Conflict of Laws: Jurisdiction, Domicile, and Choice of Law

Introduction to Conflict of Laws

A conflict of laws arises when the laws of two or more jurisdictions have some bearing on a case, such that the outcome may differ depending on which jurisdiction's law is applied to each issue in question. The contradictory legal rules may stem from federal law in the United States, state law in the United States, or international law. When competing laws emerge, the first question becomes: which law should be employed to resolve the case? To decide which law will be applied, courts follow a specific procedure (Kay, 1). This process is referred to as characterization or classification in legal terms. When deciding which law to apply in a conflict, courts typically have two options:

Lex fori: When a conflict of laws arises in a procedural matter, courts usually apply lex fori — that is, the law of the forum.

Lex loci: When a conflict of laws involves a substantive topic, courts often apply lex loci — the local law of the place where the cause of action arose.

Determination of Affiliation: Domicile, Nationality, Appearance, and Consent

Conflict of laws is referred to as private international law by legal professionals and experts in civil law, and it is invoked whenever there is a foreign element to a case. The rules of federal courts differ from those of state courts; because the Constitution limits the federal courts' jurisdiction, federal courts must follow a complicated series of standards to determine which competing statute to apply (Stimson, 107–110). The principles of conflict of laws are therefore especially important in the United States, where states frequently have laws that differ from one another. The Supreme Court ruled in 1938 that federal courts must follow the conflict-of-laws standards of the state in which the case is being heard. Certain clauses of the United States Constitution also restrict states' ability to resolve disputes in particular ways (Reese, 679–699). For example, Article IV, Section 1 of the Constitution mandates that each state accord full faith and credit to the judicial actions of other states. The Supreme Court has made clear that, under this constitutional provision, each state must regard another state's judgment as valid and assist in its enforcement. The sole exception is that a state is not required to enforce the penal laws of another state.

Several factors influence a plaintiff's decision on where to file a case. The first is practicality: a plaintiff is more likely to sue in a jurisdiction close to his residence because witnesses and evidence may be more readily available there. Legal considerations also matter. A plaintiff may prefer a jurisdiction that offers procedural or other advantages, or one in which the defendant holds assets sufficient to satisfy a final judgment.

Many of the parties' rights and obligations — including property classification, the legality and structure of a will, the site of probate, and other planning concerns — are determined by ascertaining a client's domicile. Domicile is a legal concept describing a person's relationship with a specific location or country. While there is no universal definition, most common law countries require two factors to exist simultaneously: (1) physical presence in the jurisdiction and (2) the intent to remain there indefinitely. Both federal and state legislation have codified this common law concept in various forms (Lawrence and Rizzo, 4). In New York, for example, a "domicile" is defined as a fixed, permanent, and primary residence to which an individual intends to return regardless of where they may be temporarily residing.

Certain legal presumptions assist in determining a person's domicile. The recognized categories are domicile of origin, domicile by operation of law, and domicile of choice. Domicile of origin is the legal address assigned to each individual at birth — typically the father's domicile in the case of a legitimate child and the mother's in the case of an illegitimate child. Domicile can also be assigned by legislation (Kay, 3–9). Under common law, for instance, a married woman was presumed to share her husband's domicile; however, in most common law jurisdictions today, a husband and wife may have separate domiciles even if they are not living apart. The third category, domicile of choice, allows a legally competent person to change their domicile by physically residing in a new jurisdiction with the intent to remain there indefinitely (Lawrence and Rizzo, 4–5).

While domicile is the primary criterion in common law jurisdictions for resolving certain conflict-of-laws questions, nationality is also employed in other jurisdictions. Nationality may be determined based on political affiliation, parentage, birthplace, or naturalization. As a result, a person may be a national of one country while residing in another. Different governments may apply different standards to determine nationality, just as they do with domicile, meaning two or more countries may simultaneously claim an individual as a national. Some jurisdictions, such as Switzerland, use a blended system combining domicile and nationality: the domiciliary rule applies to foreigners living within the jurisdiction and to citizens living abroad (Lawrence and Rizzo, 6). Although nationality does not play a substantial role in conflict-of-laws analysis by U.S. courts, a global estate planner should be familiar with this area of law.

Blackmer v. United States is probably the clearest example and leading case on judicial jurisdiction based on nationality. Blackmer was a United States citizen residing in Paris. As required by law, the American consul personally served him with a subpoena to appear as a witness in a criminal trial in the District of Columbia (Moreland, 180). Upon his failure to appear, a substantial portion of his property in the United States was seized and a $60,000 contempt charge was assessed. In affirming the lower court, the Supreme Court declared: "Neither can it be questioned that the United States retains the power inherent in sovereignty to compel the return to this country of a citizen, resident elsewhere, whenever the public interest requires it" (Blackmer v. United States, p. 437).

In England, nationality was established as a legal ground of jurisdiction in Douglas v. Forrest (1828). The court based its ruling in part on the fact that the absent individual held property within the jurisdiction, but the broader principle was that a sovereign could compel a subject to appear in its courts in exchange for the protection of his person and property. Subsequent English cases support this rule by dicta — for example, Gavin Gibson & Co., Ltd. v. Gibson and Schibsby v. Westenholz — both of which concern private-party lawsuits.

Stumberg (80) considers appearance to be a form of consent. When a defendant makes a general appearance, he is understood to have submitted to the court's jurisdiction. However, following Blake's (5) reasoning, it can also be argued that presence — rather than permission — is a more accurate explanation for appearance as a basis of jurisdiction. The rule that appearance confers jurisdiction also binds the plaintiff, who, by filing a lawsuit and thereby appearing, submits to full adjudication of the claim, including any counterclaim or set-off. In Adam v. Saenger, Chief Justice Stone stated: "The plaintiff having voluntarily submitted himself to the court's jurisdiction by demanding justice from the defendant, there is nothing arbitrary or unreasonable in treating him as being present for all purposes for which justice to the defendant requires his presence."

A notable issue in appearance cases is the appearance made solely to challenge jurisdiction. Such a special appearance is, by definition, not an agreement to general jurisdiction — it is the opposite (Moreland, 183). However, a state may provide by statute that a special appearance for the purpose of contesting jurisdiction exposes the appearing party to all the consequences of a general appearance. By operation of law, the special appearance thereby transforms into a general one.

When a pre-litigation agreement to submit to the jurisdiction of a particular court is reasonable and convenient for the parties, it is generally accepted as a sufficient basis for jurisdiction. It is always worth asking why a particular jurisdiction was selected: did one party choose it because it would be more favorable to him, perhaps one with fewer traditional bases of jurisdiction? Does the consenting party's agreement provide the proposing party with an unfair advantage? These concerns are relevant to whether a court will assume jurisdiction by consent in a given case.

Choice of Law: Unilateralism, Multilateralism, and the Substantive Approach

The cases of Gilbert v. Burnstine and Copin v. Adamson are instructive on these issues. In Gilbert v. Burnstine, the defendants were all New York residents and citizens who had contracted with the plaintiff to sell and supply zinc concentrates in the United States. A stipulation in the contract provided that all disputes arising from the agreement were to be arbitrated in London. When disputes arose over the defendant's alleged failure to perform, the defendant was notified in New York but failed to appear in London for the arbitration, and the arbitrator found against him. The New York Court held that the contract to arbitrate in London implied consent to English jurisdiction, and that the award was valid (Moreland, 185). Whether consent to jurisdiction will be implied from an agreement to arbitrate in subsequent New York cases remains uncertain.

In Copin v. Adamson, the defendant was a British subject who became a stockholder in a French corporation whose articles of incorporation provided that all disputes arising during liquidation should be submitted to a tribunal in the Seine department, that every shareholder must elect a domicile in Paris, and that if no such election were made, the shareholder would be deemed domiciled at the official procurator's office for service of process. The court held that if the defendant did not elect a domicile, one could be assigned to him under the agreement, and that acquisition of the shares could be construed as notice of an intent to accept that provision (Moreland, 186–187). However, it was determined that service on the French procurator without the defendant's actual knowledge did not constitute legitimate notice of suit. The remaining question — whether the simple acquisition of shares should bind a person to an article of incorporation requiring such purchase to constitute consent to a Paris domicile — remains debatable. It is argued that implying such consent under those circumstances was not reasonable.

Choice of law is the essential element of the conflict-of-laws discipline. It is a complex and contested area of law in which scholars have invested considerable effort developing competing theories. The methodologies so far devised in the conflict-of-laws field can be broadly classified into three approaches: unilateralism, multilateralism, and the substantive law approach (Kebede and Kassim, 98).

A unilateralist approach is premised on the notion that a state can only determine whether its own law should apply to a given situation. In other words, this method focuses on defining the personal and territorial reach of potentially applicable local decision-making rules (Kebede and Kassim, 99). It establishes the geographic scope of a state's substantive legislation.

Conclusion

"What law should be applied to the matter at hand?" is the question that anyone concerned with conflict of laws should ask. Through "characterization" or "classification," the court selects which law to apply, and this decision must be made in conformity with the forum's own legal system. In a case involving diversity of citizenship, a federal court decides the conflict-of-laws question as if it were the highest state court of the state in which it sits. When a court faces a choice-of-law question, it may either apply the law of the forum (lex fori) — the usual result when the issue is procedural — or the law of the transaction or occurrence that gave rise to the litigation (lex loci) — the usual choice when the matter is substantive. Because federal jurisdiction is limited to what is specified in the Constitution, federal courts follow different rules than state courts, and the standards governing which laws federal courts must apply are highly complex.