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Maxim of Private International Law

1: LEX SITUS

1.1 Definition

The term lex situs (Latin) refers to the law of the place in which property is situated for the purposes of the Conflict of laws. For example, property may subject to tax pursuant to the law of the place of the property or by virtue of the domicile of its owner. Conflict is the branch of public law regulating all lawsuits involving a “foreign” law element where a difference in result will occur depending on which laws are applied.

1.2 Explanation

When a case comes before a court and all the main features of the case are local, the court will apply the lex fori, the prevailing municipal law, to decide the case. But if there are “foreign” elements to the case, the forum court may be obliged under the Conflict of Laws system to consider:

  • whether the forum court has jurisdiction to hear the case (see the problem of forum shopping);
  • it must then characterise the issues, i.e. allocate the factual basis of the case to its relevant legal classes; and
  • then apply the choice of law rules to decide which law is to be applied to each class.

The lex situs is a choice of law rule applied to identify the lex causae for cases involving title to, or the possession and use of property. In law, there are two types of property:

  • Real property is land or any permanent feature or structure above or below the surface. Ownership of land is an aspect of the system of real property or realty in common law systems (immovable in civil law systems and the Conflict of Laws).
  • All other property is considered personal property or personally in common law systems (movables in civil law systems and the Conflict of Laws), and this property is either tangible or intangible, i.e. it is either physical property that can be touched like a computer, or it is an enforceable right like a patent or other form of intellectual property.

Properly speaking, the term lex situs is applied only to immovable property and lex loci rei sitae ought to be used when referring to the law of the situs of movable property but this distinction is less common today and is ignored for the purposes of the Conflict pages on the Wikipedia. Land has traditionally represented one of the most important cultural and economic forms of wealth in society. Because of this historical significance, it is vital that any judgment affecting title to or the use of the land should be enforceable with the minimum of difficulty. Hence, compliance with the lex situs should produce a judgment in rem. The choice of law rules are as follows:

  • immovables, by definition, do not move and so the identification of the lex situs will not present a problem in the majority of cases;
  • because movables may be portable, the lex situs is the law of the state in which the personalty is resident at the time the case is heard.

2: LEX LOCI CONTRACTUS

2.1 Definition:

In the conflict of laws, the lex loci contractus is the Latin term for “law of the place where the contract is made”.

LEX LOCI CONTRACTUS, contracts. The law of the place where an agreement is made.
2. Generally, the validity of a contract is to be decided by the law of the place where, the contract is made; if valid, there it is, in general, valid everywhere. Story, Confl. of Laws, Sec. 242, and the cases there cited. And vice versa if void or illegal there, it is generally void everywhere.

  1. There is an exception to the rule as to the universal validity of contracts. The comity of nations, by virtue of which such contracts derive their force in foreign countries, cannot prevail in cases where it violates the law of our own country, the law of nature, or the law of God. 2 Barn. & Cresw. 448, 471. And a further exception may be mentioned, namely, that no nation will regard or enforce the revenue laws of another country. Cas. Temp. 85, 89, 194.
    4. When the contract is entered into in one place, to be executed in another, there are two loci contractus; the locus celebrate contractus, and the locus solutionis; the former governs in everything which relates to the mode of construing the contract, the meaning to be attached to the expressions, and the nature and validity of the engagement; but the latter governs the performance of the agreement. 8 N. S. 34. Vide 15 Serg. & Rawle 84; 2 Mass. R. 88; 1 Nott & M’Cord, 173; 2 Harr. & Johns. 193, 221; 2 N. H. Rep. 42; 5 Id. 401; 2 John. Cas. 355; 5 Pardes. n. 1482; Bac. Abr. Bail in Civil Causes, B 5; Com. Dig. 545, n.; 1 Supp. to Ves. jr. 270; 8 Ves. 198; 5 Ves. 750.

2.2 Explanation

When a case comes before a court and all the main features of the case are local, the court will apply the lex fori, the prevailing municipal law, to decide the case. But if there are “foreign” elements to the case, the forum court may be obliged under the Conflict of Laws system to consider:

  • whether the forum court has jurisdiction to hear the case (see the problem of forum shopping);
  • it must then characterize the issues, i.e. allocate the factual basis of the case to its relevant legal classes; and
  • then apply the choice of law rules to decide which law is to be applied to each class.

The lex loci contractus is one of the possible choice of law rules applied to cases testing the validity of a contract. For example, suppose that a person domiciled in Canada and a person habitually resident in France, make a contract by e-mail. They agree to meet in New York State to record a CD of hip hop music. The possibly relevant choice of law rules would be:

  • the lex domicilii and law of habitual residence to determine whether the parties had the capacity to enter into the contract;
  • the lex loci contractus which could be difficult to establish since neither party left his own jurisdiction (reliance on postal rules for offer and acceptance in the several putative leges causae might produce different results);
  • the lex loci solutionis might be the most relevant since New York is the most closely connected to the substance of the obligations assumed;
  • the proper law; and
  • the lex fori which might have public policy issues if, say, one of the parties was an infant.

2.3 Implications of the law

The provisions of this legal concept can be construed to confirm the following:

  • If a contract is valid where it was consummated, it is (generally) valid everywhere (i.e. in all comity states);
  • If a contract is void where it was consummated, it is void everywhere (i.e. in all comity states);
  • An exception in comity exists: The agreement will not be held valid in the forum country if it violates the law of the forum country, or if it violates the law of nature, or if it violates the Law of God;
  • A contract may be deemed valid in lex loci contractus, but if it is a revenue law of that state it will not be enforced in the forum state.

If a contract is consummated in one state but its content specifies that it is to be carried out in another state, two loci are thus generated: locus celebrate contractus (where it was signed) and locus solutionis (where it is to be performed). The laws of the locus celebrate contractus state will govern all matters concerning the mode of constructing the contract, the meaning of each factor therein, the nature of the contract, and its validity. The laws of the locus solutionis state will apply to the performance or execution of the contract.

2.4 Determining lex loci contractus at law

Sometimes the locus celebrate contractus state is difficult to determine, for example if the contract was signed at sea or on a moving train, or if the details of the contract signing were not well documented. If a court is called upon to determine the applicable state, it may use any or all of the following factors:

  • The residence or main domicile of the signatory parties;
  • The main place of business of the signatory parties;
  • The state in which the business was incorporated;
  • The state nominated for arbitration proceedings in case of a conflict (lex loci arbitri);
  • The language used to write the contract;
  • The format of the contract (only relevant if the contract format is unique to a state or group of states within the comity group);
  • The currency in which payment for performance of the contract is specified to be paid;
  • The nation of registration of any ship involved in performance of the contract;
  • The state where completion of the contract is specified to occur (lex loci solutionis);
  • A pattern of similar contracts involving the same parties;
  • The state where any third parties to the contract are located;
  • The state where any insurance companies connected with the contract are located.

3: LEX LOCI SOLUTIONIS

3.1 Definition

The lex loci solutionis is the Latin term for “law of the place where relevant performance occurs” in the Conflict of Laws. Conflict is the branch of public law regulating all lawsuits involving a “foreign” law element where a difference in result will occur depending on which laws are applied.

3.2 Explanation

When a case comes before a court and all the main features of the case are local, the court will apply the lex fori, the prevailing municipal law, to decide the case. But if there are “foreign” elements to the case, the forum court may be obliged under the Conflict of Laws system to consider:

  • whether the forum court has jurisdiction to hear the case (see the problem of forum shopping);
  • it must then characterise the issues, i.e. allocate the factual basis of the case to its relevant legal classes; and
  • then apply the choice of law rules to decide which law is to be applied to each class.

The lex loci solutionis is one of the possible choice of law rules applied to cases testing the validity of a contract and in tort cases. For example, suppose that a person domiciled in Bolivia and a person habitually resident in Germany, make a contract by e-mail. They agree to meet in Arizona to research a book. The possibly relevant choice of law rules would be:

  • the lex domicilii, lex patriae or the law of habitual residence to determine whether the parties had the capacity to enter into the contract;
  • the lex loci contractus which could be difficult to establish since neither party left their own state (reliance on postal rules for offer and acceptance in the several putative lex causae might produce different results);
  • the lex loci solutionis might be the most relevant since Arizona is the most closely connected to the substance of the obligations assumed;
  • the proper law; and
  • the lex fori which might have public policy issues if, say, one of the parties was an infant.

4: LEX LOCI CELEBRATIONIS

4.1 Definition

The lex loci celebrationis is the Latin term for “law of the place where the marriage is celebrated” in the conflict of laws. Conflict is the branch of public law regulating all lawsuits involving a “foreign” law element where a difference in result will occur depending on which laws are applied.

4.2 Explanation

When a case comes before a court and all the main features of the case are local, the court will apply the lex fori, the prevailing municipal law, to decide the case. But if there are “foreign” elements to the case, the forum court may be obliged under the conflict of laws system to:

  1. consider whether the forum court has jurisdiction to hear the case (see the problem of forum shopping);
  2. characterise the issues, i.e. allocate the factual basis of the case to its relevant legal classes; and
  3. apply the choice of law rules to decide which law is to be applied to each class.

The lex loci celebrationis is a choice of law rule applied to cases testing the validity of a marriage. For example, suppose that a person domiciled in Scotland and a person habitually resident in France, both being of the Islamic faith, go through an Islamic marriage ceremony in Pakistan where their respective families originated. This ceremony is not registered with the Pakistani authorities but they initially establish a matrimonial home in Karachi. After a year, they return to Europe. For immigration and other purposes, whether they are now husband and wife would be referred to the law of Pakistan because that is the most immediately relevant law by which to decide precisely the nature of the ceremony they went through and the effect of failing to register it. If the ceremony was in fact sufficient to create a valid marriage under Pakistani law and there are no public policy issues raised under their personal laws of lex domicilii or habitual residence, and under the lex fori, they will be treated a validly married for all purposes, i.e. it will be an in rem outcome.

 5: Domicile

In law, domicile is the status or attribution of being a permanent resident in a particular jurisdiction. A person can remain domiciled in a jurisdiction even after they have left it, if they have maintained sufficient links with that jurisdiction or have not displayed an intention to leave permanently.

Traditionally many common law jurisdictions considered a person’s domicile to be a determinative factor in the conflict of laws and would, for example, only recognize a divorce conducted in another jurisdiction if at least one of the parties were domiciled there at the time it was conducted.

Domicile of origin

Dicey states the common law rule thus:

Every person receives at birth a domicile of origin:

(a) A legitimate child born during the lifetime of his father has his domicile of origin in the country in which his father was domiciled at the time of his birth;

(b) A legitimate child not born during the lifetime of his father, or an illegitimate child, has his domicile of origin in the country in which his mother was domiciled at the time of his birth;

(c) A foundling has his domicile of origin in the country in which he was found.

(2) A domicile of origin may be changed as a result of adoption, but not otherwise.

In some jurisdictions the status of illegitimacy has been abolished, and slightly different rules apply where parents have differing domiciles.

Domicile of choice

Dicey states the common law rule thus:

Every independent person can acquire a domicile of choice by the cnation of residence and intention of permanent or indefinite residence, but not otherwise.

A person abandons a domicile of choice in a country by ceasing to reside there and by ceasing to intend to reside there permanently or indefinitely, and not otherwise.

When a domicile of choice is abandoned, either

(i) a new domicile of choice is acquired; or

(ii) the domicile of origin revives.

Intention of permanent or indefinite res

they may one day return.

The rule that the domicile of origin revives on abandonment of a domicile of choice has been altered in some jurisdictions.

Domicile of dependency

Dicey states the common law rule thus:

The domicile of a dependent person is, in general, the same as, and changes (if at all) with, the domicile of the person on whom he is, as regards his domicile, legally dependent.

In particular, during minority, a child’s domicile of dependency changes to match that of the adult on whom the child is said to be dependent.

Lex loci delicti commissi

The lex loci delicti commissi is the Latin term for “law of the place where the delict [tort] was committed” in the conflict of laws. Conflict of laws is the branch of law regulating all lawsuits involving a “foreign” law element where a difference in result will occur depending on which laws are applied.

The term is often shortened to lex loci delicti.

Explanation

When a case comes before a court and the parties and the causes of action are local, the court will apply the lex fori, the prevailing municipal law, to decide the case. However, if there are “foreign” elements to the case, the forum court may be obliged under the conflict of laws to consider the following issues:

  • It adjudicates whether the forum court has jurisdiction to hear the case (see forum shopping);
  • It subsequently applies the choice of law rules to decide the lex causae, that is, which law is to be applied to each cause of action.

The lex loci delicti commissi is one of the possible choice of law rules applied to cases arising from an alleged tort. For example, if a person domiciled in Australia exchanges correspondence by e-mail with a resident in Albania – alleged to defame a group of Kurds resident in Turkey – the relevant choice of law rules would be:

  • The lex loci solutionis (law of the place where relevant performance occurs) might be the most relevant, but it leaves the laws of Australia, Albania, and Turkey equally applicable. That is, the parties corresponded from two states but the damage was not sustained until the correspondence was published in Turkey;
  • The proper law is the law which has the closest connection with the alleged misconduct; and
  • The lex fori which might have public policy issues if, for example, one of the parties was an infant, or multiple jurisdictions may be involved over global internet use.

Reasoning for applicability

In a case where a US citizen on vacation in Mexico was injured when he fell into a hotel construction excavation (while climbing a mound of dirt to obtain a better view of the construction activity), he attempted to sue the hotel’s owners in a US court. The US court rejected the suit, asserting lex loci delicti. The man appealed the trial court’s finding, but the appeals court sided with the trial court. The appeals court judge (Judge Posner) supported his decision with a vigorous explanation of why the lex loci rule should apply: “The jurisdiction in which the accident occurs] is the place that has the greatest interest in striking a reasonable balance among safety, cost, and other factors pertinent to the design and administration of a system of tort law. Most people affected whether as victims or as injurers by accidents and other injury-causing events are residents of the jurisdiction in which the event takes place. So if law can be assumed to be generally responsive to the values and preferences of the people who live in the community that formulated the law, the law of the place of the accident can be expected to reflect the values and preferences of the people most likely to be involved in accidents . . .”

Two Harvard University Law professors examined the Judge’s reasoning, and while agreeing with it in principle, articulated several different points of rationale for applying local law to local incidents:

  • Under the economic theory of accident law, compensatory damages should be relative to the social harm caused by an accident, and that level of harm can best be determined by application of the local laws governing that area;
  • The perceived economic value of life and limb varies from state to state;
  • The optimal amount of medical care for an injured person (and thus the required cash compensation) will vary from state to state;
  • Specific standards of precautions against particular classes of injuries or accidents will differ between states, because of differences in population density, climatic factors, economic factors, differing perceptions of risk etc.

Proper law

The Doctrine of the Proper Law is applied in the choice of law stage of a lawsuit involving the Conflict of Laws.

Explanation

In a Conflicts lawsuit, one or more state laws will be relevant to the decision-making process. If the laws are the same, this will cause no problems, but if there are substantive differences, the choice of which law to apply will produce a different judgment. Each state therefore produces a set of rules to guide the choice of law, and one of the most significant rules is that the law to be applied in any given situation will be the proper law. This is the law which seems to have the closest and most real connection to the facts of the case, and so has the best claim to be applied.

All laws, to a greater or lesser extent, are reflections of the public policies of the state that enacted them. The more important the policy to the society, the greater the claim of the relevant law to be applied. Thus, if laws exist to protect citizens, the law of the place where loss or damage is sustained might have a strong claim to apply: e.g. in a traffic accident, two cars collide because of faulty maintenance and both drivers are injured – the local laws exist to provide some degree of protection for all those who use the roads in that state, setting minimum standards for the design and maintenance of vehicles, specifying what levels of insurance should be carried, setting the minimum age and qualifications for the right to drive, etc.

But the problem with accepting the claim of any one state to have its law apply is that the result may be somewhat arbitrary. So, in the example given, if neither driver had a residence in the state, and the cars were both maintained outside the state, the laws of other states may have an equal or better claim to apply. The advantage of the proper law approach is that it builds in flexibility rather than offering a mechanical rule. Suppose that there is a contract between an Italian company and an English partnership for the sale of goods made in Greece to be shipped from Belgium on a ship flying the flag of Panama to a Swedish port. Adopting a rule such as the lex loci contractus, i.e. apply the law of the place where the contract was made, might actually select a law having no other connection with the substance of the bargain made by the parties. Similarly, picking the lex loci solutionis, i.e. the law of the place where the contract is to be performed, may prove to be equally irrelevant, assuming that there is only one place where performance is to occur: in the example, there is manufacture in Greece, delivery to Belgium, loading in Belgium, carriage on the high seas, and unloading in Sweden. So, if the contract does not make an express selection of the law to apply (see choice of law clause), the parties are deemed to have chosen to be bound by the law with which the contract has the closest and most real connection.

Conclusion

The general rule is that the proper law is the primary system of law which governs most aspects of the factual situation giving rise to the dispute. This does not imply that all the aspects of the factual circumstances are necessarily governed by the same system of law, but there is a strong presumption that this will be the case (see characterisation). So, the process of legal analysis undertaken by the courts in each case identifies all the facts that have a specific geographical connection, e.g. where the parties reside or their businesses operate, where any agreement was made, where relevant actions were performed, etc. Once all the relevant connecting factors have been identified, the law of the state that has the greatest number of connections will be the proper law. In the event of a tie, the connecting factors which relate to performance will be given a greater weight than the connecting factors affect form. In most cases, this weighting will produce a clear winner.

Source: Wikipedia and legal-dictionary.thefreedictionary.com

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