall Law School and, in 1966, the Faculty of Law at the University of Toronto, where he is now a Professor. IAN

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Essays on

PRIVATE LAW

Foreign Law and Foreign Judgments

IAN F. G. BAXTER University of Toronto Press

©

UNIVERSITY OF TORONTO PRESS

1966

Printed in Canada

PREFACE

THIS IS NOT A TEXT BOOK and the essay form in which the chapters are written provides a much greater choice of weapons and a more open advocacy of law reform than a standard work for practitioners and students. Law reform can arise by statute (including codification), by agreement or treaty (followed by legislation), and by the development of case law. For practitioners, businessmen, executors, trustees, and those worried about ownership of property, about tort liability, about their matrimonial status or their legitimacy, the area of law with which this book is concerned should be much easier to determine and less dependent on conceptualism derived from the political emotions and reasoning of earlier times. An essay, like a musical prelude, should be exploratory and limited, and this is a useful initial approach to law reform. Chapter one deals with jurisdiction, and this topic and that of choice of law (chapter two) raise two important questions with which this book is concerned: (a) whether a court ought to hear an issue submitted to it, and (ft) if so, by what systems are the rights and duties of the parties to be measured? The two topics are different, with different considerations of policy, but they have not always been kept distinct by judges and text writers. Jurisdictional language and jurisdictional theories of power and sovereignty have too often infiltrated discussion on choice of law. Sound rules of local jurisdiction must be the starting point so that the courts do not exercise authority unjustly or ineffectively. The question of renvoi is a by-product of schemes for choice of law because it asks whether a reference to foreign law includes a reference to the foreign choice of law rules. Chapter three deals with certain questions of legal interpretation, mainly in the construction of money obligations expressed in a foreign currency. This shows a working out of the problems of contract analysis and interpretation which are dealt with more generally in other chapters. There is a chapter on property law, and this branch of the law has been influenced, historically, by the doctrine of situs. Property law in

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Preface

general has developed in too artificial a way, too dependent on the manipulation of abstractions and terms of art. A new orientation is needed, and the rules should form an integral part of this. There are chapters discussing the recognition of status in family law and in corporation law. If X enters a certain legal class by achieving a status, should this be only a local result or should there be more general acceptance of these classifications so that they do not change (or at least not too frequently) when state, provincial, or national boundaries are crossed? The concluding chapter is an attempt to draw together the main results of the preceding discussion and to state some basic principles. These are only tentative, and there are important areas which are hardly discussed at all because complete coverage is not the object of a book of essays. The traditional subject of conflict of laws, regarded as a speciality, treats certain problems extracted from contracts, property law, family law, and so on, as a "horizontal" discipline laid across these "vertical" disciplines. Specialization has gone very far both in application and in writing and teaching, and there is a need for a re-assessment and a new coordination, for greater unity between the conflict rules and the general law. It is only true in a limited sense that a conflict question involves international law—it is really a matter of extending the scope and subtlety of the ordinary law where some of the elements in the case have a locus outside the jurisdiction and of allowing ordinary law to reflect, where appropriate, the influence of legal systems other than that of the jorum. Some of the chapters are based on articles already published in the Canadian Bar Review and the McGill Law Journal, and I wish to express my grateful thanks to the editors of these periodicals for permission to use the material. I also wish to thank the Law Society of Upper Canada for financial aid towards the publication of this book, which has also been supported by the Publications Fund of the University of Toronto Press. IAN F. G. BAXTER Faculty of Law, University of Toronto

CONTENTS

PREFACE

1. Jurisdiction of the Courts

V

3

2.

Choice of Law

21

3.

Renvoi as a Symptom

49

4.

The Interpretation of Written Obligations

64

5.

Property

87

6.

Recognition of Status in Family Law

120

7.

Recognition of Foreign Corporations

163

8.

Conclusion

194

CASE INDEX

201

SUBJECT INDEX

209

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ESSAYS ON P R I V A T E LAW

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CHAPTER!

J[

I Jurisdiction of the Courts

"JURISDICTION" may raise the questions whether any court of a legal system can hear a case; which court of the same system is the proper court to hear the case; what is the extent of legislative authority.1 The sense of the word is confused by the concept of "international" jurisdiction for recognition of foreign judgments (meaning by a foreign judgment, a judgment of another legal system) . (i) A attempts to bring proceedings against B in Ruritania. The courts of that country refuse to examine the merits of A's case because they have no jurisdiction by Ruritanian law. (ii) W asks the courts of Utopia if she is an unmarried woman by Utopian law by reason of a divorce judgment in Ruritania dissolving her marriage with H. The first question for the Utopian court is whether it has jurisdiction to determine the status of W. Let us assume that it can determine W's status (by Utopian law). Recognition of the Ruritanian divorce may depend on Utopian conflict rules. By these rules (let us suppose) a foreign divorce is recognized if the circumstances were such that, mutatis mutandis, a Utopian court would have assumed jurisdiction. A Utopian court assumes divorce jurisdiction if the husband was domiciled in the country at the time. H was so domiciled in Ruritania. /f's domicile was irrelevant by Ruritanian law, and Utopian law applied an "international" jurisdiction (on the recognition question). This chapter is not concerned with "international" jurisdiction (which will be discussed later);2 the present subject is limited iSee discussion in Ehrenzweig, Conflict of Laws (1962), 71 et seq. See chap. 3 on choice of law and chap. 6 on recognition of status in family law. 2

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Essays on Private Law

to the question of whether any court of the legal system may consider the merits of a given case. Refusal of jurisdiction by the forum does not necessarily involve the acceptance of "international" rules or principles, although this may sometimes be so, for example, in regard to treaties, supra-national controls (as in the European Communities), or federal constitutions (as between states or provinces). "International" rules will emerge if there is an inter-sovereign agreement or a regional or a federal governmental structure. Normally, the issue is not to which one of a group of countries a certain case should be allocated jurisdictionally, but whether one country J, (which the plaintiff has selected) has or has not authority (by its own law) to try the case.3 The point is a preliminary question and the lex fori is applied.4 Jurisdiction sets up the operational range of the forum's law, but it also affects choice of law. The answer to a criticism of a choice of law rule may be that, in a better system, the problem would not arise, because jurisdiction would have been refused. So the choice of law problem is limited by the jurisdictional rules. COMMON LAW AND CIVIL LAW "The English courts have jurisdiction (subject to the exceptions referred to below) to entertain an action in personam against any person who is within the jurisdiction at the time when the writ in the action is served upon him, however transitory his sojourn in England may be."5 In certain cases, the court may give leave to serve the writ outside the jurisdiction, for example, if there is property within the jurisdiction, if a tort has been committed there, or if an injunction is requested for enforcement there. The courts also exercise an authority in rem over things within the country,6 and there are special rules for matrimonial causes.7 Jurisdiction can result from the consent of the defendant, if this is not prevented by public policy. Certain persons may be exempt from 3

Some writers talk of conflict of jurisdictions analogous to a conflict of laws, e.g., 4 Arregui Derecho Internacional Privado (1952), s. 426. Nussbaum, "Jurisdiction and Foreign Elements" (1941), 41 Col. L. Rev. 221, 223; cf. Buchanan v. Rucker (1808), 9 East 192. SHalsbury, 3rd. éd., vols. 6, 7; Falconbridge, Conflict of Laws (2nd éd., 1954), 612; Cheshire, Private International Law (7th éd., 1965), 74 et seq.\ John Russell & Co. v. Cayzer, Irving & Co., [1916] 2 A. C. 298, 302; Beale, The Conflict of Laws (1935), vol. 1, 339. 6 Beale, "The Jurisdiction of Courts Over Foreigners," 26 Harv. L. Rev. 283. 7 Ehrenzweig, op. cit. note 1, 79 et seq. There have been attempts to develop the concept of res in relation to jurisdiction, for example, with reference to divorce, nullity, probate of a will, bankruptcy, dissolution of a company; Cheshire, op. cit. note 6. The classical division of the subject of jurisdiction is into rationae materiae and rationae personae\ Arregui, loc. cit. note 4.

Jurisdiction of the Courts

5

jurisdiction on diplomatic grounds. But, usually, jurisdiction in the common law depends on presence of the defendant and service in the territory of the court.8 It has been argued that the common law tends to be more territorial and the civil law more personal in approach.9 The civil law starting point is that a defendant may be sued at his "domicile."10 In French law domicile means ordinary residence, but a person can have only one domicile.11 "Résidence de fait" (residence short of legal domicile) may sometimes be important, for example, in matrimonial causes where the husband's domicile is unknown or he is abroad. It has been suggested that the civil law systems are more concerned with whether it is reasonable and convenient for the court to entertain the action than with the exercise of power over persons or things.12 The defendant is more important than the plaintiff in AngloAmerican jurisdiction law13 and, in general, anyone, whether national, domiciliary, resident or non-resident, can obtain a judgment if the defendant has become subject to the court. But the French view is that their courts are not available to all, and are concerned primarily with cases in which at least one party is French (with emphasis on the plaintiff). Niboyet says that "compétence" is concerned with the nationality of the plaintiff or the defendant and describes this as "la base politique de la compétence."14 Spanish law also gives importance to nationality and differentiates between a national suing a foreigner, a foreigner suing a national, and a foreigner suing a foreigner.15 A foreigner cannot sue another foreigner in a Greek court except in specified 8 Falconbridge, op. cit., note 6, 613, adds, ". . . provided that he was not enticed within the territory or brought within the territory by the use of unlawful force." 9 De Vries and Lowenfeld, "Jurisdiction in Personal Actions" (1959), 44 Iowa L. Rev. 306. The maxim actor sequitur forum rei is ambiguous because "ra*" may derive either from res (a thing) or reus (a defendant). 10 This term will usually be interpreted by the lex fori. 1:l Niboyet, Traité de Droit international privé français, vol. 1, s. 566 et seq., vol. 6, ss. 1806-8. Von Landauer, "Matrimonial Causes in French Law" (1946), 13 Int. & Comp. L.Q. 6. A married woman has the domicile of her husband unless judicially separated. i2Ross, "The Shifting Basis of Jurisdiction" (1953), 17 Min. L. Rev. 146. 13 In divorce, the basic rule is the domicile of the parties; see chap. 6. 14 Op. cit. note 11, vol. 6, s. 1731. As to the distinction between "jurisdiction" and "compétence," and "compétence générale" and "compétence spéciale," see Smit, "International Civil Procedure—A Selective Discussion" (1961), 10 Am. J. of Comp. L. 164. 15 Goldschmidt, Derecho Internacional Privado (2nd éd., 1954), vol. 3, 60; Arregui, op. cit. note 4, s. 429, considers outdated the theory that justice is a privilege to be dispensed to nationals. Mexican law applies to all persons living in the country who may be nationals, residents, or transients, art. 12 C.C. (See art. 13 C.C. as to contracts and art. 14 as to land.); see Arce, Derecho Internacional Privado (3rd éd., 1961), 305, on the meaning of domicile in Mexican law.

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Essays on Private Law

instances or by consent.16 In German law the ordinary place where a person may be sued is at his domicile.17 The main bases of jurisdiction in Scotland are residence for forty days and ownership of real property there.18 French law is affected by articles 14 and 15 of the Civil Code.19 By article 14, an alien who is not resident in France can be sued in a French court for performance of an obligation contracted in France with a Frenchman or for an obligation contracted in a foreign country in relation to a Frenchman. So, a defendant who is neither domiciled nor resident in France, nor has property there, may be subject to a French court. The apparent policy of this article is to make the French courts available to a French plaintiff who has a dispute with a foreigner.20 Article 15 provides that a French national can be subject to the French courts in cases in which an obligation has been contracted abroad with an alien. These articles are exceptions to the general (domicile) rule in the Code of Procedure21 and they govern the jurisdiction of the French courts vis-à-vis French nationals, either as plaintiffs (article 14) or defendants (article 15).22 SOME THEORIES ON J U R I S D I C T I O N Three theories for jurisdictional rules will be examined and can be referred to as (a) "the power theory," (b) "the inadequacy theory," and (c) the forum "conveniens theory." They are not mutually exclusive. POWER

By this theory, the foundation of jurisdiction is physical power.23 "Historically, the jurisdiction of courts to render judgments in personam is grounded on their de jacto power over the defendant's person."24 Beale iSArt 27 C. Proc.; Carabiber, Conflits de lois (1930), 123. 17 There are also extra-ordinary bases of jurisdiction. 18 Dewar Gibb, The International Law of Jurisdiction (1926), chap. 3. 19 See De Vries and Lowenfeld, op. cit. note 10, 316-30, for a history and analysis of these articles. 20 "Tout individu de nationalité française peut se prévaloir de l'article 14 Code civil. Le texte vise, en effet, les obligations contractées 'avec un Français'. Il y a là un privilège de nationalité." Niboyet, op. cit. note 11, vol. 6, s. 1733. 21 "En matière personnelle, le défendeur sera assigné devant le tribunal de son domicile; s'il n'a pas de domicile, devant le tribunel de sa résidence" Art. 59 (1). Niboyet says that, when introduced, Art. 14 had the effect of preventing the maxim actor sequitur forum rei from being given too much importance; op. cit. note 11, s. 1747. 22Batiffol, Traité élémentaire de Droit international privé (1959), s. 684; Pillet, "Jurisdiction in Actions between Foreigners" (1905), Harv. L.R. 325, 335. ^McDonald v. Mabee (1917), 243 U.S. 90, 91. Ehrenzweig, op. cit. note 1, 77. ^International Shoe Co. v. Washington (1945), 326 U.S. 310, 316. Stone C. J.,

Jurisdiction of the Courts

7

defines jurisdiction as "the power of a state to create rights such as will be recognised by other states as valid."25 The question whether a federal, provincial, or state legislature has authority to make a statute, or whether a case should go before the High Court or a County Court can relate to distribution of power. Further, any court must operate under the power of the relevant law. Also, if the reference to physical power is understood as meaning the parties' submission to the judge's authority, it has a basis in the early history of most, if not all, legal systems.26 But such statements may not be relevant when a plaintiff seeks jurisdiction in the sense of whether some court in the country will or will not consider the plaintiff's request for a remedy. In this sense of jurisdiction, power as an agent of enforcement ceases to be an issue. As has been observed, "conflict of laws problems as to personal jurisdiction have to do not with the physical power to enforce a judgment but with the purely intellectual function of creating rights through the medium of the judicial process."27 There is a tendency to express certain aspects of power theory as "implied consent," "fictional consent," or "submission" (especially with reference to jurisdiction over foreign corporations), and when the court talked "in terms of submission, consent was purely fictional."28 So, although the power theory may be an answer to some questions associated with the general area of judicial and legislative jurisdiction, and political and social policy, it does not meet the question in this chapter: whether any court in the country will consider the merits of the proceedings brought by the plaintiff. INADEQUACY

One of the difficulties with both the theory of the "inadequacy" of the system of the law of the forum to provide a useful remedy and with the "power" theory is to determine the meaning of these terms. There are a variety of references in the literature to effectiveness, efficiency added that although presence in the jurisdiction was the primary basis, it would be sufficient if the defendant "have certain minimum contacts with it such that the maintenance of1 the suit does not offend traditional notions of fair play and substantial justice. " 25 Beale, op. cit. note 6, 274 et seq. Historically, the early idea was that the defendant must be within the power of the sovereign; Dodd, Jurisdiction in Personal Actions (1929), 23 ///. L.R. 427. 26 Ehrenzweig, op. cit. note 1, 77. "International" jurisdiction has been said to relate to "power"—a country claims exclusive right to deal with a particular class of problem and accords a similar right to other countries by comity. 2 7Read, "Book Review" (1935), 13 Can. Bar Rev. 765; Johnson, Conflict of Laws (2nd éd., 1962), 1012 et seq. 28 Read, "Book Review." Beale, op. cit. note 6, 382 et seq. Cf. British American Oil Company v. Born Engineering Company (1964), 44 D.L.R. (2d) 569.

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Essays on Private Law

and the like.29 French writers have referred to "effectivité" as an important policy consideration playing the role of a "toile de fond".30 The theory of effectivité is founded on the idea that a court should not make a judgment in which the plaintiff receives only a theoretical proposition in his favour which he cannot enforce with concrete results. The administration of civil justice provides (i) courts for the settlement of disputes, and (ii) machinery for the enforcement of judgments in appropriate cases. The theory of "inadequacy" seems to mean that a decision as to the former will take into consideration the possibilities of the latter. But there are two questions to consider about "inadequacy." The first concerns its ambiguity. When "inadequacy" is arrived at, does it mean that the judgment is ineffective now, or does it mean that it will never be effective? A judgment in personam in country / against X, who is not in / and has no property there, is ineffective now but it might be effective if X entered /. There may be no reciprocal enforcement of judgments now between Jt and J2 but there may be in the future. A declaratory judgment as to title or status may not be directly operable against anyone's person or property but it may be useful as a clarification of legal rights relative to the forum. The second question is (if the correct interpretation is that the judgment will never be effective), does "inadequacy" make a significant enough contribution to the subject to justify regarding it as a foundation concept for jurisdictional rules? The classical instance of "inadequacy" relates to actions directly affecting title to or possession of foreign land. An immovable does not change its situs and the execution machinery of the forum does not extend into another country (save as it is permitted in the sense of reciprocity). Foreign in personam judgments "are generally said to be ineffective as to forum land."31 Equity recognises an exception where it can act in personam.32 The source of this attitude is probably as much historical as logical, for the mediaeval view was that venue should be 29 Dicey, Conflict of Laws (7th éd., 1958), 22 et seq.\ Ehrenzweig, op cit. note 1, 3078; Johnson, Conflict of Laws (2nd éd., 1962), 1014-16. Niboyet, op. cit. note 11, vol. VI, s. 1719: "II ne servirait à rien de nier cette notion d'effectivité qui est nécessairement à la base de nombreuses règles de compétence, et qui doit aussi être un guide pour les demandeurs, parce qu'ils s'efforceront toujours de s'addresser aux tribunaux du pays qui pourra rendre la décision susceptible de conduire pour eux à un résultat pratique." siEhrenzweig, op. cit. note 1, 209-11. For a full discussion of the English common law position, see Falconbridge, op. cit., note 6, 611 et seq. MPenn. v. Lord Baltimore (1750), 1 Ves. Sen. 444, 27 E.R. 1132; Duke v. Andler, [1932] S.C.R. 734, [1932] 4 D.L.R. 529.

Jurisdiction of the Courts

9

associated with the cause of action. Jurisdictional rules were developed to determine venue within the realm, and the important consideration was that the jury should know the relevant events and people.33 But this view of "inadequacy" relates to the effectiveness of the trial process as distinct from judgment enforcement and is better reserved for the third heading, forum conveniens. It seems logical to think of "inadequacy" as inability to give a practical remedy now or at any time, rather than as a lack of operational content in a judgment at the time it is given. The plaintiff has chosen a jorum in which he seeks a judgment. He may have various motives for doing so, including a desire to have a judgment available for future execution if the opportunity arises and a clarification of his legal rights and obligations by the chosen forum. On this basis, virtually the only judgments having no practical effect are those involving the doing of something permanently beyond the power of the forum. The court should not act in vain;34 and this policy is comparable to that of the choice of law rule which states that the validity of a marriage ceremony should be governed by the lex loci celebrationis and not by the lex fori (if different).35 The legal and political machinery of the forum is not unlimited in extent and certain practical remedies are beyond its scope.36 In this context, "power" and "effectiveness" seem to come together (although declaratory judgments form an exception), and the court is saying to the plaintiff, "even if we wished, we could not give you what you ask, so there is no point in pursuing the matter further;" but there are not many cases about which this can be said. In modern law, and free from the shadows of principles designed for other conditions, "inadequacy" applies in some instances to reject jurisdiction but is insufficient to provide a general basis for jurisdiction. FORUM CONVENIENS

Theories concerning the convenient forum are not limited to the effectiveness of execution or to the opportunities for the exercise of power, such as the presence of a defendant or witnesses. The question is whether the taking of jurisdiction would offend "traditional notions 33

Kuhn, "Local and Transitory Actions in Private International Law" (1928), 66 U. Pa. L. Rev., 301; Ehrenzweig, op. cit. note 1, 140; see also 104-7 for a historical discussion. 34 "A state ought not to seek to establish and declare rights which it is powerless to 35enforce"; Dodd, op. cit. note 25, 429. For discussion of this point, see chap. 2. 36 If the defendant is non-resident and not represented, with no property in the jurisdiction, a judgment will usually be ineffective; Pennoyer v. Neff (1878), 95 U.S. 714, 722.

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Essays on Private Law

of fair play and substantial justice."37 Ehrenzweig considers that concepts such as "power," "implied consent," and "presence," in the specific sense, and efficiency, in the general sense, are obsolete as jurisdictional theories. He thinks that modern courts have before them the task of moulding "a new common law of 'convenient' jurisdiction from case to case, by trial and by error."38 The bases are presumably efficiency and justice to the parties. One usually thinks of jorum conveniens in relation to changes of venue within a jurisdiction. But it is used here in a more extended sense, namely, as to whether any court in the country is a suitable venue and should examine the merits of the plaintiff's case. So put, it has a larger sphere of influence than "inadequacy." Of the three theories for jurisdictional rules, jorum conveniens is preferable because it is based on practicability and is adaptable to modern conditions. But the foundations of jorum conveniens are usually stated rather vaguely as related to "fair play," "common sense," "efficiency," "justice," and so on. It is necessary to work out relations between the general concepts and the actual rules. It is not enough that the court should refuse jurisdiction where such a refusal seems desirable for reasons of efficiency and fair play—so giving the court a wide-open discretion. On the other hand, there are dangers in laying down rules too rigidly. Rules must be evolved which will give adequate guidance in ordinary cases but with enough discretionary "play" in them to permit justice in special cases. FAIRNESS AND PRACTICABILITY PLAINTIFF

The plaintiff, having selected the jorum, cannot argue that it is not just and practicable; he might, however, have reasons why it would be awkward, inconvenient, or expensive for him to seek his remedy in another jurisdiction. The plaintiff might also argue, for example, that (a) the law of the selected forum is more just (in general) than that of neighbouring countries; (ft) that it is more just in the particular area; (c) that the selected forum, having regard to the nature of the dispute and any geographical associations, is more capable of doing justice; or (d) that the plaintiff is a national, a domiciliary, or an ordinary resident of the selected country. As regards (a) and (ft), it is difficult for a 37International Shoe Co. v. Washington (1945), 326 U.S. 310, 316. Ehrenzweig, op. cit. note 1, 119.

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Jurisdiction of the Courts

11

court to make an assessment of the comparative justice of its own laws and those of other countries.39 The forum will be unlikely to refuse jurisdiction on the ground of the superior justice in another legal system. Point (c) can be relevant since it bears on the ability of the forum to examine the plaintiff's claim efficiently. Point (d) regards the courts as a family concern dispensing justice for those with a political or residential tie. This point spills over into public policy, for example, as to whether the forum should dissolve a marriage where the plaintiff does not have a specified contact with the country. In this case, a country may take the view that its machinery of justice should not be available to a passerby on questions where public policy is active. The political or residential contacts of the plaintiff are seldom relevant to the practicability and fairness of the process which determines the plaintiff's case and the execution facilities. For example, the proper examination of witnesses, the making of inferences, and the sound application of legal principles can be conducted with efficiency and fairness regardless of the plaintiff's national, domiciliary, or resident status. Considerations relative to the plaintiff ought to be kept to a minimum because discrimination between plaintiffs, even on grounds of nationality or domicile, is usually unnecessary and unreasonable. Discrimination could be reserved for situations in which the restriction would serve a real purpose—to prevent social abuse, as in the question of "divorce mills."40 DEFENDANT

Not having chosen the forum9 the defendant can argue that its jurisdiction would be unfair. His objections might be connected with: the trial process (e.g., inconvenience of attending, unavailability of witnesses and evidence); the cost of the proceedings; ancillary difficulties (i.e., related to the system involved, language, obtaining legal advice) ; and execution difficulties. These objections can be expressed more generally as: (a) those due to distance of the forum either from the defendant or from relevant events connected with the cause of action (such as the locus of an accident, as being the place where the witnesses and evidence will likely be found); and (¿) those due to the "foreign" nature of the law (the process, the language, etc., vis-à-vis the defendant). These factors could subject the defendant to an unreasonable burden or could prejudice the efficient and fair operation of the trial. 39 See chap. 3, as to the forum and knowledge of foreign law. 4°See chap. 6.

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Essays on Private Law

PUBLIC POLICY

There need be no hard division between the jurisdictional interests of a party and those of the public. But, in some cases, the courts seem to have applied public policy without imposing any necessary hardship on a party or any inconvenience to the judicial process. The courts' refusal to apply the fiscal law of a foreign country, directly or indirectly, is an example. The wisdom or common sense of such a rule in the modern world is debatable.41 Public policy is employed in conflict of laws to prevent an undesirable solution, either by rejection of jurisdiction or by refusal to follow the normal application of the choice of law rules when the lex jori is applied42. To decide whether public policy applies, an examination of the plaintiff's case may be necessary, and it appears that a court may go into the merits to determine a jurisdictional point.43 Indeed, it would seem that public policy is usually concerned with the merits and with the possible detrimental effects to the public interest of a judgment for the plaintiff, i.e., with the consequences of the judgment rather than hardship or inefficiency connected with the process of producing the judgment. Since public policy is an ultimum remedium preventing judgments with bad effects and is available to the court throughout the proceedings, it might be applied to cases where the pleadings of the plaintiff ask a remedy which the court would not grant (even on proof of all his allegations), e.g., because of illegality or immorality.44 There has been a tendency to allow rules of law to be strongly influenced by half-considered political or social ideas. Public policy, as distinct from fairness, convenience, and efficiency to the parties, should pay a minimal part in the making of rules on jurisdiction. There are two main grounds for this view: (i) public policy can too easily become political and social prejudice, and (ii) public policy is a corrective which still remains available to the court after deciding to assume jurisdiction. The main areas in which public policy should be applied are in cases which involve a public mischief (e.g., "divorce mills"), transient or fugitive debtors, diplomatic privilege, and in cases where the plaintiff's conclusions could not follow from his premises, as where the remedy asked for is immoral or illegal. In the context of this view of public policy one might suggest that the dominant considerations of fairness 41 For a discussion, see Castel, "Foreign Tax Claims and Judgments in Canadian Courts" (1964), 42 Can. Bar Rev. 277. 42See chap. 6. **Har-Shefi v. Har-Shefi, [1953] P. 161, 170-71. 44 This reasoning is familiar to a Scottish lawyer in relation to the plea of relevancy; see, e.g., Donaghue v. Stevenson, [1932] A.C. 562.

Jurisdiction of the Courts

13

and practicability should be: (1) the efficiency of the process, having regard to convenience, availability of witnesses, and the like; and (2) the hardship to the defendant in taking jurisdiction, e.g., distance from the forum, the "foreign" nature of the forum's law, and process vis-à-vis the defendant. SERVICE The tendency of the common law systems is to connect service and jurisdiction, and the chief basis of jurisdiction in personam in English law is the presence of the defendant in the jurisdiction when the writ is served on him.45 It has been said that in England jurisdiction in personal actions depends on ability to serve a writ, whereas in Scotland ability to serve a writ depends on jurisdiction.46 Ehrenzweig raises the question whether a principle of personal jurisdiction based "upon the requirement and the sufficiency of personal service within the state of the forum'9 is still sound or "whether it does not unduly hamper the growth of the law."47 There are a number of situations where a common law court will assume jurisdiction without personal service within its boundaries, e.g., when the defendant has consented to the jurisdiction, when the service is "substituted," "constructive," or outside the jurisdiction.48 Is there a proper connection between service and jurisdiction? The basis of service is to make the defendant cognizant of the plaintiff's claim, and it may be an injustice to the defendant if the court goes into the merits without having taken the proper steps to acquaint him with the proceedings.49 Where foreign service of the writ is allowed, it would seem 45 See 46

note 6. Dewar Gibb, op. cit. note 18, 2-3. ^Op. cit. note 1, 88—9, where it is doubted if the rule is as venerable as is sometimes contended. As to the exercise of control over a foreign infant, see Re48Kernot (an Infant), [1964] 3 All. E.R., 339. Ehrenzweig, op. cit. note 1, 119. The chief grounds on which service out of Ontario may be allowed by the court are: (a) land within Ontario; (b) construction, rectification, etc., of a deed, will, etc., affecting land in Ontario; (c) construction of a will affecting personal property if the testator died domiciled in Ontario; (d) relief against a person domiciled or ordinarily resident in Ontario; (e) administration of personal estate of a person who died domiciled in Ontario; (/) a trust to be executed by the law of Ontario; (g) breach of contract in Ontario; (h) enforcement of a mortgage, charge, or lien on personal property in Ontario; (0 a tort in Ontario; (/) an injunction in Ontario or a nuisance in Ontario; (k) additional defendant where a defendant is already served in Ontario; (/) cause of action in contract or alimony and at least $200 of available assets in Ontario; (m) a matrimonial cause; Ontario Rules of Practice, 25 (1). 49 Ontario Rules of Practice, 30-31; English Rules of Court, order XI, r. 1.

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reasonable to utilize the facilities and relevant practice of the foreign jurisdiction. The English authorities suggest that service abroad in compliance with the foreign rules will not be deemed contrary to natural justice in England, even although the defendant may not, in fact, have received any notification of the procedings.50 There is nothing improper or contrary to natural justice per se in the use of foreign machinery or rules in connection with service. All reasonable steps should be taken to make the defendant aware of the writ issued against him, but it would be going too far to say that the court should never proceed without proof of such awareness by the defendant, because this might unfairly deprive the plaintiff of a remedy. The difficult cases occur where the defendant is unaware of the proceedings, but the case is allowed to go on. These cases involve weighing the prima facie unfairness of pursuing the case where it is not shown that the writ was brought to the notice of the defendant, against the unfairness to the plaintiff if the court refuses to examine the merits of his writ (after complying with such service procedures as the rules require). The forum ought to have practical, clear, and reasonable rules for substituted service which take properly into account the interests of plaintiff and defendant. Given such rules, observance is a condition which precedes examination of the merits of the writ. The true principle is that service in compliance with the rules of practice of the forum is a condition of jurisdiction, not that jurisdiction in personal actions depends on ability to serve the writ. Sound rules of practice for service (including substituted service or service outside the jurisdiction) do not solve the problem of jurisdiction, they only fix a fundamental condition. CONVENIENCE

FACTORS

Where there is no consent to jurisdiction or public policy does not permit it, the fundamental grounds on which a court should refuse to consider a plaintiff's action are: (i) non-compliance with the rules of practice of the forum as to service; (ii) unfair burden on the defendant due to distance, the foreign character of the forum, or in relation to the procedure; (iii) "inadequacy"; (iv) public policy. These elements are not mutually exclusive. Item (i) will apply in all cases; item (iv) should apply only in a small number of well-defined areas where the public conscience speaks against jurisdiction clearly and for objective reasons. WBoettcher v. Boettcher, [1949] W.N. 83; Igra v. Igra, [1951] P. 404; Maker v. Maker, [1951] P. 342, [1951] 2 All E.R. 37; Macalpine v. Macalpine, [1958] P. 35, [1957] 3 All E.R. 134; Baxter, "The Law of Domestic Relations 1948-1958" (1958), 36 Can. Bar Rev. 314-15.

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How far should Ruritania extend the settling of disputes in its courts of law? It would not be always satisfactory to leave the whole matter to the discretion of the court to decide according to the particular circumstances. But a true measure of "convenience" cannot be obtained without regard to the particular circumstances. Rules which were too detailed would result in inflexibility and an unsophisticated evaluation. On the other hand, the question can be left too open, with a lack of guide-lines and consistency. It is desirable to strike a balance between too much freedom and a superbundance of rules. A "convenience factor" is defined as an element connecting the forum and the cause of action and producing a practical and fair reason in favour of the case being decided by a court of the forum state. If no convenience factor is present, no court of the forum state should assume jurisdiction. If the defendant is ordinarily resident within the forum jurisdiction, there will be a reasonable chance that inconvenience will substantially disappear. Suppose that X and Y, both Ontario residents, are travelling in separate cars in Italy and have a collision. If the case is tried in Ontario, it may be difficult to obtain the testimony of the witnesses. If the case is heard in Italy, X and Y will have to conduct a lawsuit in a foreign country. As will frequently happen, no forum is perfectly convenient. But what we seek in jurisdictional rules is a reasonable expectation of forum conveniens in a preponderance of cases. On this footing ordinary residence of the defendant (whether a physical or a legal person) is a good convenience factor. Actions to determine the right or title to possession of immovables outside the state (or, e.g., to determine the interpretation of the documents relevant thereto) are excluded from the jurisdiction of the forum on the grounds of "inadequacy," whether or not the defendant is ordinarily resident in the forum state. Tort and breach of contract within the forum state are acceptable convenience factors because they lead to a reasonable expectation of forum conveniens in a preponderance of cases.51 Other convenience factors can be obtained on similar reasoning, for example, property having a situs within the forum state52 (and enforcement of security interests); an injunction or a nuisance in the forum state; joining a codefendant where there is already jurisdiction over a defendant. Cases on wills and administration of estates, bankruptcy and windingup, execution of trusts, all relate to the distribution of the property of 51 As to softening of the boundaries between contract and tort, see Stevens, "Hedley Byrne v. Heller: Judicial Creativity and Doctrinal Possibility" (1964), 27 Mod. L. Rev. 121, 155 et seq. 52 See chap. 5 for a discussion of situs and property.

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a physical or a legal person among various classes of claimants, e.g., secured, preferred, and unsecured creditors, shareholders, or beneficiaries. Unless there are some assets within the forum state, jurisdiction may be ineffective. But the assets may also lie in more than one jurisdiction, and it may be undesirable to distribute the estate of the same deceased in different jurisdictions. There is a uniform tendency to assume jurisdiction with respect to movables, if the deceased was last domiciled in the forum state.53 Domicile is a complex idea in Canadian, English,54 and French law,55 and "internationalism" has played a part in its formation, as has the idea of "permanent home." There have been inroads in the common law principles of domicile in various jurisdictions, tending to move it in the direction of equivalence to ordinary residence. There are features of domicile which can create substantial and unnecessary difficulties, for example, differences between jurisdictions as to the meaning of domicile (and differences within the same jurisdiction), and confusion regarding the dependent domicile of a married woman or of an infant and the political associations of domicile in some systems which makes domicile like an alternative to nationality.56 As a convenience factor, ordinary residence is to be preferred to domicile because it is more precise and more easily understood. Consequently, the last "ordinary residence" of the deceased and the "ordinary residence" of a company, etc., will, in this book, be proposed as convenience factors (where at least some of the assets are within the jurisdiction) in appropriate cases on wills and administration of estates, bankruptcy and winding-up, execution of trusts, and the like. The situs of a preponderance of the assets within the jurisdiction should be another convenience factor. It has been said in the House of Lords that even if the proper law to determine the existence or effect of a contract is the lex loci contractus, "it does not in the least follow that the courts of the place where the contract was made always have jurisdiction to entertain a suit 53 Falconbridge, op. cit. note 6, 159. As to the complications caused by the concepts of "personal law" and "domicile," particularly in the matrimonial field, see chap. 2 on choice of law and chap. 6 on recognition of status in family law. 54 See generally, e.g., Falconbridge, op. cit. note 6, chap. 22; Ehrenzweig, op. cit. note 1, 653 et seq.\ Niboyet, op. cit. note 11, s. 1838, Art 59 (8) C. Proc. 55 Batiffol, op. cit. note 22, s. 182; Niboyet, op. cit. note 11, vol. 1, s. 507 et 56 seq. "Le domicile est alors un lieu médiat ou indirect avec un Etat, par le fait d'un certain lieu qui s'y trouve. Il apparaît, dès lors, comme une sorte de sousnationalité, ou plus exactment peut-être, de vice-nationalité." Niboyet, op. cit. note 11, vol. 1, s. 507; Collier v. Rivaz (1841), 2 Curt. 855, 163 E.R. 608; see chap. 3 on renvoi. In thé Québec Civil Code, art. 79, domicile is defined as "principal établissement."

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involving these matters. It is almost obvious to us today that the mere fact that an ordinary contract has been made in a particular country does not confer jurisdiction on the courts of that country to entertain an action with regard to that contract against a defendant who is neither present, resident, nor domiciled in that country when the action is commenced."57 The convenience factors proposed so far include ordinary residence of the defendant within the jurisdiction and breach of the contract within the jurisdiction. The courts of the forum state will have jurisdiction if either of these factors is present, if there has been proper service by the rules (either inside or outside the jurisdiction as the case may be), and if there is no exclusion for public policy or ineffectiveness (as there might be, for example, if the contract were immoral or related to foreign land). Do these convenience factors lead to a sufficient coverage of contract cases? Let us suppose P sues D in Ontario on a sale of goods contract made in Ontario. D is a Colombian resident and the goods are in Colombia. Should the place of contracting be a convenience factor? There could be cases where the principles suggested might operate harshly on the plaintiff, such as where the defendant is a transient purchaser of goods. But the question is whether to crystallize the judge's discretion into a further convenience factor, e.g., place of contracting, or to leave him free to assume jurisdiction (notwithstanding that there are none of the foregoing convenience factors present) where he thinks that there might be hardship on the plaintiff if jurisdiction were refused. The cases are likely to be too varied to be responsive to a convenience factor such as the place of contracting. To make the place of contracting an explicit convenience factor comes near to producing a "rule of thumb," and it is better to leave the court unfettered, although place of contracting might be an element in formulating discretion. I would propose, therefore (subject always to the rules on service, public policy, and "inadequacy"), that even if there is no convenience factor present, and no consent to jurisdiction, the court still should have a discretion to assume jurisdiction in a special case where refusal might be unfair to the plaintiff. The tendency (in the common law systems at least) has been to set up special rules of jurisdiction for family law, especially in relation to 57Ross Smith v. Ross Smith, [1963] A.C. 280, 295 per Lord Reid. As to the Ontario rules for service out of the Province, see note 48. The English courts may permit service out of the jurisdiction in an action to enforce, rescind, dissolve, annul, or otherwise to affect a contract or to recover damages or other relief for breach of a contract made within the jurisdiction or governed by English law, and the court has jurisdiction where service outside the jurisdiction has been permitted and validly effected; S.C. ord. 11, r.r. 1 (e); Halsbury (3rd ed.) vol. 7, 69, and vol. 30, 324.

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divorce and nullity.58 The divorce rule (at common law) is the husband's domicile and there are usually statutory extensions to prevent this rule being unfair against, for example, the deserted wife. Nullity jurisdiction is the high-water mark of confusion, and it would be difficult to say what the law is in Ontario at the present time. The law in England has received clarification from the House of Lords, but there are still points of doubt (e.g., as to whether there is a distinction between void and voidable marriages).59 The question is, should there be a special theory (or theories) for jurisdiction in family law? Would it be practical and just and in keeping with modern social thinking to have the same principles of jurisdiction in family law cases as in other cases, with some small modifications regarding the nature of the problems involved (e.g., the prevention of "divorce mills" and too easy dissolution of marriage) and the understandable desire of people to know their matrimonial status, legitimacy, and the like? The question of "divorce mills" is really one of public policy and is mainly concerned with the prevention of injustice to the defendant, particularly a wife-defendant without substantial means, and with the recognition of foreign dissolutions of marriage.60 Jurisdiction depends upon what is meant by "ordinary residence" (in Scotland it has been interpreted as continuous residence over forty days).61 In regard to recognition of divorces, it may be desirable to stipulate a special period of residence on the part of either plaintiff or defendant (for example, a period of one year).62 If it is the plaintiff who so qualifies, then the defendant would have to be ordinarily resident, in the general sense of the term as interpreted by the lex fori, to produce the necessary convenience factor to give jurisdiction. In other words, the residence for a year would be a necessary condition for recognition, not a convenience factor. Should this period of residence be made an extra rule of jurisdiction in the forum for actions to terminate a marriage (i.e., in relation to local 58 See also chap. 6 on recognition of status in family law; Falconbridge, op. cit. note 5, chaps. 37 and 38; Baxter, "The Law of Domestic Relations 1948-1958" (1958), 36 Can. Bar Rev. 299; "L'évolution récente du Droit de la famille au Canada et en Angleterre" (1958), 11 Rev. Int. de Droit Comp. 697; Payne, "Jurisdiction in Nullity Proceedings," 26 Sask. Bar Rev. 20. WRoss Smith v. Ross Smith, [1963] A. C. 280; Ramsay-Fairfax v. RamsayFairfax, [1956] P. 115; Sfeele v. Steele (1964), 43 D.L.R. 2d, 57, followed the Court of Appeal decision in Ross Smith which was over-ruled by the House of Lords. 60 This topic is discussed in chap. 6. siDewar Gibb, op. cit. note 18, chap. 3. There is an exception in the case of a person with no fixed residence, Linn v. Casadinos (1881), 8 R. 849. 62 This suggestion is discussed more fully in chap. 6 on recognition of status in family law.

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divorces, not recognition of foreign divorces)? There may be no compelling policy reason because the period is a restriction on recognition of foreign divorces that will curb "divorce mills" and "tourist divorces." It would be desirable to have a uniform jurisdictional rule for dissolution of marriage, both as regards recognition and local jurisdiction. This would be more likely to produce a general acceptance of one year's residence as a condition of recognition. It is proposed, therefore, that in an action to dissolve a marriage it should be an extra condition of jurisdiction that either the plaintiff or the defendant has had an ordinary residence in the forum state for at least a year. It is reasonable and commendable that people should wish to have their status ascertained by a court of law. But these questions do not always arise in a pure, declaratory form: they may be mixed up with questions of existing rights of property, ancillary reliefs, and so on. However, if the plaintiff is virtually asking for nothing more than a declaration of status, the court should have a discretion to widen the normal rules (if necesary) and to give a declaratory judgment on the merits.

CONCLUSION The proposals made here are not intended to be a worked-out blueprint for law reform. The chapters are essays and the proposals they contan are meant to suggest a ground-work of concept and policy. The following is a summary of the suggested principles on which the courts of the forum state should refuse jurisdiction (there having been no consent to the jurisdiction) : (A) They should refuse jurisdiction if there is no convenience factor present. The following are examples of convenience factors: ( 1 ) the defendant is ordinarily resident within the forum state; (2) the action relates to a tort, a breach of contract, injunction, or nuisance within the forum state; (3) the action relates to property (or security over property) having a situs within the forum state; (4) in cases relating to wills and administration of estates, bankruptcy and winding-up, execution of trusts, and the like (as appropriate to the circumstances), the last ordinary residence of the deceased and the situs of the preponderance of assets within the forum state are both convenience factors. (B) They should refuse jurisdiction if there is "inadequacy." This applies mainly to foreign land.

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(C) They may refuse jurisdiction on grounds of public policy or diplomatic privilege. (D) They should refuse jurisdiction in actions to dissolve a marriage if neither the plaintiff nor the defendant has been ordinarily resident in the jorum state for at least a year. (E) They should refuse jurisdiction if there has not been proper service (inside or outside the jurisdiction as the case may be). But the court ought to have an over-riding discretion, in certain cases, to assume jurisdiction even where it would be refused on a strict application of rules A to E. Discretion might be exercised, for example, in relation to persons of no fixed residence, to fugitive and transitory defendants, and to declaratory actions on status. This discretionary power would enable the courts of the jorum to operate their jurisdictional rules in a fair and flexible manner, adjusting them to difficult cases and to all the jurisdictional circumstances of a plaintiff's case. At the same time, the discretionary power would be circumscribed by and related to a body of rules sufficient to determine normal cases. Consequently, the proposed jurisdictional system has some "play" in it, but not an excessive amount. It is an important practical consideration that the rules should be relatively simple and straightforward, as far as consistent with a fair determination of a large and complex group of situations, so that legal advice can be given with an expectation of accuracy. The rules to be derived from the foregoing suggestions may not be completely simple, but one can hardly expect them to be, considering the wide variety of jurisdictional questions with which they must deal and the size of the organizational problems involved in framing them. However, these rules are based on discernible principles and depend on the idea that a plaintiff's action should be refused jurisdiction only for a worthwhile policy reason.

CHAPTER! 2

I Choice of Law

IF A COURT is not restricted to the rules of the lex /an, but ought to select the most appropriate law from all the systems available, internal or foreign, then it is embarking on a different kind of inquiry from that in a purely local case. On this basis (which is traditional), choice of law is a means of "shunting" a problem into one of many systems of law. This means that, assuming that there are N available systems and that a legal issue has been raised where there is jurisdiction to deal with it, the function of choice of law rules of the jorum is to refer the problem to one only of the N systems.1 On a strict formulation of this theory, no special weight is given to the lex fori: it is not favoured against the law of Ruritania.2 These ideas have an aura of internationalism, but choice lr The view of Batiffol, Aspects Philosophiques du Droit international privé (1956), is that there should be co-ordination between legal systems so as to minimize the inconveniences and injustices of the multiple-system world in which we live. Cf. Batiffol, Traité élémentaire du Droit international privé (3rd éd., 1959), 3. In the first edition of his treatise, Westlake defined private international law as "that department of private jurisprudence which determines before the courts of what nation each suit should be brought, and by the law of what nation it should be decided;" Private International Law (1858), 1. See Wolff, Private International Law (2nd éd., 1950), 24, to the effect that Bartolus was not concerned with what system of law applied to the facts, but with what relationships fell within a given rule of law. 2 The N systems are quite general and not simply the elements of a federation between which there will usually be an initial measure of uniformity and a constitutional link. It should be borne in mind that modern American writers on conflict of laws concentrate very substantially on internal conflict problems which can make their theories concerning external conflicts of doubtful validity.

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of law rules are part of the total law of a given country and are limited by its boundaries as to enforceability.3 The choice of law rules of a particular country may be motivated by "international" ideas and by principles deemed necessary and desirable for the social existence of countries inter se.4 In the severer forms of the "shunting" theory, the comparative justice of the solutions of the N possible systems is not relevant and the decision of the law suit is developed in three stages. In the first stage, any of the N systems can apply to the problem and all are regarded (prima facie) as equally just. In the next stage, the "shunting" rules of the forum are applied to bring the problem uniquely under one legal system. These "shunting" rules are of a general character, and the court is not supposed to consider the possible solution if system li were applied nor if system /* were applied, and then to decide on the better disposal of the issue. The "shunting" rules are isolated from the justice of the endresult, and so there are two sets of laws in each jorum: choice of law or "shunting" rules, and other laws of the system (sometimes described as "internal" or "domestic"). In the third stage, the selected system of law is applied to produce the end-solution. According to Falconbridge,5 the "subject of the conflict rule is a legal question or problem arising from the factual situation or from some element or elements of that situation." The rule is composed of three parts: (a) the kind of legal question, for instance, capacity to marry, transfer of things inter vivos; (b) a "connecting factor" or "particular local element in the factual situation (domicile of a person at a particular time, the place of doing an act, the situs of a thing, or as the case may be)," this being "the factor which connects the factual situation with a particular country"; (c) the conclusion that the law of that country should be applied.6 3 Perassi, Lezioni di Diritto Internationale (1938), 62, discusses "international" as a classification of rules of international law. See De Nova, "New Trends in Italian Private International Law" (1963), 28 Law & Contemp. Probs. 808, 812. 4 The doctrine of comity has been an important historical factor, for example, the principle of Huber: "Rectores imperium id comiter agunt, ut iura cuiusque populi intra términos eius exercita teneant ubique suam vim, quatenus, nihil potestati aut iuri alterius imperantis eiusque civium praeiudicetur." ^Conflict of Laws 2nd éd., 1954), 39-40, and see generally 37-49 on the structure of a conflict rule. *Ibid. Cf. Rabel, The Conflict Laws, vol. 1 (1945), 42-3. For a comparative discussion see Goldschmidt, Derecho Internacional Privado (1952), vol. 1, s. 15 ("Los puntos de connexion") where it is said (317) that "Estos puntos de contacto funcionan como 'variables* en las Matemáticas que, según los casos, pueden

Choice of Law

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THE "FORMAL CONDITIONS" OF "SHUNTING"

Suppose that the problem is whether a ceremony of marriage between H and W was valid. The class of legal question is that concerned with the formal validity of marriages. If the conflict rule of the jorum connects this class with the law of the locus celebrationis, the problem is uniquely solved. Whether the final disposal by this law is a model of enlightened justice, or is oppressive and unfair is not relevant to the application of the conflict rule (unless the public policy of the jorum is involved,7 and, in the common law jurisdictions at least, public policy does not often function explicitly.8 Let us construct a class of issues sa. If every sa had its own connecting factor, the number of these factors would become unmanageable. Therefore, classes are formed on the basis that x can have many possible values but that the number of different classes will be small. The next step is to find a link between a connecting factor and a legal system, and, formally, anything will do which is capable of reducing the choice to one. Any factor which cannot do this is ineffective, and so the necessary and sufficient characteristics of a connecting factor from the formal point of view are that it be associated with each legal question within the class and that it be linked with only one of the available jurisdictions. These conditions will be referred to as the "formal conditions." In the example of the validity of a marriage ceremony, the formal conditions are satisfied by the locus celebrationis—it is part of the fact situation, and it will have a geographical position in only one jurisdiction. The forum will also satisfy the formal conditions because the place where the action is raised is a fact associated with the legal question; but the same issue can be raised in any forum which has jurisdiction by its local law, and in this sense the forum chosen has a different kind of "fixity" than, for example, the locus celebrationis. Indeed, the formal conditions will be satisfied by any "fact" able to be associated with each element of the class sz and within the locus of one only of the N legal systems. revestir cualquier valor." See also Emilio Betti, Problemática del Diritto Internazionale (1956), 65-8: Robertson, Characterization in the Conflict of Laws (1940), chap. 4. ?Cf. Kenward v. Kenward, [1951] P. 124, where a marriage in the U.S.S.R. was held invalid because the celebrant had omitted certain formalities (presumably without the knowledge of the parties) and Alspector v. Alspecîor, [1957] O.K. 14 and 454, where no marriage licence was obtained, but the marriage was upheld because the parties intended to be validly married. See also Baxter, "The Law of Domestic Relations 1948-1958" (1958), 36 Can. Bar Rev. 299, 300, 304. 8 See chap. 6, as to public policy and "ordre public."

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"REAL" AND "PERSONAL" C O N N E C T I N G FACTORS For historical reasons connecting factors are usually related to things or persons.9 "Real" connecting factors usually satisfy the formal conditions, for instance, the locus celebrationis of a marriage or the situs of land or a chattel. Most connecting factors are not pure facts, and so the determination of a problem by a "real" connecting factor may not always be simple. When we turn to "personal" connecting factors, such as nationality or domicile, the situation is different. A personal connecting factor does not, in general, satisfy the formal conditions. Disputes involve more than one person, but a personal connecting factor relates to only one individual. Suppose that the conflict rule of the jorum is that capacity to contract shall be determined by the law of the nationality. Unless the nationalities are the same, a supplementary rule will be needed. This supplementary rule might be that the contract will only be valid for capacity when each party has capacity by his national law. This would mean that the forum might find a contract invalid by reason of an incapacity pertaining to A by the law of his nationality, although the same reason would not affect the validity of the contract by the local law of the other nationalities or the jorum. Another possible supplementary rule is that the contract will be valid for capacity if valid by the local law of at least one of the parties. In general, the personal type of connecting factor relates the legal question to a characteristic of an individual.10 The idea of a man carrying his own law about with him—like his religion, clothes, and personal luggage—has had great influence. The connecting factor must be something that will pertain to every member of the class sx so that the connecting factor must be "universal." The connecting factor must also be unique—it must channel the issue to one system of law. The personal law has universality in the required sense but not always uniqueness. ANALYSIS OF THE FORMAL CONDITIONS: CHOICE OF LAW SCHEMES Let us construct some choice of law schemes and examine them with reference to the formal conditions. 9Yntema, "The Objectives of Private International Law" (1957), 35 Can. Bar Rev. 721. 10 The meaning of nationality and domicile can vary substantially from one

Choice of Law

25

SCHEME ONE

Let / represent a connecting factor which is common to all legal questions of the class sx. The uniqueness requirement is satisfied if / can lead to one only of the N systems. SCHEME TWO

Arrange the N systems in alphabetical order and let each court of the forum (as from a certain point of time) allocate the first cause in time which comes before it to the first system (in alphabetical order) and so on.11 An order is determined for both the systems and the legal questions and they are co-ordinated with each other. There is no a priori objection to either scheme, since all the N systems (including the forum) are regarded, at this stage, as equally capable of producing a fair and workable solution. The first scheme functions by means of a specially constructed, intermediate, general class, lying between the particular legal question and the particular system which is to govern it; the second is an operational connection between the set of questions and the set of systems. SCHEME THREE

If the conditions are suitable, a dispute between parties with different personal laws can be referred to a supplementary "federal" system. This method of dealing with disputes might return to fashion with a development of federalism and supra-national regionalism, such as in the case of the European Communities. It can only operate, of course, where there is some concurrent jurisdiction of legal systems. Scheme three is logically effective only if the supplementary legal system exists concurrently with each of the sx. SCHEME FOUR

A "shunting" system can be set up by designating preferred jurisdictions for certain kinds of legal question. By this plan, the forum jurisdiction to another. Whereas nationality applies to a country, problems may arise between states or provinces (in the case of a federation) and the formal conditions will not be satisfied without supplementary rules. llr This would result in a high proportion of domestic problems being allocated to foreign law because, for the moment, we are considering a choice of law operation purely as a formal exercise based on the principle ¿hat all the systems prima facie will produce an equally just and reasonable final solution; Currie, "Verdict of Quiescent Years: Mr. Hill and the Conflict of Laws" (1961), 28 17. of Chi. L. Rev. 258, 271. It has been proposed (as an axiom) that a foreign fact element should inevitably produce an international law problem and a reference to choice of law rules; see Francescakis, La théorie du renvoi (1958), 11.

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accepts the view of the preferred jurisdiction for the issue involved without regard to what system of law that jurisdiction has applied or would apply. This theory has been developed in English law, where, for instance, in the matter of recognition of foreign divorce judgments, preference has been given to decisions by the courts of the husband's domicile.12 It is similar to scheme one except that the association is with a jurisdiction and not with a system of law. It is obvious that if different countries use different "shunting" rules (in addition to defining connecting factors and other relevant concepts in different ways) there can be a great deal of complexity and variation. At the present time, there is no uniformity, even as to the formal structure, between the "shunting" rules of different countries. There is, however, a preference for the first and the fourth schemes. If one were devising a system de novo (in a highly developed country with electronic computers and fast communications), there might be an argument for the second scheme. For the third scheme to operate effectively, a supplementary system of law, L, must exist concurrently with the set of individual systems and, in practice, this will occur only regionally or federally. Also, there will be extra-regional or extra-federal problems beyond the range of scheme three because L does not operate externally, and so, if scheme three is applied, there will be two theories, one for regional or federal problems, and another for external problems.18 In comparing schemes one and four, we must distinguish between whether a foreign court has or has not made a judgment on the issue. If a judgment has been made so that the problem is one of recognition, scheme four can be applied on the basis that the jorum will recognise a judgment by the preferred jurisdiction but not a judgment by another jurisdiction.14 If a judgment has not been given, then a reference to a certain jurisdiction must be to the law of that jurisdiction (perhaps including its conflict rules).15 Therefore, apart from recognition problems, schemes one and four are hard to distinguish. Scheme one will work for recognition as well as for other questions, a possible basis being that the 12

See chap. 6. Scheme three is to be distinguished from the situation where some of the laws to which a person is subject are federal and some are state or provincial. In this situation it is the interpretation of the rules which determines which type of law will apply. 14 This is the approach of the common law countries in regard to divorce and possibly to nullity. 15 There may be ambiguity as to whether a reference to the law of a country means a reference only to its domestic or to its "total" law (domestic law plus conflict rules). This is discussed in chap. 3. 13

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27

forum will recognise a judgment of a foreign court if it has applied that law which, by the choice of law rules of the forum, would be applied to the issue.16 Scheme four means that two different concepts of jurisdiction may exist, local jurisdiction, and "international" jurisdiction. This can be another source of complexity and confusion. THE LOGICAL STRUCTURE Using scheme one, what is the logical structure for the determination of a legal problem? Again, take as an example the formal validity of marriage and let the choice of law rule of the forum be that the ceremonial validity of a marriage is governed by the place of celebration. The chosen law requires the fulfilment of a set of conditions for ceremonial validity; the outline of the reasoning is: (la) Ceremonial validity is governed by the law of the place of celebration. (Ib) The particular marriage was celebrated in Ruritania. (2a) By the law of Ruritania, if conditions X are fulfilled, a marriage is valid as to ceremony. (26) In the particular marriage, conditions X are satisfied. Typical general characteristics are (1) that parties can be regarded as connected with somewhere; (2) that something has been done, or has to be done, somewhere; (3) that a res is involved which is located somewhere; (4) that a jorum has jurisdiction to decide the question. In traditional terms, these may lead to (1) lex personalis; (2) lex actus, (3) lex rei sitae; (4) lex fori. THE RELATIVE MERITS OF DIFFERENT FORMALLY EFFECTIVE CONNECTING FACTORS There is no ground, purely from the point of view of formal structure, for preferring one workable connecting factor to another. In this, there lies a major difficulty in the construction of choice of law rules by "shunting" approach. To prefer one possible factor to another, we must introduce other considerations not derived from formal structure. Where do we find these considerations and how are they justified? It is said that one should not examine the comparative justice of endresults by different systems (although public policy may operate as an URabel, op. cit. note 6 (2nd éd., 1958), vol. 1, 508 et seq.

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ultimatum remedium). This view implies that all internal systems of law (as they bear on the question in issue) are equally just and efficient and have nothing about them to induce a preference. It is argued that if this attitude is not taken, the courts will be faced with the unmanageable task of examining the end-solutions in a variety of different systems of law and then choosing the one that appeals most from the point of view of reasonableness and fairness. But if we are not to take these factors into account as they pertain to the end-solution, we must establish separate criteria of reason and justice for the choice of law rules per se, and (reverting back to the outline of reasoning given above), this means that the considerations by which we seek to justify proposition (2a) may be different from those by which we seek to justify proposition (la), although both justifications should depend upon reason and fairness. In regard to (la) we seek to justify the rule while ignoring the effect of the choice on the final disposal of the case. Is it really possible to value connecting factors inter se and to prefer one of them under the conditions that the end-solution is ignored and that, a priori, all the legal systems are regarded as of equal weight and equally capable of doing justice? Suppose that the question is the validity of a contract for sale of goods. Various connecting factors could produce an effective "shunting," for example, (i) the nationality or the domicile of the seller or the buyer at some determinable time; (ii) the place where the contract was made; (iii) the place where the contract is to be performed; (iv) the location of the goods at some determinable time; (v) the location of the forum. If we limit ourselves to the time of the event and the time of the court action, there are four possibilities under (i), one each under (ii), (iii), and (v), and two under (iv): a total of nine. There have been many ingenious arguments as to why one logically effective connecting factor should be preferred to another. For example, one factor may have achieved a greater degree of veneration for historical reasons (aided by the sanctity of a Latin maxim); the legislature or courts of a jurisdiction may have favoured a certain factor—they had to favour something; legal scholars may argue that one factor is "more closely associated" with the question or "more intellectually satisfying" that another; or it is said that a man's affairs should be governed by the law of the place where he has made his home. But all of these arguments have led to an abundance of empty maxims, dogmatic repetitions, and mystical arguments, such as, idealistic "internationalism" and "comity of nations", which bolster codes and judgments and fill out multi-volume texts.

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AN ALTERNATIVE TO " S H U N T I N G "

Arguments can be made in favour of the forum applying its own law:17 (a) a high proportion of the problems which come before the courts of a jurisdiction relate to fact situations within its boundaries; (b) in an even higher proportion of cases, there will be no practical difficulty in the forum disposing of the issue by its own law; (c) the judges and lawyers are trained in their own law and only exceptionally in the law of any other jurisdiction; (d) if the lex fori is applied, the awkward matter of proving foreign law is avoided; (e) the judgment can be implemented and enforced by the law of the country (together with any reciprocal foreign enforcement which may be possible). Suppose that A and B, both Utopians, have a car accident on a Utopian highway, and A sues B in a Utopian court. The people of Utopia (unless they are "shunting" addicts) will expect that such a situation should be dealt with by domestic law. If foreign law is applied, the court may have to decide its principles from expert evidence on alien concepts and usually from translated sources which will affect the efficiency of its operation and the justice of its decision. There is an "atomism" about applications of foreign law.18 Some countries provide for a special inquiry into the foreign law,19 but in all cases, in both initial inquiry and facilities for appeal, investigation of foreign law inevitably falls short 17

C/. Rabel, op. cit. chap. 2 note 6; Cavers, The Choice-of-Law Process (1965), 82-7; Currie, Selected Essays on the Conflict of Laws (1963), 8-9. In earlier times, some laws were associated with persons (with a consequent mobility), while others were connected with physical things (such as land), due to the great importance of personal status and of land as property in the Middle Ages and18 later. "I1 est évident que les faits auxquels il s'agit d'appliquer la loi étrangère ne sont pas identiques dans les différentes espèces et que, d'autre part, en cas de rapports juridiques identiques, ce n'est pas toujours la même loi étrangère qu'il y a lieu d'appliquer. Dans ces conditions, la violation de la loi étrangère se présente en réalité sous forme d'erreurs isolées commises dans l'application d'une certaine loi étrangère aux faits d'une cause déterminée, et dont la portée se trouve en conséquence limitée aux parties à l'affaire en question . . . il est permis de penser que, de même le manque de portée générale des cas d'application de la loi étrangère a contribué au refus de la Cour Suprême de contrôler l'interprétation de cette loi;" Zajtay, La condition de la loi étrangère en Droit international privé français (1958), 42. 19 "In the event of difficulty in the application of foreign laws, the court may request the Ministry of Foreign Affairs to communicate with the respective foreign government for the purpose of obtaining an opinion on the question involved. Such opinion shall be transmitted to the court by the Ministry of Foreign Affairs;" The Code of Civil Procedure of the U.S.S.R., art. 8; Gsovski, Soviet Civil Law (1949), vol. 2, 557. This article was carried over from the Code of Procedure before the revolution; Makarov, Précis de Droit international privé d'après la

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(in efficiency) of the application by the forum of its own law. In applying foreign law, the court operates in area for which it is not really suited, either by organisation or by training, and this is true to a greater or less degree whatever the method of establishing foreign law, i.e., whether it is treated as a quasi-fact or whether it is to be ascertained by the court from the study of authorities. There are tribunals which administer different systems of law: the Judicial Committee of the Privy Council, the Supreme Court of Canada, and federal courts in the United States under the "Klaxon" doctrine, for example. With the development of the European Communities there may be more of this kind of thing. Also, of course, the process is much easier for "internal" conflicts within a federation where the possible applicable laws are closely related, such as in the common law jurisdictions of Canada. The process can be much more difficult for an "external" conflict question, with, say, Ontario, Poland, and Spain as the possible applicable laws. Despite Stair's adage that a man must ponder and digest in his mind the common law of the world to become a "knowing lawyer", few can be good judges in more than one system of law (not to mention N systems), even with expert witnesses and modern libraries. The N-dextrous court is a myth (where N is unrestricted). DISADVANTAGE OF DUALISTIC

SOLUTIONS

The means of carrying the judgment into effect are determined by the forum.20 There is also a tendency to recognize foreign judgments on status and title and to allow (indirect) reciprocal enforcement in some situations. Thus a judgment given in terms of the law of Jy may have to be enforced by the concepts and legal machinery of Jx, which may be different from those of Jy. A court case is not a group of separate legal questions, but the settlement of a dispute, and to resolve the dispute by partial reference to two systems of law yields a dualistic solution which can produce inefficiency, doubt, and awkwardness. The determination of a whole case by a single system of law, and a fortiori by the lex fori, is the most likely to be simple and efficient. législation et la doctrine russes (1933), 100-101. In West Germany, the courts have available for opinions well-equipped institutes of international and foreign law, such as those at Hamburg or Berlin. As to developments in the United States and judicial notice of foreign law, see Cavers, op. cit. note 17, chap. 11. 20 In regard to judgments in personam, reciprocal enforcement is usually limited to final judgments for debt or a definite sum of money. One may consider in the same context, Full Faith and Credit recognition of judgments in the United States of America; Ehrenzweig, Treatise on the Conflict of Laws (1962), s. 47, 166.

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EXCEPTIONS TO THE LEX FORI

Should the lex fori be advocated for the solution of di legal problems? A system in which N jurisdictions each applied their own law and never foreign law could give satisfactory solutions in a large number of cases. Are there situations where this application will produce solutions that are unacceptable? Unacceptability will not be due to the formal conditions. In general terms, the disposition of a legal issue may be criticized because it is inefficient or unreasonable in operation (as an element in the social machinery of the country); because it is unfair to the parties involved in the dispute; or because it is undesirable from the point of view of the community and public policy.21 It is important to see the difference in principle between (a) a "shunting" approach and (ft) a process of determining in what areas the lex fori will give undesirable solutions. The root of the objection to (a) is that the rules produced by this approach tend to be a "transcendental body of law."22 As for the (b) attitude, it has been said that "once a court has taken jurisdiction, it will usually apply its own law, unless the parties' own choice or an important foreign fact, such as a foreign domicile, a foreign situs, or a foreign conduct, appear to require application of another law."23 It is understandable that a court will not wish to apply unfamiliar law, unless it is persuaded that there are substantial reasons for not using the lex fori.24 If the lex fori is the court's basic choice of law rule, we begin our investigation with one system—not 21 For 22

a discussion of these criteria, see chap. 6. Currie, "Change of Venue and the Conflict of Laws: A Retraction" (1960), 27 U. of Chi. L. Rev. 341, 343, says that "This position assumes that it is possible to develop a rational system of conflict of laws in the abstract, independently of the policies and interests of the governments legitimately concerned, and independently of the construction and interpretation placed by the courts of a state upon its laws. This, I am now convinced, is an impossibility." 23Ehrenzweig, "Basic Rule in the Conflict of Laws" (1960), 58 Mich. L. Rev. 637, 643, suggests that the lex fori should be taken as the basic choice of law determinant with "relegation of traditional conflict rules to the status of exceptions keyed to ever narrower fact situations. . . ." The reason is that choice of law "formulas have in turn relegated both party autonomy and the basic lex fori to the status of exceptions, and have, in spite or rather because of their consistency and simplicity, brought this branch of the law to the brink of defeat." See also Ehrenzweig, "Statute of Frauds in the Conflict of Laws: The Basic Rule of Validation and Contracts in the Conflict of Laws" (1959), 59 Col. L. Rev. 874 and 973; op. cit. note 20, s. 175 et seq. For a discussion of present applications of the lex fori in English law see Webb, "Some Thoughts on the Place of English Law as Lex Fori in English Private International Law" (1961), 10 Int. and Comp. L.Q. 818. 24 Renvoi is discussed in chap. 3.

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with N systems—and our object is the discovery and study of exceptions to the lex jori. There may still be a choice of law problem for the court under the lex jori approach but is is not "transcendental." We will describe the body of law of a country, other than its conflict rules, as the "standard" law of the jurisdiction. Whether (a) there should be a deviation from the standard law, and (b) how this deviation should occur with respect to which foreign system will usually coalesce into one question since the considerations which provide an affirmative answer to (a) will at least indicate (and will normally make it obvious) which foreign system should be preferred. THE EXCEPTION

OF I N A D E Q U A C Y

An example of a situation in which a court ought to find it irrational to apply its own law is the celebration of a marriage.25 H and W go through a ceremony of marriage in jurisdiction Ji and an action for nullity is brought in J2 on the ground that the marriage is invalid as to form. The rules of /j and J2 will usually necessitate carrying out certain formalities,26 and will not apply outside the jurisdiction, so that the court in J2 cannot usefully ask whether H and W complied with a Marriage Act in J2. There is thus a lacuna in the standard law of J2. J2 may require a special type of religious ceremony,27 and, assuming that this ceremony is one which may be correctly celebrated in JÍ9 it is then possible for J2 to apply its confessional rule to the marriage in /j. Since, however, a state will include people of different religious faiths who cannot all be expected to marry by the same kind of religious ceremony, J2 will not (in modern conditions) apply a confessional law to all marriages, but only where H and W, or one of them, are of a certain religious faith. Thus it is a characteristic of laws on the formal validity of marriage that they are limited in their application to a geographical area or to a kind of person. Where the marriage in question Ues outside these limitations, it is necessary for the forum to introduce rules for a marriage celebrated in a foreign country or between persons of different religious faiths. Thus, in questions of formal validity (depending on the structure 25

See chap. 6 for a comparative discussion of the validity of marriage in the common law and French law. 26/W¿

27See Chapelle v. Chapelle, [1950] P. 134; Rigaux, La théories des qualifications en Droit international privé (1956), s. 262 (on "lois confessionelles"); Greek Civil Code, art. 1367; Spanish Civil Code, art. 42, Muñoz, Comentarios a los Códigos Civiles de España e Hispanoamérica (1953), 104; Desjardins, Le mariage en Italie (1933), chap. 6; T. de Tilière, Le mariage dans le Concordai Italien (1936), chap. 3; see Makarov, op. cit. note 19, 324, as to the confessional character of pre-revolutionary Russian marriage law.

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of the law of the forum, there should be an exception to the lex fori in favour of the lex loci actus. This is an example of a general class of exception to the lex fori caused by the inadequacy (or incompleteness) of the standard law of that system. Examples are laws dealing with marriage formalities, execution of wills and documents, registration of securities, such as mortgages, in the common law countries, formalities as to registration of title and change of ownership, and so on. All questions of formal validity, however, are not of this type. For example, the standard law of J2 may prescribe that a document must be executed before two witnesses, or before an official of a kind existing in both /i and J2. The formalities required by the law of J2 could be carried out in Ji. So if the lex loci actus is now to be applied in J2, it must be applied for some reason other than "inadequacy". A typical "other" policy reason is where X and Y attempt to make a certain type of contract in J±. Neither X nor Y may be a national or a domiciliary of J2 (the forum) or even resident there. The conflict rule of J2 applies the lex fori9 but X and Y, in good faith, make the contract according to the validity conditions of Ji. X and Y may have followed that law because they had asked a local lawyer how to execute the contract and had taken his opinion. The parties intended to make a valid contract. Is it to be the policy of J2 that the contract shall be invalid because X and Y have observed the forms of Ji instead of those of J21 The preference may not be inadvertent because the parties (or one of them) may desire that the contract shall be formally valid in /i. With these various considerations in view, J2 may see fit to modify a strict rule of the lex fori, perhaps to the effect that there will be formal validity if either the lex fori or the law of some other system has been observed. For example, according to Falconbridge: "As regards the formal validity of a will of 'personal estate' made by a British subject outside the United Kingdom, s. 1 of Lord Kingsdown's Act passed in 1861 by the Parliament of the United Kingdom, permits the use of the forms required by the law of the place of making or by the law of the domicile of the testator at the time of making or by the law of the domicile of origin of the testator within the British dominions, and if the will is made within the United Kingdom, s. 2 of the statute permits the use of the forms required by the law of the place of making".28 As to the general purpose of Lord Kingsdown's Act, he says: "The object of the statute was to avoid having wills of 'personal estate' declared invalid, in point of form, in cases in which under the old law a testator had made a mistake in using the form prescribed by one law when he should have used the form prescribed by another law. The 28

Falconbridge, op. cit. note 5, 532.

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statute accordingly validated wills made in accordance with the forms prescribed by one of several laws, including the law of the place of making . . . ,"29 The French Civil Code permits the use of local forms, providing that a Frenchman "qui se trouvera en pays étranger, pourra faire ses dispositions testamentaires par acte sous signature privée, ainsi qu'il est prescrit en l'article 970 ou par acte authentique, avec les formes usitées dans le lieu où cet acte sera passé."30 The question has been raised in French law whether the application of the lex loci actus to questions of form is obligatory or merely permissive. As far as wills are concerned, the wording of article 999 is uncertain, but possibly the emphasis on the law of the place of making depends on the historical importance of this factor from the time of the Middle Ages both in regard to form and substance.31 As regards the formal validity of a contract, English law appears to allow the lex loci actus and the proper law as alternatives, but the law in the United States does not favour the lex loci actus to the same extent.32 There is uncertainty as to whether form and substance should be separated and whether the place of performance should be used as at least a permissive connecting factor in regard to form. The question of form is difficult to separate precisely from other issues, notably from that of the substantial or intrinsic validity of the act or transaction. wibid., 533. 30Art. 999, Batiffol, Traité élémentaire de Droit international privé (1959), s. 667, states that "Les dispositions à titre gratuit sont soumises pour la forme, comme tous les actes juridiques, à la règle locus régit actum." See also LereboursPigeonnière, Droit international privé (7th éd., 1959), s. 485. 31 Batiffol, op. cit. s. 286; Niboyet, Traité de Droit international privé français, vol. 5 (1948), s. 1460; Caste!, "De la forme des actes juridiques et instrumentaires en Droit international privé québécois" (1957), 35 Can. Bar Rev. 654. As to the optional character of lex loci actus embodied in art. 26 of the Italian Civil Code, see Betti, La forma degli atti nel diritte internazionale privato (1960), 28 et seq. The Spanish Civil Code, art 11 and the Civil Code of the Argentine, art. 950, embody the lex loci actus\ Goldschmidt, op. cit. note 6, vol. 2, s. 28. 32 Falconbridge, op. cit., note 5, 380-81. According to Scudder v. Union National Bank (1875), 91 U.S. 406, execution validity and interpretation of a contract should be governed by the lex loci contractus (except for contracts as to land which should be governed by the lex rei sitae). It has been suggested that, in general, the validity of property conveyances should be determined by the lex rei sitae, as should wills relating to real estate, although the general rule for wills of movables (where there is no special statute) is the lex domicilii: Robertson v. Pickrell (1883), 109 U.S. 608, In Re Beaumont (1907), 65 A. 799, 216 Pa. 350. In Reilly v. Steinhart (1916), 112 N.E. 468, Cardozo J. distinguished between foreign law affecting basic validity and foreign law affecting the nature of the remedy. The case concerned a Cuban law which left the contract valid but which prescribed formalities as a pre-condition for specific performance. The forum was not required to follow the Cuban requirements since they went to remedy and procedure and were not true validity conditions.

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A LIBERAL APPROACH Besides "inadequacy," which depends on the structure of the standard law of the forum, validity may be concerned with what can be described as "liberalism." A Ruritanian executes his will in Ruritania in conformity with the validity conditions of the law of Ruritania. An issue of validity arises before a court of Utopia and the execution of the will is not in conformity with the validity conditions of Utopia. Validity conditions are sometimes artificial, and thus Utopia may feel that justice would not be helped by invalidating the will. To make the validity conditions of the locus actus or some other foreign system exclusive and mandatory seems pointless where there is no inadequacy. In the example given, let the Utopian validity conditions be that one witness must be present and subscribe. Suppose that there had been one witness to the execution of the will in Ruritania but that the (different) Ruritanian validity conditions were not observed. Is there any good reason why Utopia should prefer the Ruritanian concept of a valid will to the concept of the same by Utopian standard law and so declare the will invalid? The policy question in "liberalism" is the importance which the jorum attaches to the particular validity condition with which there has been failure to comply. Principles of "liberalism" should be subject to public policy, whereby, if the conflict rules produce a result repugnant to the ideas of the jorum, they will be disallowed and the lex fori substituted.33 INTERPRETATION OF CONTRACTS Are there circumstances in which the forum should apply foreign principles of interpretation in preference to its own? If X and Y are Italians and their contract is written in Italian and the case has come before a Mexican court, should the interpretation be determined by Italian or Mexican law? The Mexican court may be unfamiliar with Italian rules of interpretation. The parties may also have specified a system of law for interpretation which may not be the lex fori. The rules of interpretation of contracts in modern jurisdictions do not differ very substantially and are built around the underlying intention of the parties. Should the law of the forum provide that a contract may be interpreted by a foreign system when such a desire is express or implied in the language used in a written agreement? We are approaching the general topic of choice of law by the wish of the parties. A contract between X and Y contains a clause that the 33

See chap. 6 as to the public policy exception.

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contract shall be governed by the law of Ruritania. A dispute on the contract arises in a court of Utopia. Should Utopia give a solution by the principles of Ruritanian law in preference to those of Utopian law? The dispute is about the validity of the contract. If the contract is invalid in either jurisdiction, then the clause in the contract selecting Ruritanian law may also be invalid there. CHOICE OF LAW

BY THE PARTIES

Some feel that to allow the parties to select the governing law is to place them above the law.84 Normally the parties select what they want to do and it is the law which determines the legal consequences of their selection.35 Is the desire of the parties per se a sufficient reason where the lex fori is not inadequate? Is a solution by the chosen law more just, more reasonable, or more expedient, merely because the parties want it, than, say, a solution by the lex foril The important question is not, what law do the parties want, but what is the most just solution of the dispute.36 Consider the same two Italians who expressed their contract in Italian law and where the question of interpretation has arisen before a Mexican court. Are there disadvantages to interpretation by Mexican law? In most systems the main rule is that effect should be given to the intention of the parties, and the function of interpretation is to enable the courts to resolve doubts regarding the intention in a systematic manner. The Mexican Civil Code provides that if the terms of a contract are clear and leave no doubt as to the intention of the parties, the clauses will be construed in their literal sense, unless the words seem contrary to the evident intention.37 A similar principle appears in the Italian Civil Code.38 Both Codes favour an interpretation that will give some effect to the contract39 and both refer to custom in the event of ambiguity.40 There is a general similarity between the approach of the two systems to interpretation, and there is no significant difference in policy objectives. The document was written in Italian and to translate it into Spanish will not 34 See 35

the summary of various arguments in Falconbridge, op. cit. note 5, 406-17. To select an unconnected law suggests an attempt to evade some law that would otherwise apply and this resembles the French doctrine of fraude à la loi; L. de Vos, Les problèmes des conflicts de lois (1947), vol. 2, s. 549 et seq. 36 Ehrenzweig, op. cit. note 20, s. 124, 353. 37Art. 1851. 38 "Nell interpretare il contratto si deve indagare quale sia state la comune intenzione délie parti e non limitarsi al senso letterale délie parole"; Art. 1362. 39 Mexican Civil Code, art. 1853; Italian Civil Code, art. 1367. ^Mexican Civil Code, art. 1856; Italian Civil Code, art. 1368.

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remove any ambiguities. One must distinguish here between (a) translation and questions of semantics and (6) rules of law on interpretation, because, whether the Mexican court interprets by its own law or by Italian law, it will require a Spanish translation and it will reach a decision on the basis of that translation. Whether Italian or Mexican construction rules are used, the Mexican court will need to understand an Italian document and any technical terms of Italian law. The important consideration is not whether Mexican or Italian interpretation law is applied, but that the Mexican court should have available to it sufficient aid from Italian experts—lawyers, interpreters, and the like—to enable it to give a sensible meaning to the Italian document. In regard to the interpretation law in the Civil Codes of the two countries,41 it would seem preferable for the forum to apply its own rules because it understands them better. On this basis, the rule would be the application of the lex jori to questions of interpretation; but the standard law of the jorum should require that, if the contract is in a foreign language or has foreign associations, the court should be given adequate help from experts. The Mexican court, so assisted, would first attempt to ascertain the meaning of the agreement and the intention of the parties.42 Any resulting ambiguities would then be resolved according to the rules in the Mexican Code. It has been said that, since contracts, in contrast to wills and trusts, embody the wishes of at least two parties, the "real and harmonious intention" does not represent a single "objective" meaning "but any (subjective) meaning that on the facts can be imputed to both sides. The foreign origin or operation of a contract can affect this interpretation only as one of the factors that assist us in deciding upon this imputability."43 But suppose the parties have written a document with the intention that it should be construed according to a particular legal system and have expressly asked for such an interpretation in the document? Rules of law bearing on this problem may be placed in two classes: subordinate rules, which yield to the intention of the parties and come into play when that intention is ambiguous; dominant rules, which over-ride the intention of the parties because that intention has come up against some strong public policy. The jorum should apply its own ideas of public policy, and not those of other systems of law, so the dominant rules will be part of the lex jori. X makes his will with regard to a subordinate rule ^Mexican Civil Code, arts. 1851-7; Italian Civil Code, arts. 1362-71. 42 Cf. Chatenay v. Brazilian Submarine Telegraph Company, [1891] 1 Q.B. 79, 84, per Lord Esher M.R. 43 Ehrenzweig, op. cit. note 20, s. 186, 492; Corbin, On Contracts (1952), ss. 532-60.

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RI of Ji and inserts a clause that it is to be interpreted according to the law of /j, the forum being /2. We will assume that the issue is only affected by subordinate rules. R2 (the appropriate subordinate rule in 72) will yield to the express or implied intention of the testator; and, if J2 has the kind of standard law suggested for the Mexican case, a legal expert of J± will be brought in to assist the court. The association with Ji indicates that the testator intended the distribution to be that produced by RI. This evidence of intention, if established and given sufficient weight by /2, will displace the rule R2 and will determine the distribution. Such matters as the use of a foreign language, or the intention that a foreign rule of construction be applied, then, are not grounds for the application (as such) of foreign interpretation law in the event of ambiguity; these matters, however, may well be evidence bearing on the intention of the party or parties as to the desired operation of the agreement or document and so as to its meaning. ENFORCEMENT OF CONTRACTS So far we have been dealing with validity and interpretation. The only substantial impediment to the application of the lex fori is "inadequacy" in regard to validity. Another major class of contract problem is concerned with enforcement. The question again is the effectiveness of the lex fori: whether there are situations in which it would be more just and reasonable for a court of /