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Saggi, Conferenze e Seminari 37. Reproduced with permission of Centro di studi e ricerche di diritto comparator e straniero, diretto da M.J. Bonell

The Problem with Private International Law

Friedrich K. Juenger
Roma (August 1999)

  1. The Crux of the Problem
  2. From Unilateralism to Multilateralism
    1. The Statutists
    2. The Multilateralist "Revolution"
  3. The Defects of Multilateralism
    1. Decisional Disharmony
    2. Multilateralism's Self-Inflicted Problems
    3. The Problem of Justice
  4. The American "Conflicts Revolution"
    1. The Demise of the First Conflicts Restatement
    2. Soft Multilateralism
    3. Interest Analysis
    4. The "Conflicts Revolution's" Consequences
    5. Echoes Abroad
  5. Where Do We Go From Here
    1. Uniform Choice-of-Law Rules
    2. Uniform Substantive Law
    3. Alternative Choice of Law Approaches
      In Conclusion

I. THE CRUX OF THE PROBLEM

A glance at the abundant literature, case law and legislative activity in the field of private international law might suggest that it is a vibrant discipline chock full of new and exciting developments. In fact, one should expect as much in light of the fact that more transactions than ever cross state lines. By virtue of the unprecedented mobility of our times, conflict of laws problems arise with ever-increasing frequency; in this era of "globalisation", to use that clichéd term, the effects of broken promises, defective goods, traffic accidents and marital squabbles are no longer confined to the territory of one particular state or nation. Jurisdictional, choice-of-law and recognition problems are daily fare. This is true especially within regional organisations such as the European Community, a supranational entity with quasi-federal features akin to those of the old "conflicts paradise,"[1] the United States America, whose states serve as "legal laboratories"[2] for the testing of new approaches. Given its practical importance, one should hope that private international ought to have been sufficiently perfected to cope with these challenges.

Alas, looking at the practice of courts, the handiwork of legislatures and the voluminous literature, it is clear that the discipline has [page 1] not attained the desirable maturity and solid doctrinal grounding necessary to alleviate the legal hazards that threaten interstate and international transactions. This is true, especially, as regards private international in the narrow sense, that is the field of choice of law. While rules on jurisdiction and judgements recognition also leave much to be desired, the most problematic are those that attempt to determine what law governs interstate or international transactions. After eight centuries of scholarship, which has produced an enormous wealth of literature, this question still awaits satisfactory answers. Outstanding jurists such as Bartolus, Story, Savigny and Mancini -- not to mention renowned scholars of more recent vintage -- have wrestled with it, but their efforts have yet to yield a communis opinio doctorum. Legislative and judicial solutions vary greatly, attorneys and judges (if they do not simply overlook choice-of-law problems or deliberately disregard them) rarely find the pertinent rules and approaches satisfactory. Indeed, dissatisfaction with the conventional wisdom is so great that the United States has witnessed what has been called a conflicts "revolution."[3] What, then, is wrong with private international law?

The quick answer would be: "quite a few things." But there is a fundamental malaise. Contrary to what the term "private international law" suggests, neither its rules nor the rules to which they refer are of an international or supranational nature.[4] Rather, choice-of-law approaches, much as they diverge from one another, have one thing in common: they attempt to resolve problems that transcend territorial [page 2] boundaries by recourse to domestic laws. Any of these laws are supposedly equally appropriate to deal with the task of governing interstate and international relationships, notwithstanding the fact that their quality varies greatly. But domestic laws are usually made with domestic exigencies in mind; legislators are not necessarily imbued with an urbane, cosmopolitan spirit, nor should one blame them for having their constituents' interests uppermost in mind. Submitting international transactions to a disparate array of domestic laws is akin to fashioning a silk purse out of a sow's ear, as the adage goes. To accomplish this daunting feat, two principal methods have been used: the first looks at the substantive rules that "conflict" to determine which of them ought to apply, the second allocates a transaction that straddles territorial boundaries to one state or the other.

Both of these methods have been used by legislatures, courts and scholars. The first of them, the so-called "unilateralist" approach,[5] focuses on the spatial reach of substantive rules and asks "does this rule of decision claim application to the facts at hand?" For instance, if the issue arises whether a contract between a French and an English corporation lacks an appropriate basis, the judge might ponder whether the French concept of cause or the English doctrine of consideration should control. Alternatively, the court asks "is this an English or a French contract?" In other words, instead of looking at the potentially pertinent rules of decision, the "multilateral" (or "bilateral") method lets the resolution of the issue of validity depend on whether the contract "belongs" to the French or the English legal system. The views on which of these approaches is preferable have differed in the past, and they still differ today. But whichever may be the prevailing orthodoxy at a given time, neither of them is satisfactory [page 3] because both lead to the application of domestic laws that may be ill-equipped to deal with interstate and international transactions.

II. FROM UNILATERALISM TO MULTILATERALISM

1. The Statutists

By posing the question whether or not a particular city state's statutum governs a given transaction, the medieval scholars who first pondered choice-of-law problems [6] hit upon the unilateralist method. Thus the "statutists" addressed the quaestio anglica (i.e. whether the inheritance of Italian immovables by an Englishman is subject to the English rule of primogeniture) by asking whether or not the English "statute" is real or personal in nature. Put differently, they speculated about whether the rule of primogeniture deals with property (and therefore could not reach Italian immovables) or the person (in which case it would apply to the English heir). As one might expect, dividing rules of law into "real" and "personal" ones proved to be highly unsatisfactory, if only because -- as Beale noted -- "every law has both a territorial and a personal application;"[7] it reigns within the state and, at the same time, binds the state's subjects. It is, therefore, hardly surprising that the statutists could never agree upon the criteria that control the classification of particular rules of decision as personal or real. [page 4]

The problematic nature of this distinction finds a vivid illustration in Bartolus' discussion of the quaestio Anglica.[8] Taking the position that the wording of a rule determines its classification, Bartolus argued that if the English rule of primogeniture were to provide "the firstborn shall succeed," it should be classified as personal, but if it were to read "the possession of deceased persons shall pass to the firstborn" it would be real. This ludicrous attempt to cast a common law principle in statutory terms, and then to derive legal conclusions from its fictitious wording, earned Bartolus much mockery from later writers. The efforts of other statutists, however, proved to be no more convincing, so that the fundamental question concerning which laws should be considered personal (and could therefore operate extraterritorially) and which ought to be characterized as real (and therefore apply only within the state) remained forever unresolved. Nor did it help that scholars later invented the new category of "mixed" statutes. As has been noted about these vain classificatory attempts, "it is truly amazing how professors sweat when drawing these distinctions."[9]

2. The Multilateralist "Revolution"

Given its obvious defects, the statutists' unilateralist methodology was destined to be challenged. In the United States it was rejected early on by the Louisiana Supreme Court in the landmark decision of Saul v. His Creditors [10] and by Joseph Story.[11] In Europe, first [page 5] Wächter [12] and then Savigny [13] denounced the statutist learning, which Savigny replaced with a multilateral approach. While multilateral choice-of-law rules were not entirely new (the glossators had already recognized such precepts as locus regit actum), he gave it the aura of a scientific system. Savigny maintained that it was the task of private international law to determine the "seat" of legal relationships.[14] To make them sit, that is to allocate such relationships as property, obligations or domestic relations to a particular legal system, he relied on choice-of-law rules that link these categories by means of "connecting factors" to a particular legal system. Thus issues concerning property would be governed by the law of the situs, obligations by the law of the place where they are to be performed, and domestic relations by the law of the parties' domicile.

For his classificatory method Savigny offered a seemingly convincing rationale: noting that the jurisdictional bases of different states frequently overlap, he justified his "seat" principle by arguing that it would be unjust to let the applicable law be determined by the plaintiff's choice among available fora.[15] He believed that linking each legal relationships with a particular state or nation by means of a fixed connecting factor could eradicate this evil by assuring a uniform result irrespective of where a dispute is litigated. In other words, multilateralism seeks to discourage forum shopping by promoting [page 6] what is nowadays called "decisional harmony."[16] That ideal is dear to the heart of multilateralists to this day; indeed it has been said, somewhat extravagantly, that Savigny "a fait jaillir la lumière de la vérité au sein d'une quasi-obscurité," which "éclaire tout le droit international privé contemporain,"[17] and brought about a "Copernican revolution" in the conflict of laws.[18]

III. THE DEFECTS OF MULTILATERALISM

1. Decisional Disharmony

Savigny's prestige assured his methodology widespread acceptance, even though his methodology could not possibly attain its stated objective. First of all, the notion that by guaranteeing identical results in any forum the plaintiff might choose, multilateralism might dissuade plaintiff from forum shopping, is misguided. Forum shoppers do not necessarily seek the application of a favorable substantive law; they frequently shop for procedural advantages. To mention but one example: victims injured in Europa by defective products are generally well advised to sue in the United States. The reason is usually not the more favorable American products liability law.[19] Rather, products plaintiffs can more readily afford to litigate in the United [page 7] States because American attorneys are willing to take personal injury cases on a contingent fee basis. In consequence, the victims do not have to pay counsel to bring an action, nor are they required to reimburse the defendant's attorney fees should they lose. Beyond that, litigating in the United States is attractive because American juries grant verdicts that far exceed the amounts that can be recovered in a European court.[20]

Multilateral rules do not, therefore, spell the end of forum shopping. Nor can they guarantee that the same substantive rules will indeed be applied irrespective of where a particular transaction is litigated. To attain the goal of "decisional harmony" would require each and every state to adopt identical choice-of-law rules, which was indeed what Savigny had optimistically predicted.[21] But private international law, its name notwithstanding, is domestic law, and one cannot possibly expect all jurisdictions of this world to live up to the German jurist's prediction. To mention only the most striking example of the vast disparities that exist:[22] as a result of Mancini's successful [page 8] advocacy, many civil law countries rely on citizenship to link a person with a state, whereas common law jurisdictions use the connecting factor of domicile (which Savigny had preferred). Moreover, there are substantial variations in the way that different legal systems organize their domestic laws. For instance, while some protect surviving spouses by means of matrimonial property regimes, others use domestic relations or succession rules to that end.[23] Such discrepancies, which already existed during Savigny's times,[24] have not diminished. If anything, they have been exacerbated as shown by recent European private international law codifications, not two of which are alike.

2. Multilateralism's Self-Inflicted Problems

Not only do the conflict of conflict of laws rules assure that Savigny's ideal of decisional harmony will never be attained, but differences in classification and connecting factors have created puzzling new problems to boot. For example, if a married couple from a state that protects the surviving spouse by means of inheritance rights retires in a community property state, the survivor may be left without protection because no assets may have been acquired in the retirement state and the change of domicile eliminates the inheritance rights the former domicile provided.[25] Whereas differences in classification create the conundrum known as "qualification" or "characterization," variations in connecting factors prompt the dreaded "renvoi." Assume that a national of a country that follows the domiciliary principle moves to one that uses citizenship as the connecting factor in [page 9] determining the law applicable to the succession to movables.[26] If that person dies leaving personal property in both jurisdictions, not only will their choice-of-law rules produce different results but the courts of each nation are required to apply the law of the other country. Even if these courts choose to take into account the choice-of-law rules of the jurisdiction to which the forum's choice-of-law rule refers, there is still no guarantee that both courts will in fact reach identical results.

Thus, the seeming simplicity of the multilateral approach is deceptive. Put to the test, that methodology fails to produce the promised decisional harmony and it introduces intractable new difficulties.[27] Accordingly, as was true of the statutists' unilateralist approach, which imposed the impossible task of classifying rules of decision, multilateralism poses questions for which there are no satisfactory answers. Just as there never was a consensus on which statutes are personal and which are real, courts and scholars will never agree on how to deal with renvoi and characterization.[28] As a glance at the grab bag of implausible "solutions" to the artificial problems engendered by a misguided approach assembled in the "General Part" of the conflict of laws shows, multilateralism's design defects are beyond repair. Worse yet, there is the problem of substantial justice. Choice-of-law rules that single-mindedly pursue the elusive goal of "decisional harmony" pay insufficient attention to the quality of conflicting rules. To [page 10] prevent intolerable results, multilateralists were forced to resort to a desperate corrective, the public policy exception, about which Lorenzen said that it "ought to have been a warning that there was something the matter with the reasoning upon which the rules to which it is the exception were supposed to be based."[29]

3. The Problem of Justice

The need for the public policy reservation demonstrates that the intellectual efforts multilateralism's complex apparatus demands are not compensated by the results it yields in practical application. With regrettable frequency, traditional choice-of-law rules produce unsatisfactory decisions because mechanical precepts whose hard and fast connecting factors indiscriminately invoke foreign law must inevitably produce hardship. For instance, once the world became motorized, the lex loci delicti commissi rule brought before domestic courts many foreign tort rules that were sure to offend the forum judiciary's sense of justice.[30] Similarly, once people no longer simply stayed at home, domestic relations choice-of-law rules of the classical type are prone to import noxious foreign rules of decision, especially in those legal systems that have adopted the national law principle.[31]

Hard and fast as it is, citizenship offers an ideal connecting factor from the multilateralists' perspective. A person's nationality can usually be ascertained more readily than his domicile; it is more resistant to change; it has fewer shades of meaning; and it cannot be as readily manipulated. Accordingly, that connecting factor is more likely to promote the desired "decisional harmony" than the domiciliary [page 11] nexus.[32] But, by the same token, the national law principle burdens foreign nationals, who usually occupy the social ladder's lower rungs, with intricate conflicts and foreign law problems.[33] In consequence, cases to which aliens are parties impede the efficient administration of justice by adding delays and costs to the litigation of run-of-the-mill domestic relations disputes. Worse yet, the lex patriae is prone to import foreign law that may fall so far below the forum's standards of decency as to offend constitutional tenets. In Germany, for instance, the obsession with decisional harmony combined with the dysfunctional national law principle first prompted large-scale evasion by German divorcees, who were precluded from marrying aliens from countries that did not recognize German divorces, and then the Constitutional Court's intervention.[34]

IV. THE AMERICAN "CONFLICTS REVOLUTION"

1. The Demise of the First Conflicts Restatement

In the United States the multilateral approach's propensity to import noxious foreign rules of decision provoked a complete reorientation of American tort choice of law. Most of the cases that triggered this sea change dealt with automotive accidents,[35] others [page 12] involved airplane crashes.[36] Until the nineteen-sixties and seventies more than half of the American states barred recovery by injured passengers from the driver, either by virtue of so called "guest statutes" or because of the intra-family immunity doctrine. Also, quite a few states imposed arbitrary statutory monetary limits on liability for wrongful death, some of which were ridiculously low.[37] Judges in states that had never adopted such substandard rules, or had reformed their domestic tort laws, began to balk at applying unreformed sister-state law, which -- given the American public's mobility -- the authoritative First Conflicts Restatement's [38] lex loci delicti commissi rule imported en masse.

To ward off such foreign statuta odiosa, especially in cases involving out-of-state accidents of forum residents, American judges resorted to various and sundry escape devices. While paying lip service to the lex loci delicti commissi rule, they avoided its brunt by resorting to the "General Part" of conflicts law.[39] Thus they characterized foreign tort rules as "procedural,"[40] invoked the renvoi doctrine [41] [page 13] or wielded the heavy club of public policy [42] to block undesirable foreign tort rules. Inevitably, large-scale resort to such maneuvers undermined the credibility of the rule the courts purported to apply. At the same time American conflicts scholars, under the influence of the legal realist school, had become disenchanted with the hard and fast rules compelled by precedent and the First Restatement. In addition, the Restatement's authority was undercut, shortly after its publication, by the United States Supreme Court. While the highest American court originally embraced the multilateral approach, it later retreated from this position, granting state courts and legislatures a substantial measure of freedom in dealing with choice-of-law problems.[43]

The Supreme Court's stance emboldened judges to experiment with different choice-of-law approaches, prompting what has since been called a "conflicts revolution."[44] Eschewing the pretense of relying on fine-spun escape devices, the New York Court of Appeals, in Babcock v. Jackson,[45] decided to abandon the lex loci delicti commissi rule. Many other highest state courts followed suit, and the place-of-the-accident rule now only prevails in a minority of American jurisdictions.[46] Yet, while the unsatisfactory nature of the First Restatement's choice-of-law rule was widely recognized, those who believed in the need for a changed choice-of-law approach could not agree on what exactly should take its place. Two principal substitutes emerged: [page 14] (1) a "soft" multilateralism that would replace hard and fast connecting factors with flexible formula, and (2) a return to the unilateralist approach.

2. Soft Multilateralism

The First Restatement's deficiencies had first become apparent in contract choice of law. The lex loci contractus rule, which, according to its Reporter Beale, followed with ineluctable logic from the vested rights theory he espoused,[47] had several obvious defects (as did Savigny's lex loci solutionis).[48] For this reason, most legal systems opted for what British courts call the "proper law" approach, i.e. the principle of party autonomy or, in the absence of a choice-of-law clause, application of the law that has the "closest connection" with the contract.[49] But while the U.S. Supreme Court originally took a similar stance,[50] under the spell of Beale's teachings most American states adopted the dysfunctional lex loci contractus rule (which some apply to this day [51]). Since the mid-century, however, when, in Auten v. Auten,[52] the New York Court of Appeals opted for the open-ended "most significant contacts" formula, American courts began to align themselves with the practice in other nations. [page 15]

In an article published in an American law review, an English conflicts scholar contended that this flexible connecting factor need not be limited to contract choice of law and advocated the adoption of a "proper law of torts."[53] Nine years after it decided Auten v. Auten, the New York Court of Appeals followed this suggestion and embraced the "most significant contacts" test in the landmark tort choice-of-law case Babcock v. Jackson.[54] In a slightly modified form, this formula became a key element of the Second Conflicts Restatement, where it parades under the name of "most significant relationship."[55] Ostensibly, the adoption of a flexible in lieu of a rigid connecting factor still preserves the multilateral approach. But in reality it undercuts the very thrust of multilateralism: because different courts are bound to interpret this impressionistic phrase in different ways, it is antithetical to the ideal of "decisional harmony." This may explain why Savigny took pains to characterize his notion of the "seat" of legal relationships -- to which the proper law approach is indebted [56] -- as a mere "formal principle," which must be given substance by less open-ended connecting factors.

3. Interest Analysis

In addition to the most-significant-contacts test, Babcock v. Jackson contained an ingredient that is entirely at odds with the multilateralists' philosophy. Judge Fuld's opinion in that case also referred to state "interests" and "concerns," which are catchphrases of the "governmental interest analysis" developed by Brainerd Currie.[57] [page 16] This approach, which a majority of American conflicts writers favor, attempts to resolve choice-of-law problems by an analysis of the concerns Currie believed states have in effectuating the policies underlying their laws. Since it focuses on the reach of substantive rules rather than on the "seat" of legal relationships, this methodology amounts to a return to the unilateralist approach the statutists had invented. Currie's version of interest analysis, however, largely avoids the difficulty of classifying substantive rules as either personal or real. Proceeding from the assumption that governments are interested not so much in what happens within their territories than in the well-being of their subjects, Currie's methodology relied almost entirely on the personal nexus.[58]

The idea that -- to speak in statutist terms -- all statutes are personal does not, however, avoid all of the problems inherent in the unilateralist approach. If the parties to a transaction hale from different states, reliance on their personal law can cause either an overlap (cumul) or a legal void (lacune) of norms.[59] To cope with this difficulty, Currie advocated application of the lex fori whenever his method produced what he called a "true conflict" or an "unprovided for" case.[60] Accordingly, interest analysis invokes the lex fori in practically all cases, so that it amounts to little more than a complex pretext for not applying foreign law.[61] Nor is parochialism the only flaw of interest analysis. Because it requires each issue posed by a multistate case to be analyzed separately, norms from different states may have to be applied to the same transaction. This is apt to produce the [page 17] phenomenon called dépeçage, an admixture of norms from different states that may bear no resemblance to the law that prevails in any one of them.[62] Such an amalgamation may well make sense, because the law applied to an international transaction need not necessarily conform to any particular domestic law, but it flies in the face of a methodology designed that is designed to effectuate the interests of "sovereigns."[63] As is apparent, unilateralism is no less prone to creating artificial problems than the multilateral approach.[64]

4. The "Conflicts Revolution's" Consequences

Since Babcock v. Jackson, a majority of American states have rejected the lex loci delicti commissi rule to adopt one or the other of the various approaches proffered by scholars. In consequence, tort choice of law in the United States has -- as domestic and foreign observers have noted -- become chaotic and confused.[65] Yet, the decisions American courts nowadays reach in tort choice-of-law cases are usually more satisfactory than those of the bygone era, so that the level of interstate and international justice has been enhanced.[66] The reasons are obvious. The flexibility judges enjoy by virtue of such formulae as the "most significant relationship" allows them first to determine the law they wish to apply and then to find arguments bolstering the assertion that this law has the closest connection. In this fashion they can avoid the foreign statuta odiosa that the classical [page 18] First Restatement invoked with deplorable regularity. Similarly, because tort actions are usually brought in jurisdictions whose law is favorable to the plaintiff, the homing trend inherent in interest analysis eliminates rules of decision that unreasonably bar or diminish the victim's recovery. Thus, while the American conflict of laws may lie in shambles, the First Restatement's demise improved the quality of decisions in interstate and international tort cases, which poses the fundamental question: might we not be better off without private international law?

5. Echoes Abroad

Conflicts scholars who start from the premise that all substantive laws are created equal must, of necessity, tolerate untoward results in interstate and international cases. To sugarcoat the iniquities that inevitably follow from the pursuit of "decisional harmony," they have invented the term "conflicts justice."[67] That turn of phrase suggests that private international law, unlike all other law, it is not concerned with the results of its application; justice is done as long as the law applied has the closest connection with the case at hand. Yet even those who believe in "conflicts justice" cannot be entirely oblivious to outcomes.[68] To avoid wholly unacceptable results, they can of course rely on the public policy reservation. That escape device is, however, rather blunt and it rubs with the fundamental assumption that all laws are created equal. Looking for subtler ways to reach palatable decisions in international cases, scholars, courts and legislatures have experimented with expedients similar to those that have surfaced during the American "conflicts revolution." [page 19]

By now, soft connecting factors and a dash of unilateralism have also become fashionable outside the United States.[69] Thus both the Rome Convention on the Law Applicable to Contractual Obligations and the draft Convention on the Law Applicable to Non-Contractual Obligations ("Rome II") use the "closest connection" test [70] as well as the unilateralist notion of "lois de police."[71] To be sure, interest analysis has found few takers outside the United States and the sporadic recognition of lois de police hardly spells a return to the days of the statutists. Yet, it is remarkable that unilateralism, which not too long ago seemed to be dead and buried on account of Savigny's "Copernican revolution," is now experiencing a renaissance.[72] Conversely, some American conflicts writers have attempted to combine the unilateralist approach with multilateral elements.[73] Thus, the two incompatible approaches now live in uneasy coexistence; in fact, "methodological pluralism"[74] -- a tacit recognition of the traditional methodologies' deficiencies -- may well be the hallmark of today's private international law. But is eclecticism the only possible cure for what ails private international law? [page 20]

V. WHERE DO WE GO FROM HERE?

1. Uniform Choice-of-Law Rules

To return to the beginning of this paper: the basic problem with traditional private international law is that it relies on domestic rules to resolve problems that are international in nature.[75] It therefore invokes rules of decision that are frequently not attuned to the exigencies of international commerce. In addition, private international rules themselves being domestic in nature, they differ from one state to the next, which -- as has been pointed out [76] -- dooms the hoped-for decisional harmony. To be sure, the latter problem can be cured: seizing upon a suggestion Savigny had made,[77] Mancini (who had less reason to be optimistic about the universal adoption of his national law principle), advocated international conventions as a means of harmonising choice-of-law rules. By alleviating disparities in national legislation and case law, conventions can indeed avoid some of the embarrassments of the "General Part," such as characterisation and renvoi, and thereby ensure a greater measure of uniformity. Yet, even an overarching treaty framework leaves open the possibility of conflicting interpretations, especially of such vague connecting factors as the "closest connection." [page 21]

Thus, unless a central court is empowered to issue binding interpretations of its provisions, even a choice-of-law convention cannot guarantee uniformity. Worse yet, unless it contains a fairly broad public policy reservation, such an instrument cannot resolve the fundamental problem of dysfunctional national rules of decision. The original Hague Conventions in the field of family law stand as a warning example of how the focus on "decisional harmony," especially when combined with the national law principle, can work havoc with human relationships.[78] Preventing marriages and divorces, and, in the spectacular Boll case,[79] frustrating the welfare and protection of a molested child, they cogently illustrate the dangers of a single-minded pursuit of uniformity. The fact that it took quite some time to denounce them demonstrates a further difficulty: because amendments of choice-of-law conventions require the consent of all signatories, they cannot be readily adapted to changed circumstances.

In the future, choice-of-law rules in the European Community may take the form of council regulations because the Treaty of Amsterdam confers authority upon the Community's institutions to legislate in this area with supranational effect. Such regulations would unify choice of law more effectively than a mere convention because, by virtue of article 177 of the Rome Treaty, the Court of Justice would become be the ultimate arbiter concerning their interpretation. One may, however, well doubt the benefits of such action by the Community. To lay down supranational choice-of-law rules means, in effect, that the Community embarks on a policy to preserve disparate national laws that may impede the traffic between member states. Even if such a commitment to "subsidiarity" would make sense, [page 22] inflicting on an already overburdened tribunal the additional task of divining the meaning of such weasel words as "closely connected" hardly serves the interest of an efficient administration of justice. More importantly, supranationalizing it will not cure the Rome Convention's shortcomings [80] and the European authorities' earlier dabbling with choice-of-law rules in several directives has prompted mixed reactions.[81] As noted earlier, for a while the U.S. Supreme Court toyed with constitutionalizing choice-of-law rules.[82] The decisions it rendered during those bygone days stand as a warning against federalizing the conflict of laws.[83]

2. Uniform Substantive Law

Choice-of-law rules tell a judge whether, for example, issues arising from a dispute relating to a contract between an Italian and a German firm are governed by German or Italian law. But an agreement that straddles national frontiers clearly is not truly German or Italian; it is an international transaction. To submit it to one national legal system or another may not be entirely satisfactory; the parties' interests would probably be better protected by applying a law conceived with international realities in mind. Recognizing the need for an international law of contracts, many nations have ratified the Vienna Convention on the International Sale of Goods. Unification does [page 23] not, however, necessarily require a convention, uniform statutes may be sufficient for the purpose.[84] In fact, it may not even require legislation: the UNIDROIT Principles of International Commercial Contracts, a private restatement,[85] can serve that need.

The desirability of an overarching lex mercatoria, as it once existed,[86] was recognized by such noted jurists such as the Dutch scholar Daniël Josephus Jitta, the Uruguayan Quintín Alfonsín and the Frenchman Berthold Goldman. The great French comparativist René David, denouncing those whom he characterized as "conflictualists,"[87] scathingly observed that

"the lawyers' idea which aspires to submit international trade, in every case, to one or more national systems of law is nothing but bluff. The practical men have very largely freed themselves from it, by mean of standard contracts and arbitration, and states will be abandoning neither sovereignty nor prerogatives if they open their eyes to reality and lend themselves to the reconstruction of international law."[88]

The quest for such a law has become more pressing since new realities have emerged that are at odds with those that spawned the traditional choice-of-law approaches. Take, for instance, the Internet, [page 24] whose "transnational nature confounds the conventional law of territorial jurisdiction and national borders."[89] Are not "[t]raditional notions of jurisdiction ... outdated in a world divided not into nations, states, and provinces but networks, domains and hosts"?[90]

3. Alternative Choice-of-Law Approaches

The unification of substantive law of course obviates the need for choice-of-law rules. Outside the field of commercial law, however, the prospects of unification -- even within a regional organization such as the European Community -- are less than promising. While it may therefore seem that only the merchant class can benefit from a universal law, commercial cases suggest that other fields as well could profit from possible alternatives to the simple-minded traditional choice-of-law methods. As noted earlier, in contract cases courts found better ways to deal with the choice-of-law problem than to either allocate contracts to a legal system by means of hard and fast connecting factors or speculating about the reach of rules of decision.[91] Emulating the substantive policy of freedom of contract, judges -- undaunted by the academicians' scruples [92] -- have embraced the principles of party autonomy, which allows the parties to an agreement to select the law that is most suitable to their transaction. Obviously, this solution is at loggerheads with the traditional approaches, which rely on objective connecting factors rather than the parties' subjective intent, but it does work well in practical application. [page 25]

Although party autonomy usually still leads to the application of national law, some legal systems happen to be better adapted to the exigencies of international commerce than others. English maritime law, for example, approximates the standards one would expect from truly international norms. Moreover, the principle of freedom of contract permits the parties to stipulate out of obsolete or misguided national rules of decision. If they should, however, be unable to agree on any national legal system, the parties can submit their agreement to the lex mercatoria or the UNIDROIT Principles of International Commercial Contracts. While some legal writers (and presumably the Rome Convention) take the position that individuals and enterprises are limited to the choice of a positive law,[93] such a paternalistic view is at odds with the very principle of freedom of contract. In any event, as a practical matter it presents no serious obstacle because party autonomy also has a procedural aspect: the contracting parties are free to designate the forum; and if courts cannot be expected to respect their choice, arbitrators certainly will.

The principle of party autonomy illustrates that there are choice-of-law methods beyond the traditional unilateral or multilateral approaches. That principle need not be confined to contract choice of law; in fact, it has been used in such areas as marital property and succession.[94] Nor is party autonomy the only choice-of-law principle that can ensure palatable results in transnational cases. Result-oriented alternative reference rules, for instance, are not exactly new to private international law.[95] According to authority dating back to the Middle [page 26] Ages, multistate contracts need comply only with the formalities that prevail at either the place of performance or the place of execution. This rule validates agreements that may violate one or the other of the many pesky form requirements that abound on the international scene, such as common law statutes of frauds or the pertinent provisions of French-inspired civil codes. Alternative reference rules have also been applied to save contracts from potential substantive invalidity caused by the motley array of American usury statutes.[96]

Again, alternative reference need not be limited to contracts. More than a century ago, the German Reichsgericht developed a choice-of-law rule for long-distance torts, which assured the victim the benefit of the more favorable law prevailing at either the place of acting or the place of injury.[97] An extraordinarily broad alternative reference rule is found in the Hague Convention on the Law Applicable to Wills, which invokes the rules of a variety of legal systems to safeguard testamentary dispositions against the international risk of formal invalidity. Rules of this nature are designed to effectuate a substantive policy, such as the validity of contracts or other legal transactions or the protection of tort victims. In this fashion they promote what German writers have called the "substantification"[98] of private international law. Such a substantive law approach shows how the conflicts technique can be used to further the unification of law, which is the [page 27] only effective way to assure true "decisional harmony." This kind of uniformity is superior to that which multilateralists pursue because it not only guarantees similar results irrespective of the place of adjudication but also a higher level of substantive justice.

Although it relies on domestic legal norms, the alternative reference technique -- a variant of the multilateral approach -- uses them not as the applicable law but as mere raw material for fashioning transnational rules. Similar to the principle of party autonomy, this technique helps neutralize statuta odiosa that burden international intercourse. Its salutary effect can be enhanced by borrowing from unilateralism the notion that each specific issue of an international dispute requires separate analysis: by avoiding all potentially applicable statuta odiosa, dépeçage [99] can thus offer tailor-made solutions to international disputes. In this fashion, the conflict of laws can play a role akin to that of the general principles of law of civilized nations in article 38 of the Statute of the International Court of Justice, namely to serve as a source for the creation of an international law. Private international law can thus help overcome the legal isolationism the emergence of modern nation states has prompted, especially in the civil law orbit, where codification destroyed the cohesion the ius commune once provided and the common law still does provide. Now that these two great legal cultures are peacefully united in the European Union -- an endeavor inspired by the need to take Europe beyond the confines of the nation state -- it would seem appropriate to create, for the united states of Europe, a common law comparable to that which prevails in the United States of America. [page 28]

IN CONCLUSION

By now the defects of the two principal approaches to dealing with interstate and international transactions ought to be painfully apparent. Since exclusive reliance on national law cannot satisfactorily resolve international problems, the quest for the touchstone has been in vain. In the foreseeable future, private international law will continue to produce disappointing results when applied to real-life problems because recent cases, statutes and conventions have done little to reform private international law. Yet, bad decisions in multistate cases, which may have been bearable in more sedentary times, will become less tolerable as long as the volume of international transactions keeps increasing. Why, then, do we cling to the conventional wisdom, the idea that national law must govern international transactions and that all national laws are of equal value? Among the reasons that come to mind there are, first and foremost, the force of habit and the hesitation to deviate from the trodden path. Commenting on the mixed reaction of lawyers and academics to Lord Denning, the late great innovator, a New Zealand judge wrote:

"There is in this paradox between the seemingly genuine admiration for the man and his work and the complacency with which these practitioners then adhere to their orthodoxy, an observable feeling of superiority. It is better, it seems, to belong to the priesthood and conform to its rituals than to carry the cross for justice and relevance in the law."[100]

The priesthood and rituals of private international law are especially prone to discourage unorthodox behavior for their mastery requires novices to make a hefty investment. Moreover, these rituals [page 29] are less open to challenge on grounds of common sense and reason because they attract speculative minds, whose fascination with this arcane specialty "entails the danger of losing the solid footing of concrete facts and recognized values."[101] This danger also threatens courts and legislatures, who usually defer to scholars in pursuing the elusive benefits traditional private international law promises to offer. As the recent wave of widely divergent private international law codifications shows, their misguided quest for "decisional harmony" has the perverse effect of further balkanizing private international law. Should we not instead seek to enhance the quality of transnational dispute resolution? Or shall we be forever saddled with methodologies that leave those who expect "to achieve results in multistate cases that are as satisfying in terms of standards of justice and of party acceptability as those reached in purely domestic cases ... doomed to disappointment"?[102] [page 30]


FOOTNOTES

1. Kurt G. Siehr, Domestic Relations in Europe: European Equivalents to American Evolutions, 30 Am. J. Comp. L. 37, 69 (1982) (using that term to refer to European family law conflicts).

2. New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting).

3. Babcock v. Jackson, 191 N.E.2d 279, 286 (1963) (Voorhis, J., dissenting). This term has subsequently become part of American conflicts parlance. See, e.g., Hans Baade, Counter-Revolution of Alliance for Progress? Reflections on Reading Cavers, The Choice of Law Process, 46 Tex. L. Rev. 141, 143 (1967); Albert E. Ehrenzweig, A Counter-Revolution in Conflicts Law: From Beale to Cavers, 80 Harv. L. Rev. 377 (1966). Concerning this reorientation see infra notes 35-66 and accompanying text.

4. "Krebsschaden des IPR: es ist staatliches Recht." Gerhard Kegel, Internationales Privatrecht 112 (7th ed. 1995).

5. On the distinction between the unilateral and multilateral methodologies see Friedrich K. Juenger, Choice of Law and Multistate Justice, 13 (1993).

6. Although they taught Roman law, which they believed to be of universal purport, the glossators also paid attention to the scope of the statuta of the city states in which the were teaching. See Juenger, supra note 5 at 11-12.

7. 3 Joseph H. Beale, The Conflict of Laws 1929 (1935). He added: "and where a conflict arises, it is because one sovereign wishes to apply his own law to a juridical relation arising on his territory, while another wishes to throw around his own subject, who is one of the parties to the relation, the protection of his personal law." Id.

8. See Juenger, supra note 5, at 14.

9. Johannes Nicolaus Hert, quoted in Max Gutzwiller, Geschichte des Internationalprivatrechts 201-02 (1977).

10. 5 Mart. (n.s.) 569 (La. 1827).

11. See Joseph Story, Commentaries on the Conflict of Laws 15-24 (1834).

12. See Carl Georg von Wächter, Über die Collision der Privatrechtsgesetze verschiedener Staaten (pt. 2), 24 Archiv für die civilistische Praxis 161, 270-311 (1842).

13. See 1 Friedrich Karl von Savigny, System des heutigen Römischen Rechts 3, 121-26 (1849).

14. "[F]or each legal relationship that jurisdiction must be determined to which that legal relationship, according to its peculiar nature, belongs or is subjected (wherein it has its seat)." Savigny, supra note 13, at 108; see also id. at 120, 200.

15. Id. at 129.

16. See, e.g., Pierre Mayer, Droit international privé 56 (5th ed. 1994) ("harmonie des decisions"); Max Keller & Kurt Siehr, Allgemeine Lehren des internationalen Privatrechts 57 (1986) ("Entscheidungsharmonie").

17. Mayer, supra note 16, at 54.

18. Id; Paul Heinrich Neuhaus, Die Grundbegriffe des Internationalen Privatrechts 94 (2d ed. 1976).

19. By virtue of Council Directive 85/374 of 25 July 1985 on the Approximation of the Laws, Regulations and Administrative Provisions of the Member States Concerning Liability for Defective Products, the pertinent rules in the member states of the European Community are, on their face, quite as favorable.

20. To quote Lord Denning's famous statements:

"As a moth is drawn to the light, so is a litigant drawn to the United States.

If he can only get his case into their courts, he stands to win a fortune. At no cost to himself, and at no risk of having to pay anything to the other side. The lawyers there will conduct the case on 'spec' as we say, or on a 'contingency fee' as they say. ... The courts of the United States have no such costs deterrent as we have. There is also in the United States a right to trial by jury. These are prone to award fabulous damages. . . .

The plaintiff holds all the cards."

Smith Kline & French Laboratories, Ltd. v. Bloch, [1983] 2 All E. R. 72, 74 (C.A.).

21. "Unless the ... evolution of the law is disturbed by unforeseen external circumstances, it can be expected that it will ultimately lead to a completely identical treatment of our teachings in all countries." Savigny, supra note 13, at 114.

22. There are many others. For instance, most civil law countries follow the principle of universal succession, whereas common law jurisdictions distinguish between the distribution of movables, to which they apply the law of decedents' last domicile, and the descent of immovables, which is governed by the lex situs. Apart from such patent differences, there are subtler ones, such as variant definitions of domicile or the lex loci delicti commissi (place of acting versus place of injury) .

23. See Juenger, supra note, at 71.

24. See Savigny, supra note 13, at 98-99 (noting the French Civil Code's reliance on the national law principle), 336-37 (characterization of surviving spouse's property rights).

25. See Juenger, supra note 5, at 72.

26. Cf. In re Annesley, 1926 Ch. 692.

27. An American unilateralist, after criticizing multilateralism's "metaphysical apparatus," noted that it creates "problems that did not exist before." Brainerd Currie, Selected Essays on the Conflict of Laws 180 (1963).

28. Nor are characterization and renvoi the only self-inflicted difficulties of the multilateral approach. The incompatibility of institutions found in foreign legal systems with domestic ones provoke the legerdemain called "adaptation;" realization that the traditional categories used to classify legal relationships are overly broad have prompted legal scholars to wrestle with the phenomenon known as the "incidental question;" and the parties' manipulation of connecting factors spawned much writing about "fraud on the law."

29. Ernest G. Lorenzen, Selected Articles on the Conflict of Laws 13-14 (1947).

30. See infra notes 35-41 and accompanying text.

31. In contrast, the soft connecting factor of domicile can be readily manipulated. See Juenger, supra note 5, at 176.

32. For which reason the national law principle has been called the "gold standard" of private international law. Neuhaus, supra note 18, at 209.

33. See Axel Flessner, Interessenjurisprudenz im internationalen Privatrecht 32-34 (1990).

34. See Juenger, The German Constitutional Court and the Conflict of Laws, 20 Am. J. Comp. L. 290 (1972).

35. That problem is not unique to the United States. In France, the Cour de cassation's steadfast insistence on the lex loci delicti commissi rule frequently barred or severely limited recovery, which prompted lower courts to use various and sundry devices designed to neutralize the rule, especially in cases where French parties were injured abroad. See 1 Henri Batiffol & Paul Lagarde, Droit international Privé 237-39 (7th ed. 1983) . The traffic accident problem was alleviated by France's ratification of the 1971 Hague Convention on the Law Applicable to Traffic Accidents, which provides for a number of exceptions to the rigid lex loci delicti commissi rule and invokes French law with greater frequency.

36. See, e.g., Kilberg v. Northeast Airlines, 172 N.E.2d 526 (N.Y. 1961); Griffith v. United Airlines, 203 A.2d 796 (1964); cf. Van Dusen v. Barrack, 376 U.S. 612 (1964).

37. See cases cited in preceding note (Massachusetts wrongful death statute limiting recovery to a maximum of $15,000).

38. Restatement of Conflict of Laws (1934).

39. See Juenger, supra note 5, at 96.

40. See, e.g., Grant v. McAuliffe, 264 P.2d 944 (Cal. 1953); Kilberg v. Northeast Airlines, 172 N.E.2d 526 (N.Y. 1961).

41. See Haumschild v. Continental Cas. Co., 95 N.W.2d 814, 821 (Wis. 1959) (concurring opinion); cf. University of Chicago v. Dater, 270 N.W. 175 (Mich. 1936) (contract choice of law).

42. See Kilberg v. Northeast Airlines, 172 N.E.2d 526 (N.Y. 1961).

43. See Pacific Employers Ins. Co. v. Industrial Accident Commission, 306 U.S. 493 (1939); Alaska Packers Ass'n v. Industrial Commission, 294 U.S. 532 (1935); see also Carroll v. Lanza, 349 U.S. 145 (1955).

44. See supra note 3.

45. 240 N.E.2d 279 (N.Y. 1963).

46. For a recent lineup of the various rules and approaches to tort choice of law see Symeon C. Symeonides, Choice of Law in the American Courts in 1997, 46 Am. J. Comp. L. 233, 266-73 (1998).

47. The question whether a contract is valid ... can on general principles be determined by no other law than that which applies to the acts, that is by the law of the place of contracting. ... If ... the law of the place where the contract is made annexes no legal obligation to it, there is no other law which has the power to do so.

2 Joseph H. Beale, A Treatise on the Conflict of Laws 1288 (1935).

48. See Juenger, supra note 5, at 53-54.

49. See id. at 55-58.

50. See Pritchard v. Norton, 106 U.S. 124 (1882), which let choice of law turn on the parties' "presumed intent." This fictive subjective component was subsequently objectified to become the "closest connection." See Juenger, supra note 5, at 57.

51. See Symeonides, supra note 46, at 251-53, 266.

52. 124 N.E.2d 99 (N.Y. 1954).

53. See J. H. C. Morris, The Proper Law of a Tort, 64 Harv. L. Rev. 881 (1951).

54. 191 N.E.2d 279 (N.Y. 1963).

55. See, e.g., Restatement (Second) of Conflict of Laws 145 (torts), 188 (contracts).

56. See Juenger, supra note 5, at 57.

57. See generally Currie, supra note 27.

58. See Juenger, supra note 5, at 100-01.

59. See id. at 138.

60. See id. at 137.

61. Not without reason, Currie has been accused of harboring a "nihilist view of conflicts law in the traditional sense." Eugene F. Scoles & Peter Hay, Conflict of Laws 16 (2d ed. 1992).

62. See Juenger, supra note 5, at 76, 138-39.

63. Which is why Currie and other interest analysts felt uncomfortable about dépeçage. See Juenger, supra note 5, at 139.

64. For which, as noted earlier, Currie had criticized the multilateralists. See supra note 27. An even more fundamental difficulty with his approach is that no one has ever been able to demonstrate that governments do indeed have an interest in effectuating the policies underlying their private law rules.

65. See Juenger, supra note 5, at 121-28.

66. See id. at 146-49.

67. See Kegel, supra note 4, at 106-08.

68. See id. at 116-18.

69. See Siehr, supra note 1, at 40-46, 55-57, 71.

70. See Rome Convention art. 4; draft Convention arts. 3 and 4.

71. See Rome Convention art. 7; draft Convention art. 9 ("mandatory rules").

72. See Pierre Gothot, Le renouveau de la tendance unilatéraliste en droit international privé (pts. 1-3), 60 Rev. Crit. D. I. P. 1, 209, 415 (1971). Savigny himself had referred to a species of lois de police when he spoke of "strictly positive laws." See Savigny, supra note 13, at 33-37. Moreover, he apparently considered unilateralism and multilateralism as but two sides of the same coin. See id. at 1-3, 10-11.

73. See, e.g., David F. Cavers, The Choice of Law Process 108-24 (1965); Arthur Taylor von Mehren & Donald Theodore Trautman, The Law of Multistate Problems 76-79 (1965); Baxter, Choice of Law and the Federal System, 16 Stan. L. Rev. 1 (1963).

74. A term coined by Henri Batiffol, Le pluralisme des méthodes en droit international privé, 139 Collected Courses 71 (1973-II).

75. Reliance on domestic law to resolve multistate problems creates the further difficulty of judges having to apply foreign law. Multilateralists and unilateralists alike assume that any court is able to apply whatever foreign rules of decision their approaches may invoke. Few judges, however, are comfortable dealing with any law other than their own and if they do rely on foreign law experts, the margin of error in decisionmaking inevitably increases. And who is to pay the experts' fees? What if the parties are impecunious? From the point of view of an efficacious administration of justice, how can one justify (especially in disputes of minor significance) having judges jump the hurdles first of complex choice-of-law issues and then of knotty foreign law problems?

76. See supra notes 21-24 and accompanying text.

77. See Savigny, supra note 13, at 114-15.

78. See Friedrich K. Juenger, The National Law Principle, in Mélanges Fritz Sturm (1999).

79. See Application of the Convention of 1902 Governing the Guardianship of Infants (Swed. v. Neth.), 1958 I.C.J. 55 (Judgment of Nov. 28).

80. See Friedrich K. Juenger, Two European Conflicts Conventions, 28 Victoria U. Wellington L. Rev. 527, 535-42 (1998). Nor does Rome II inspire greater confidence. That draft convention, for example, fails to include the commonsensical alternative reference rule developed in German practice. See infra note 97 and accompanying text.

81. Compare Erik Jayme & Christian Kohler, L'interaction des règles de conflict contenues dans le droit dérivé de la Communauté européenne et des conventions de Bruxelles et de Rome, 84 Rev. Crit. D. I. P. 1 (1995), with Bernd von Hoffmann, Richtlinien der Europäischen Gemeinschaft und Internationales Privatrecht, 36 ZfRV 45 (1995).

82. See supra note 43 and accompanying text.

83. See, e.g., New York Life Ins. Co. v. Dodge, 246 U.S. 357 (1918); Slater v. Mexican Nat'l R.R. Co., 194 U.S. 120 (1904).

84. As shown by the example of the American federal system, where the Uniform Commercial Code offers a substantial measure of uniformity.

85. See generally Michael Joachim Bonell, An International Restatement of Contract Law (2d ed. 1997).

86. See Swift v. Tyson, 41 U.S. (16 Pet.) 1, 19 (1842) (Story, J.).

87. René David, The International Unification of Private Law, in 2 International Encyclopedia of Comparative Law ch. 5, at 25 (1969).

88. Id. at 212.

89. Jane C. Ginsburg, The Private International Law of Copyright in an Era of Technological Change, 273 Rec. des Cours 239, 383 (1998).

90. Matthew R. Burnstein, Conflicts on the Net: Choice of Law in Transnational Cyberspace, 29 Vand. J. Transnat'l L. 75, 81 (1996).

91. See supra notes 47-52 and accompanying text.

92. See Juenger, supra note 5, at 54-55.

93. See Paul Lagarde, Le nouveau droit international privé des contrats après l'entrée en vigeur de la Convention de Rome du 19 juin 1980, 80 Rev. Crit. D.I.P. 287, 300-01 (1991).

94. See Keller & Siehr, supra note 16, at 374-75. Article 8 of the European draft Convention on the Law Applicable to Non-Contractual Obligations would allow the parties to choose the applicable law by means of an agreement entered into after the obligation arises.

95. See Juenger, supra note 5, at 178.

96. Observing this judicial practice, Ehrenzweig (who, however, believed that validating usurious contracts made little sense) derived from it a more general rule of validation. See Albert E. Ehrenzweig, A Treatise on the Conflict of Laws 464-85 (1963).

97. See 72 RGZ 41 (1909); 23 RGZ 305 (1888). While the European draft Convention on the Law Applicable to Non-Contractual Obligations eschews this rule, see supra note 80, article 40(1), second sentence, of Introductory Act to the German Civil Code, as amended by the recent Act on the Private International Law Concerning Non-Contractual Obligations and Property, allows the injured party to the law of the place of injury instead of the place of acting, which normally applies.

98. "Materialisierung" is the term coined by Paul Heinrich Neuhaus, Neue Wege im europäischen Internationalen Privatrecht?, 35 RabelsZ 401, 407-10 (1971).

99. See supra notes 62-63 and accompanying text.

100. E. W. Thomas, Lord Denning 1899-1999, 1999 New Zealand L. J. 92, 93 (April).

101. Neuhaus, supra note 18, at 3.

102. Arthur Taylor von Mehren, Choice of Law and the Problem of Justice, 41 Law and Contemp. Probs. 27, 42 (Spring 1977).


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