Firstch 03

Chapter Three
Introduction to Conflict of Laws

Why an introduction to conflict of laws?
[3.1] This chapter provides a preliminary introduction to the rules, tests, approaches, methods, techniques and theories of conflict of laws. Due to a lack of uniformity in the use of terminology,1 terms and concepts of conflict of laws may sometimes overlap or be barely distinguishable. Nevertheless, conflict of laws is a vital part of international commercial law, because its rules affect the outcomes of international commercial transactions. The operation of the conflicts rules may have a significant impact not only on the outcome of any international commercial litigation,2 but also on the enforcement of contractual obligations in any international commercial transactions. Even if a contractual dispute is to be settled by the parties through consultation, mediation or arbitration, the conflicts rules will help them to determine the governing law of the contract, which forms the basis for ascertaining the parties rights and obligations, and for interpreting the terms of the contract.
[3.1] [3.2] [3.2]
Conflict of laws is relevant to international commercial law because the parties to an international transaction will usually (by definition) come from different countries, or the transaction, by virtue of the goods sold or matters concerned, may involve the laws of different countries. In an international sale of goods or services, for example, the seller could be in Australia, but the buyer could be in Germany or Japan. Should the law of the sellers country or the law of the buyers country apply, if any dispute arises from the contract of sale? In addition, the ship carrying the goods could have a Panamanian registration, but be owned by an American citizen who is also a resident of the Solomon Islands;
1. For example, theories in Nygh, Conflict of Laws in A ustralia, 5th ed, Butterworths, Sydney, 1991, pp 1831, include discussion of the theory of vested rights, the local law theory, non-conflicts, how to resolve a true conflict and choice of law technique in Australia. But in North and Fawcett, the same expression refers to the theory of acquired rights, local law theory and the American revolution (Cheshire and N orths Private International Law, 12th ed, Butterworths, London, 1992, pp 2731). International commercial litigation is a term of convenience. It was adopted in Cromie, International Commercial Litigation (Butterworths, London, 1990). It refers to litigation for commercial disputes which have international connections. International connections can be identified either through parties to the dispute, or the subject-matter of the dispute. Litigation arising from the dispute may involve service out of jurisdiction, foreign judicial assistance or enforcement of a foreign judgment.
[3.2]
2.
54
[3.5]
and the transaction is financed by a Japanese bank operating in Hong Kong. Furthermore, if the goods are insured by Lloyds, which is based in London, what is the governing law for the insurance contract then? The rights and obligations of each party under each possible regime of law may be substantially different, because the countries, which might have jurisdiction over the matter on the bases of residence, nationality, registration and business operation, etc, might have substantially different legal systems, and strong interests in enforcing their own laws. The rules of conflict of laws deal with these issues.
[3.2] [3.3] [3.3]
International commercial law, public international law and conflict of laws (private international law) are related. For example, in Grace v MacA rthur 170 F Supp 442 (1959) (US DCED, Arkansas) the principles of public international law came into play in support of the rules of conflict of laws. An action involving a contract was initiated in a US Federal Court in Arkansas. Service of a writ to the defendants was required. One of the defendants was served on board an aeroplane when the plane was flying over Arkansas in a non-stop journey from Memphis, Tennessee to Dallas, Texas. The court held that the defendant was served within the territory of Arkansas. This is important, because otherwise a process of service out of jurisdiction would be necessary and some jurisdiction sets out difficult rules for service out of jurisdiction. It must be noted that the jurisdiction or territory of a state extending to the airspace of the state is a concept of public international law (although it was applied within the dominion of a federal state in this case).
[3.3] [3.4] [3.4]
[3.3]
Two relatively recent Australian cases, Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197; 79 ALR 9 and V oth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 539; 97 ALR 124, illustrate the importance of conflicts rules. Both cases were determined by the High Court of Australia. In the former, the Australian plaintiff was allowed to proceed with his personal injury claim, sustained while on board a Greek registered ship within Greek territorial waters, against the Greek shipowner in the Supreme Court of New South Wales. In the latter, the New South Wales companies were not permitted to pursue their damages claims in New South Wales against a US resident for allegedly negligent advice given by him as an accountant in Missouri. The summaries of the cases are as follows:
[3.4] [3.5] [3.5]
[3.4]
Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197; 79 ALR 9 The oppressive or vexatious test versus the doctrine of forum non conveniens
Facts: Dr Fay (plaintiff), a resident in Queensland, and his wife booked a cruise around the Greek islands in the Eastern Mediterranean through the sale agent of the defendant (Oceanic Sun Line Shipping the owner of the vessel on which Dr Fay was injured) in Sydney. The money for the tour was paid to the agent in Sydney. Dr Fay received an exchange order from the Sydney agent and received the actual ticket later in Athens. The ticket contained a clause which stated that any dispute arising from the ticket must be heard before the courts of Athens.
55
[3.5]
[3.5]
International Commercial Law
Dr Fay was seriously injured while taking part in trap shooting on board the vessel, which was then sailing in Greek waters. Dr Fay later sued the defendant in the Supreme Court of New South Wales in Sydney, where the ticket was booked, money paid and exchanged order issued. The defendants application for a stay of proceedings in New South Wales failed. So did its appeal to the Full Court of the Supreme Court. The defendant (appellant) then appealed to the High Court of Australia. Issues: Whether the Supreme Court of New South Wales should hear the claim for personal injury, given the existence of the following circumstances: the cruise was booked and paid in Sydney; the ticket which contained a choice of forum clause (a clause which chooses a particular forum, either a court or an arbitral tribunal, to deal with any dispute arising from the contract concerned) was issued in Athens; the injury took place on board a Greek vessel which was within Greek territorial waters; the defendant had its principal place of business in Greece; the plaintiff was resident in Queensland; and the plaintiffs language difficulties with litigating in Greek courts. Decision: The High Court by a 32 majority dismissed the appeal and held that the terms of the ticket did not exclude the jurisdiction of the Australian courts. However, the majority judges dismissed the appeal on divergent grounds, which did not provide any unambiguous and certain guidance to the lower courts in Australia for dealing with similar matters. This unsatisfactory situation led to a duty-driven effort of compromise (in particular between the joint judgment and Brennan Js judgment) by the majority of the High Court in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538; 97 ALR 124.
[3.5] [3.6] [3.6]
Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538; 96 ALR 124 The High Court set out the test of a clearly inappropriate forum
Facts: The plaintiffs and respondents, Manildra Flour Mills (MFM, the first plaintiff and first respondent) and Honan Investments Pty Ltd (the second plaintiff and second respondent, which was the holding company of MFM), were incorporated under New South Wales law. MFM sold starches and starch products between 19761983 to Manildra Milling Corporation (MMC), which was a subsidiary of Honan Investments and incorporated under the law of the state of Kansas, the United States. Voth, the defendant and appellant, was a practising accountant in Missouri, the United States. He had allegedly provided negligent advice on tax matters to MMC, affecting MFM. Under the laws of the United States, MFM was liable to pay withholding tax on the interest received from MMC, which became indebted to MFM as the result of the transactions between them. MMC was liable to deduct the withholding tax from the payments of interest to MFM. MMC did not deduct the tax during the period between 19761983. Nor did MFM pay tax to the US Government during
56
[3.6]
[3.6]
that period. All were allegedly the results of Voths negligence. In 1984 MFM and MMC realised that the back-dated tax payments and a penalty for MMCs failure to comply with the US law were payable to the Inland Revenue Services of the United States. MFM and Honan Investments sued Voth in New South Wales for professional negligence. Voths application for a stay of proceedings in New South Wales was denied by the Supreme Court of New South Wales, and an appeal to the Court of Appeal of the Supreme Court of New South Wales failed. Voth thus appealed to the Australian High Court on the ground that the NSW court was not the appropriate forum for this dispute. Issues: Whether the proceedings in New South Wales should be stayed, given the existence of the following circumstances: the alleged negligence (omission or misrepresentation) was committed in Missouri; the damages flowing from the alleged negligence occurred in New South Wales (MFM) and US (MMC); Voth was resident in Missouri; and MFM and Honan Investments were resident in New South Wales. Decision: The majority of the High Court was determined to clarify the uncertainty arising from the divergent tests adopted by the majority judges in Oceanic Sun for determining the appropriateness of an Australian courts jurisdiction in such cases. Five judges (Mason CJ, Brennan, Deane, Dawson, and Gaudron JJ) agreed that the clearly inappropriate forum test should be adopted in Australia. One judge (Toohey J) insisted that the forum non conveniens doctrine should be the test in Australia. While the five judges were united (although maybe conditionally, as Brennan J, as his Honour then was, accepted the majoritys test for the sake of unity) in reinforcing the test of clearly inappropriate forum, they differed in the interpretation and application of the test. Four judges (Mason CJ, Deane, Dawson and Gaudron JJ) found that New South Wales was clearly an inappropriate forum under the test, but Brennan J found New South Wales was not a clearly inappropriate forum under the same test. Toohey J found Missouri was a more appropriate forum under the forum non conveniens doctrine. At the end, five judges (Mason CJ, Deane, Dawson, Toohey and Gaudron JJ) held that: the alleged tort was committed in Missouri and the liability should be determined by the law of Missouri; and the action should be stayed either because New South Wales is clearly an inappropriate forum (by the joint judgment) or because Missouri is a more appropriate forum (by Toohey J). The dissenting judge (Brennan J) found that the alleged negligence was initiated in Missouri but completed in New South Wales, the principal damage occurred in New South Wales, and New South Wales was not clearly an inappropriate forum.
[3.6]
57
[3.7]
[3.7]

[3.7]
In a situation similar to the two abovementioned cases, an Australian party will have the advantage of a familiar legal system and the benefit of saving costs if the case is heard by an Australian court, and will face higher risks, and more disadvantages, if he or she has to litigate in a foreign court. This is why we have to study the rules of conflict of laws and the tests favoured by a court of law, which will determine the selection of a forum in a given case. A lawyer needs to contemplate in any international commercial contract the implications of the conflicts rules to deal with possible disputes.
[3.7] [3.8] [3.8]
[3.7]
This chapter provides an introduction to certain basic rules, techniques or approaches of conflict of laws, and their application to the determination of a courts jurisdiction. A study of the determination of governing law of a contract or dispute is found in Chapter 15. The brief introduction to conflict of laws in this chapter will help us to understand certain preliminary issues, such as the governing law of a contract of sale or a bill of lading, or the jurisdiction of the court (see Bulk Chartering & Consultants A ustralia Pty Ltd v T & T Metal Trading Pty Ltd (The Krasnogrosk ) (1993) 31 NSWLR 18), in a number of court decisions which we will deal with in subsequent chapters.
[3.8] [3.9] [3.9]
[3.8]
What is a conflict of laws?

[3.9] The expression conflict of laws simply means that the laws of different countries are in conflict with each other. This happens when a particular matter, object, transaction or legal relationship (for example, the validity of a marriage or effect of an oral promise) is governed, or alternatively, can be dealt with by the laws of two (sometimes even more) countries. This situation can be illustrated by the following example:
[3.9] [3.10] [3.10]
[3.10] Example of conflict of laws within Australia

Conflict of laws within Australia is not a major concern of our study. However, conflict does arise between the laws of Australian states from time to time.3 A conflict between the sale of goods legislation of certain Australian states is an appropriate example to demonstrate a conflict of laws in commercial transactions. Hypothetical facts: Suppose a buyer from New South Wales telephoned a seller in Tasmania and ordered a quantity of Tasmanian cheese to the value of $5,000. The order was not reduced to any written form thereafter. No other action was taken in relation to the matter (no part performance). The market prices of the Tasmanian cheese increased and the seller refused to perform the oral agreement to sell. Can the New South Wales buyer enforce this oral agreement?
3. For example, in Potter v The Broken Hill Pty Company Ltd (1906) 3 CLR 479, the plaintiff (Potter) sued the defendant (the Broken Hill Pty Company Ltd) in the Supreme Court of Victoria for an alleged infringement of a patent granted in New South Wales under the law of New South Wales. The High Court held that the validity of the patent could only be dealt with in New South Wales. See also Cambridge Credit Corporation Ltd v Lissenden (1987) 8 NSWLR 411; Breavington v Godleman (19871988) 169 CLR 41; Perrett v Robinson (19871988) 169 CLR 172; Stevens v Head (1992) 112 ALR 7; and Rothwells v Connell (1993) 119 ALR 538.
58
[3.12]
Relevant laws: The Tasmanian law differs from the New South Wales law with regard to the validity of this oral order. Section 9 of the Sale of Goods Act 1896 (Tas) states that a contract of sale involving a value of 10 or more must be made or evidenced in writing, and an oral contract can be enforced only in the following four exceptional circumstances: buyer accepted part of the goods contracted; buyer accepted all the goods contracted; buyer paid an earnest (a rare practice today, referring to a payment made by the buyer to indicate his or her sincerity to buy the goods, which is not refundable if the buyer refuses to perform the contract); or buyer made part payment for the goods. In contrast, the Sale of Goods Act 1923 (NSW) does not require a contract of sale to be made or evidenced in writing. In fact, a similar provision in the NSW Act was repealed in 1988. Hypothetical conflict: Suppose the four exceptions in s 9 of the Tasmanian Act are not satisfied. Ignoring the issue of standing under the respective laws, the Tasmanian Act and NSW Act may lead to conflicting results, if they both become applicable on the ground that the oral contract was made in such a circumstance that it is impossible to agree on where the contract was ultimately reached (because, for example, the parties were in different states, were involved in a telephone conversation and disagreed as to when and how the offer and acceptance was effected). This means that under the NSW Act, the buyer can enforce this contract provided that the general law relating to oral contracts, ie the existence of detriment or part performance, is satisfied; but under the Tasmania law the seller has no obligation to perform the oral contract, because s 9 was not complied with. The difference between the Tasmanian Act and NSW Act is what we call conflict of laws.
[3.10] [3.11] [3.11]
The above example explains the meaning of conflict of laws. A court becomes concerned with conflict of laws issues when a plaintiff commences a proceeding pursuant to the rules of the court and the defendant raises the issues of foreign law to challenge either the appropriateness of the courts jurisdiction or the claims of the plaintiff. In such a situation, the court concerned would have to determine first whether it has an appropriate jurisdiction over the dispute, and secondly, which law governs the dispute if the court has an appropriate jurisdiction over the dispute. In carrying out these steps, the court applies the so-called rules of conflict of laws or conflicts rules to make a choice of either the jurisdiction, or of the governing law. The former can be called choice of jurisdiction and the latter choice of law. In most circumstances, conflict of laws involves the conflict between competing jurisdictions, such as the cases of Oceanic Sun and V oth v MFM: see summaries in [3.5][3.6] .
[3.11] [3.12] [3.12]
[3.11]
It follows that in order to resolve the dispute in the hypothetical example, the New South Wales court will have to determine whether it has appropriate jurisdiction
59
[3.12]
[3.12]
over the dispute if the buyer sues the seller in New South Wales. Similarly, the Tasmanian court has to determine whether it has appropriate jurisdiction over the dispute if the buyer asks it (although it is most unlikely) to enforce the oral contract. The jurisdictional issue in this hypothetical case may be (but not necessarily) dealt with under the cross-vesting legislation, which is uniform throughout Australia and allows a state court to exercise certain jurisdiction of the court in another state on a reciprocal basis. After the jurisdiction of a court is dealt with, the court which is to hear the dispute will have to decide which of the two laws (ie the New South Wales Act or Tasmanian Act) should apply. The rules, methods, approaches, or techniques for making such determination form the body of conflict of laws.
[3.12] [3.13] [3.13]
Explaining the expression conflict of laws

[3.13] Conflict of laws, as a particular branch of law, is often referred to as private international law,4 or sometimes private transnational law. It represents a body of rules, or established practices, for making a choice of jurisdiction and choice of law in dealing with foreign elements in local litigation which can involve almost any areas of law, such as contracts, torts, property law, company law, banking and securities legislation, matrimonial law, etc.
[3.13] [3.14] [3.14]
[3.14] Foreign element is a broad term referring to any facts, connections or consider-
ations which may raise the issues of foreign law, foreign jurisdiction or international treaties which are not part of domestic law. In the presence of foreign elements, a court of law would have to, as we have seen, decide whether it has an appropriate jurisdiction or whether a local law, a foreign law, an international treaty (which has not been incorporated into the domestic law), or sometimes a foreign judgment, should be taken into account in dealing with the dispute. Since there are differences, inconsistencies and conflicts between rules of different countries, a domestic court has to determine which rule or rules are applicable in a given case. This is probably why the expression conflict of laws was created. It may also explain why conflict of laws is sometimes described as choice of law.
[3.14] [3.15] [3.15]
[3.15] Choice of law suggests that in dealing with issues of conflict of laws, the court
is, in fact, making a choice between laws, including sometimes the law governing the choice of jurisdiction. The rules of conflict of laws may sometimes be broadly called the rules of choice of law. Sometimes choice of law is used in a more specific sense, referring to the choice of substantive law (see [3.16] ) which governs the rights and liabilities of the parties in a given case. This is different from choice of forum, which deals only with the jurisdiction of a court to hear a dispute.5
[3.15] [3.16] [3.16]
4. 5.
The term private international law is believed to have been created by Story in 1834 and was adopted by the early English authors, such as Westlake and Foote. North and Fawcett, supra note 1, p 12. For example, the Australian Law Reform Commissions Report No 58 states that choice of law rules need to be distinguished from the rules conferring jurisdiction: see The Law Reform Commission, Report N o58: Choice of Laws, Commonwealth of Australia, Canberra, 1992, para 1.3.
60
Introduction to Conflict of Laws [3.16]
[3.18]
The concepts of substantive law and procedural law need to be distinguished. Substantive law refers to a law governing the rights and duties of the parties to an international commercial transaction, and procedural law deals with procedural issues of litigation. The substantive rights of the parties to an action may be governed by a foreign law, but all matters appertaining to procedure are governed exclusively by the law of forum.6 There are two major reasons for the codification of conflicts rules in the context of international commercial law. First, it is necessary for the purpose of providing the same rights and duties to the same persons who are involved in the same type of international commercial transactions in different jurisdictions. Secondly, codification provides the same procedural protection to persons who have the same right but take legal action in different jurisdictions, and provides the same rules for the choice of law regardless of where the choice is made. Again, private international law (conflict of laws) is closely, but not exclusively, related to international commercial law.
[3.16] [3.17] [3.17]
Defining conflict of laws

[3.17] While we can come to a reasonable understanding of the kind of issues with which we have to deal under the conflict of laws or private international law, there are difficulties in defining the expressions. For example, Nygh observes as follows: [conflict of law, as its title suggests,] is concerned with resolving the conflicts which arise because of the interaction between different legal systems. The title is not altogether satisfactory. While it is true that the resolution of conflicts between laws is the most important and dramatic aspect of the subject, there are other issues, such as jurisdictional questions, which do not necessarily arise out of conflicts between laws and yet indisputably belong to the subject.7
Similarly, in dealing with the different meanings of private international law, North and Fawcett observe that: [the main] criticism directed against its use is its tendency to confuse private international law with the law of nations or public international law, as it is usually called There is, at any rate in theory, one common system of public international law but, as we have seen, there are as many systems of private international law as there are systems of municipal law.8
[3.17] [3.18] [3.18]
Perhaps an easier way of defining the concept of conflict of laws is to ignore the diversity of the systems of law and to describe the expression at a more abstract level. This appears to be what Castel has done. His definition of conflict of laws is as follows: It [conflict of laws] is concerned with the application of law in space. One could describe private international law or conflict of laws as the body of rules dealing with the effect of legally relevant foreign elements on the decision of a civil case. Although rules of conflict
6. 7. 8. North and Fawcett, supra note 1, p 75. Nygh, supra note 1, p 4. North and Fawcett, supra note 1, pp 1213.
[3.18]
61
[3.18]
of laws could, to a certain extent, be considered as a body of substantive rules, in fact they constitute only a technique which enables the courts to reach a solution by applying the domestic law of a particular legal unit to the facts of the case.9
Castel treats conflict of laws as a technique in an abstract sense. However, courts in different countries may in fact have different techniques of conflict of laws. This is one of the reasons for the existence of conflict of laws.
[3.18] [3.19] [3.19]
[3.19] The primary meaning of conflict of laws implies that a conflict exists in the
application of the laws of different jurisdictions, such as the hypothetical example in [3.10] . But the laws of different jurisdictions also include laws dealing with the situation where a local law conflicts with a foreign law (conflicts rules). Thus we appear to be trapped in a circle in attempting to separate the laws of sovereign states which cause a conflict (laws in conflict) from the conflicts rules of sovereign states which, while purporting to resolve the conflict caused by the former, also result in conflicts with the conflicts rules of other countries (such as renvoi, see [3.83] ).
[3.19] [3.20] [3.20]
[3.20] Bearing in mind the difficulty of reaching a universal definition of conflict of
laws, we may perhaps adopt a Castel-like approach and define conflict of laws broadly as a body of statutory or common law rules (if a common law country is involved) applied by a court of law for dealing with the conflict between substantive or procedural laws of different legal systems in any dispute involving foreign elements.
[3.20] [3.21] [3.21]
Three operating areas of conflicts rules

An overview
[3.21] Generally speaking, conflict of laws issues arise when there are foreign elements in a dispute and these elements lead to a conflict between competing laws of different legal systems. For the convenience of our study, we may classify the circumstances where conflict of laws issues arise into three categories, or operating areas. These are:
determination of jurisdictional issue, often referred as the choice of forum, or choice of jurisdiction issue; for example, Oceanic Sun, see [3.5] , and V oth v MFM [3.6] ; determination of the substantive law governing the dispute, sometimes referred to as the choice of (substantive) law issue (see Chapter 15); and enforcement of foreign judgments (see Chapter 15).
These categories help us to avoid confusion between a choice of forum issue and a choice of substantive law issue and to apply the appropriate rules accordingly.
[3.21] [3.22]
Determination of jurisdictional issues
[3.22]
[3.22] In common law tradition, a plaintiff s access to a regular court (a court the plaintiff regularly invokes) is a matter of right.10 This means that a plaintiff may commence
9. Castel, Introduction to Conflict of Laws, 2nd ed, Butterworths, Toronto, 1986, pp 34.
62
[3.25]
proceedings freely pursuant to the procedural rules of a court. Once the plaintiff has initiated the proceedings in compliance with the procedural rules, the court has to determine the appropriateness of its jurisdiction if the defendant challenges this: see, for example, Oceanic Sun (1988) 165 CLR 197; 79 ALR 9, [3.5]] ; and V oth v MFM (1990) 171 CLR 539; 97 ALR 124, [3.6] . The court has to employ certain rules to reach and justify its decision on the appropriateness of its jurisdiction in a given case. These rules are the so-called conflicts rules. We will examine the basic rules for determining the issue of jurisdiction in [3.59][3.82] .
[3.22] [3.23] [3.23]
In a conflict of laws situation, a court of law is not concerned with whether it has a jurisdiction over the dispute. Rather, it deals with the appropriateness (or inappropriateness) of its jurisdiction. The court has to decide which court of the competing jurisdictions is the best, or a clearly more appropriate, or less appropriate, or less inappropriate, or clearly inappropriate (the test endorsed by the majority of the High Court in V oth v MFM, see [3.6] ), or most convenient, or less convenient, or most inconvenient, or less inconvenient forum, whatever expressions we may use, to exercise the jurisdiction over the dispute. In a sense, the determination of the issue of jurisdiction is a balancing process, involving judging and assessing the competing factors, arguments, advantages and disadvantages or interests of the parties by a court of law, although conceptual difficulties (if not confusion) have led to disagreements among judges as to the functions of the balancing technique (if we may call this a technique) in the operation of conflicts rules.11
[3.23] [3.24] [3.24]
[3.23]
It must be pointed out that, after the endorsement of the clearly inappropriate forum test by the majority of the High Court in V oth v MFM, the balancing approach has become less significant in Australia. This is because the majority judges (Mason CJ, Deane, Dawson and Gaudron JJ) are of the opinion that convenience factors, though relevant, have never been regarded as decisive in the application of conflicts rules: (1990) 171 CLR 538 at 560. However, it must also be pointed out that in V oth v MFM, the majority judges and Toohey J did consider (if not balance) the factors relevant to the cause of action and advantages or disadvantages to the parties in pursuing the claim in the United States and Australia respectively: (1990) 171 CLR 538 at 569571 and 590.
[3.24] [3.25] [3.25]
[3.24]
Two issues are involved in the determination of a courts jurisdiction under the conflicts rules:
[3.25]
why does a court want or have to engage in a process of questioning or considering the appropriateness of its own jurisdiction (see, for example, Oceanic Sun (1988) 79 ALR 9 per Deane J at 4851)?
10. Oceanic Sun Line Special Shipping v Fay (1988) 79 ALR 9 per Deane J at 49; V oth v MFM (1990) 171 CLR 538, per Mason CJ, Deane, Dawson and Gaudron JJ at 554. 11. For example, Scott LJ in St Pierre v South A merican Stores (Gath & Chaves) Ltd [1936] 1 KB 382 at 398, stated that a mere balance of convenience is not a sufficient ground for depriving a plaintiff of the advantages of prosecuting his action in an English court if it is otherwise properly brought.
63
[3.25]
what are the tests for a court to make a choice between two or more competing jurisdictions (see, for example, V oth v MFM (1990) 171 CLR 538 per Mason CJ, Deane, Dawson and Gaudron JJ at 55461)?
The first issue is pertinent to the theories of conflict of laws and will be addressed in [3.33][3.49]. The second issue is concerned with the particular rules (methods or techniques) of conflict of laws and will be examined in [3.59][3.82] .
[3.25] [3.26]
Determination of governing law
[3.26]
[3.26] The purpose of determining the governing law of the matter in dispute is to decide the rights and liabilities of the parties to the dispute. This is what the plaintiff asks the court to do and what both plaintiff and defendant expect, once the issue of the courts jurisdiction is settled. The determination of governing law is crucial because the duties and rights of the parties and the remedies available under competing laws may differ significantly.
[3.26] [3.27] [3.27]
[3.27] The Anders Maersk [1986] 1 Lloyds Rep 483 Determination of the governing law of the dispute arising from a bill of lading
Facts: The plaintiff shippers contracted with the defendant carrier to carry two large steam boilers from Baltimore, United States to Shanghai, China in 1981. The bill of lading incorporated the provisions of the Carriage of Goods by Sea Act 1936 (US) (COGSA). It also contained a clause which gave the carrier the right to tranship the boilers. The carrier shipped the boilers to Hong Kong and transhipped them on board the vessel Linjiang there for Shanghai. The vessel encountered adverse weather conditions during the voyage. As a result, one boiler fell into the sea and the other was damaged. The shippers took action against the carrier in Hong Kong. They argued that the Carriage of Goods by Sea (Hong Kong) Order 1508 of 1980 governed the dispute because the boilers were transhipped in Hong Kong. The shippers believed that they were entitled to recover more substantial damages under the Hague-Visby Rules, which were incorporated into the law of Hong Kong by the Order 1508 of 1980, than under COGSA. The carrier contended that the bill of lading was subject to COGSA because its provisions were incorporated in the bill. The determination of the governing law of the bill in this case may affect the sum of compensation to be received by the shippers. Decision: Mayo J of the High Court of Hong Kong held that the bill was governed by COGSA by the express incorporation of COGSA in the bill of lading. In addition, the transhipment in Hong Kong was not an independent transaction. It was covered by the carriers right to tranship under the bill of lading. The law of Hong Kong did not apply to the transhipment in Hong Kong.
[3.27] [3.28]
[3.28] After the determination of the courts jurisdiction, the judge will determine the
[3.28]
law applicable to the dispute. In PS Chellaram & Co Ltd v China Ocean Shipping [1989]
64
[3.29]
1 Lloyds Rep 413,12 the defendants argued that the law of Hong Kong was applicable because the bill of lading was issued in Hong Kong, or, alternatively, the contract of carriage was concluded in Hong Kong. Both grounds are connecting factors, a connection, considerations or tests for determining the governing law in a case where more than two laws compete for authority to govern the matter in dispute. However, Carruthers J relied on the express terms of the bill, which is another rule of conflict of laws, to determine the governing law. It can be argued that the process of determining the governing law is a process of determining or balancing the rationales, rules, factors or considerations which may justify the choice of one law over another in the circumstances concerned. (The majority of the present High Court may not favour the so-called balance of convenience approach to the determination of the appropriate jurisdiction.13)
[3.28] [3.29]
Enforcement of foreign judgments

[3.29]
[3.29]
This is the last area in our functional categories of conflicts rules14 where techniques of conflicts rules are needed to guide and justify a decision of the court. Although English and Australian courts have long recognised and enforced foreign judgments,15 a person seeking to enforce a foreign judgment in England at common law does not have a right to have the judgment executed by an English court.16 Nor does a person have a common law right to enforce a foreign judgment in Australia. At common law a person must apply to a local court for the enforcement of a foreign judgment locally. The foreign judgment so enforced is executed through the authorisation of the competent local court. The reason for this situation can be explained by the concept of sovereignty which is examined in [2.6] [2.11] . If every state is sovereign and equal, there is not any jurisprudential justification for a local court having to obey the judgment of a foreign court. Recognition of a foreign judgment is an exercise of a states sovereignty and its courts discretion. The expression enforcement of foreign judgment refers to a process in which a local court recognises and enforces a foreign judgment, or alternatively, refuses to enforce the foreign judgment, pursuant to the local law. In this process, the local court is actually making a decision as to the local validity of the foreign judgment. The local court needs the assistance of certain rules, considerations or justifications in making the decision. Conflicts rules, in particular the vested rights theory (see [3.39] ) and local law theory (see [3.40] ), thus become relevant. Generally speaking, in the absence of any treaty obligation,
12. It must be pointed out that although the decision of the trial judge was set aside by the Court of Appeal of the Supreme Court of New South Wales in this case, see (1990) 28 NSWLR 354, the decision of the Court of Appeal does not affect our discussion in this paragraph. 13. For example, Oceanic Sun (1988) 79 ALR 9 per Deane J at 468; and V oth v MFM (1990) 171 CLR 538 per Mason CJ, Deane, Dawson and Gaudron JJ at 560. It must be pointed out that the determination of jurisdiction and determination of the substantive law are different matters. 14. Conflicts rules can also be discussed according to their functions, in the categories of contracts, torts, family, property and corporations, etc. 15. Sykes and Pryles, A ustralian Private International Law, 3rd ed, Law Book Co, Sydney, 1991, p 107. 16. Collins et al, eds, Dicey and Morris on the Conflict of Laws, 12th edn, Sweet & Maxwell, London, 1993, p 457.
65
[3.29]
a local court recognises and enforces a foreign judgment only when such enforcement is consistent with the local law governing the matter decided in the foreign judgment, and consistent with the public interest or public policy of the courts own country. However, a local court does not adjudicate the merits of a case which has been decided in a foreign judgment, although it may deny the effect of the judgment by refusing to enforce it locally. Conflict of laws becomes an issue when local courts adopt different methods, principles or tests for recognising foreign judgments.
[3.29] [3.30] [3.30]
[3.30] At present, the enforcement of foreign judgments in Australia is mainly dealt
with by the relevant federal and state legislation, such as the Foreign Judgments Act 1991 (Cth) and similar state legislation based on the Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK).17 The matter is further discussed in Chapter 15.
[3.30] [3.31] [3.31]
Why consider conflicting foreign laws in the context of trade?

[3.31] It is necessary to know the jurisprudential basis of the rules of conflict of laws, even though, as we will see, the experts or scholars of conflicts rules may disagree as to the real rationale or theory of the conflicts rules. Before going into some detail of the theories of conflicts rules, we should look at a hypothetical example of international trade where no rule of conflict of laws exists, or no conflict rule has been accepted.
[3.31] [3.32] [3.32]
[3.32] Example: what would happen if no conflicts rules exist and a court disregards entirely the jurisdiction of another competing court or law?
Hypothetical facts: An Australian seller sold 1000 bales of Australian wool under the FOB term (see [4.22]) to a Chinese buyer and the goods were carried by an Australian charterer, who hired the ship from a Chinese shipping company. The Australian charterer adopted the Chinese companys bill of lading which contained a clause stating that the Hamburg Rules (see [6.11]) applied to the disputes arising from the bill. The wool was water damaged due to the negligence of the Australian charterer, who was later sued by the Chinese buyer for damages. The relevant laws: Article 6, r 1(a) of the Hamburg Rules states that the carriers liability under the rules is limited to an amount equivalent to 835 units of account per package or other shipping unit or 2.5 units of account per kilogram of gross weight of the goods involved. Suppose the Hamburg Rules are part of Chinese law. In contrast, art 4, r 5(a) of the Hague-Visby Rules provides that the carriers liability under the rules is limited to an amount less than 666.67 units of account per package or unit or 2 units of account per kilogram of gross weight of the goods involved. The HagueVisby Rules are part of Australian law.
17. For example, Re Dooney [1993] 2 Qd R 362; Re Word Publishing Company Ltd [1992] 2 Qd R 336; and Keele v Findley (1990) 21 NSWLR 444.
66
[3.34]
Conflict: The Chinese buyer (shipper) sued the Australian charterer in a Chinese court, which fixed the amount of compensation in accordance with art 6, r 1(a) of the Hamburg Rules. The Australian charterer had asked the Chinese court either to stay the proceedings or to fix an amount under art 4, r 5(a) of the Hague-Visby Rules, because s 11 of the Carriage of Goods by Sea Act 1991 (Cth) states that any bill of lading for the carriage of goods from Australia to overseas must be subject to Australian law and the jurisdiction of Australian courts. The Chinese court refused to consider s 11 of the Carriage of Goods by Sea Act 1991 (Cth), whilst the Australian court refused to enforce the Chinese judgment in Australia by virtue of s 11 of the Carriage of Goods by Sea Act 1991 (Cth). The Chinese buyer subsequently seized the assets of the Australian charterer situated in China and the Australian charterer, as a means of reprisal, held the chartered vessel in Australia. What could the Chinese owner of the vessel do? Suppose the Australian courts were offended by the lack of respect shown by the Chinese court to the Carriage of Goods by Sea Act 1991 (Cth). They rejected the complaint of the Chinese shipowner on the ground that both the Chinese shipowner and the Chinese buyer of the wool were state-owned enterprises and were inseparable, and ordered both the shipowner and buyer to submit to an Australian court to answer the counter-claim of the Australian charterer. What could happen to trading relationships between Australia and China? Hypothetical consequences: More reciprocal retaliation followed and by the end not only was there no trade between the two countries, but also businessmen in each of the two countries did not dare to go to any third country which might confiscate their property at the request of the other country. Such consequences would seriously damage the countries foreign trade and commerce and be intolerable and detrimental to both countries.
This hypothetical example demonstrates that it is unimaginable that conflicts rules not exist in the area of foreign trade and commerce. There are mutual benefits for the courts of trading countries to coordinate their rules of conflict of laws, or alternatively, to develop their own rational rules of conflict of laws. This is a practical reason for the existence of conflicts rules in international commercial disputes.
[3.32] [3.33] [3.33]
Major theories of conflicts rules

An overview
[3.33] Theories of conflicts rules enable us to identify the reasons and rationale for the existence of conflicts rules and how these rules are applied. Thus, we may be able to choose appropriate conflicts rules from the vast and divergent techniques or rules of conflict of laws to resolve the relevant issues arising from international commercial disputes.
[3.33] [3.34] [3.34]
North and Fawcett review the history and theories of conflict of laws in Cheshire and N orths Private International Law (12th ed, Butterworths, London, 1992) pp 1440.
67
[3.34]
[3.34]
Rather than repeating what has been said in that book, we will examine only the main theories or thoughts which explain why there ought to be conflicts rules and how the rules should be applied. These theories and thoughts provide rational bases for a court (or a country) to develop its conflicts rules to deal with contests between competing laws and jurisdictions.
[3.34] [3.35]
Theory of international comity
[3.35]
[3.35] In order to explain why a local court has, or is willing, to consider a foreign law which is likely to be in conflict with the local law in a given circumstance, certain legal scholars relied on the theory of comity. This theory (the theory of international comity) was explained by Huber in the following words: Sovereigns act out of comity so that the laws of each nation, brought into existence within its territory, may hold their force everywhere so far as they do not prejudice the power of the law of another sovereign and his subjects. From which it follows that this is derived not merely from the civil law, but from convenience and the tacit consent of nations.18
Hubers theory of comity was further developed by Story of the United States in the nineteenth century, but was criticised by several European writers on the basis that it was too parochial and relegated choice of law to judicial discretion and caprice.19
[3.35] [3.36] [3.36]
[3.36] The theory of comity is not a theory pertaining only to conflict of laws. In fact, it
has been developed as a theory to explain international law in general. It explains why a sovereign state will wish to respect the sovereignty of another this respect extends to the sovereignty of the law and territorial sovereignty of another state. If comity is understood merely as a gesture of courtesy based solely on the discretion of a local government or a local court, it only explains the conflicts rules from a moral perspective (ie, a morally binding covenant between countries). However, such a perspective does not explain why, for example, s 11(1) of the Carriage of Goods by Sea Act 1991 (Cth) imposes exclusive jurisdiction of the Australian law and courts on the sea-carriage from a place in Australia to a place outside Australia: see [6.137] [6.138] . Nor does it explain why the Australian Parliament refuses to consider foreign law in the circumstances described in s 11. Internation comity is better understood as being based on reciprocity and mutual convenience in order to avoid or to reduce mutual inconvenience, countries have to give reciprocal comity to each other when considering the authority of foreign law in certain circumstances. This proposition may perhaps be called economic interdependence theory.
[3.36] [3.37] [3.37]
[3.37] Since the comity theory is based on the courteous conduct of states or courts of
different states, it is vulnerable to attack from the parochial, arbitrary and discourteous conduct of foreign states or foreign courts in certain circumstances. For example, Deane J observed in Oceanic Sun (1988) 79 ALR 9 at 50, that the comity theory may not be relied on to deny a local courts jurisdiction in circumstances where some leading western
18. This passage was quoted in Sykes and Pryles, supra note 15, p 7. 19. Id, p 8.
68
[3.38]
countries, particularly in relation to actions by their own residents, decline to observe even the judicial restraint shown by common law countries under the traditional doctrine of oppression and vexation. The comity theory does not impose a unilateral obligation upon a local court to treat a competing foreign jurisdiction as equivalent to its own jurisdiction.
[3.37] [3.38]
The economic interdependence theory

[3.38]
[3.38]
No conflict of laws scholar has adopted this expression. But the notion of this theory can be seen in the following passage from Hubers De Conflictu Legum diversarum in Diversis Imperiis:
Because as the laws of another nation can have no force directly in another territory, so nothing could be more inconvenient to commerce and international usage than if rights valid by the law of a certain place were at once made void by a different law elsewhere 20
It is implied in Hubers statement that the absence of conflicts rules will substantially deter and harm international commerce and trade. This observation is undoubtedly correct. As we have seen in Chapter 1, in early English history courts of law applied customs and usage of foreign merchants to mercantile transactions involving foreign merchants: see [1.8] [1.13] . English law also allowed juries for commercial disputes involving foreign merchants to consist of both local and foreign persons: see [1.12] . These practices gave effect to the relevant foreign law and foreign customs and usage to which the foreign merchants had been accustomed. The main purpose of these practices was to attract more foreign merchants to England and facilitate international trade and commerce in England. It can be argued that economic interdependence between countries is the essential reason for having conflicts rules in international commercial disputes. The point is even clearer in the history of international commercial law in China. The notion of conflict of laws was unheard of in seventh century China. However, the Tang Code allowed disputes between two foreign merchants of the same nationality to be dealt with under the relevant foreign law: see [1.23] . The likely explanation for the adoption of this conflict of laws rule is that the Chinese Government sought to encourage foreign traders, although it may also be argued it might have considered that to be a morally fair and preferable thing to do. In any event, the hypothetical example of [3.10] suggests the rationale and need for having harmonious conflicts rules in the context of international trade and commerce. Therefore, we may argue that as far as international trade and commerce is concerned, economic interdependence between countries is a compelling reason for them to adopt reasonable conflicts rules. Indeed, this proposition is supported by a statement of the US Supreme Court in The Bremen v Zapata Off-Shore Co (1971) 407 US 1 at 8 that the expansion of American business and industry will hardly be encouraged if, notwithstanding solemn contracts, we insist on a parochial concept that all disputes must be resolved under our law and in our courts.
[3.38]
20. Id, p 7.
69
[3.39]
[3.39]

[3.39]
Theory of acquired or vested rights21
[3.39] In the history of searching for a higher law (or theory) to guide and explain the existence, application and nature of particular conflicts rules, legal scholars and jurists sought to rationalise the need for and existence of conflicts rules by examining the nature of the rights subject to the rules. Huber and Dicey, for example, developed the vested or acquired rights theory. This theory assumed that a person acquired a right under a foreign law or a local law. The right recognised, granted or given under a particular law became the vested or acquired right of the person, and could be enforced or recognised or at least considered by a court of another country. In order to ascertain the creation or existence of acquired or vested rights, this theory emphasised the territoriality of law.
The theory was further developed by Beale in the United States, and strict criteria for determining the territoriality of law and rights were developed. The rigidity of the criteria for determining rights and applying conflicts rules forced the theory away from reality, and its validity was further undermined by Cook and Lorenzen.22 The main defect of the vested or acquired right theory is that it assumes that there is only one state which has power to create the right which later becomes vested or acquired.23 This is obviously untrue even in our preliminary hypothetical of the oral contract between the New South Wales buyer and Tasmanian seller (see [3.10] ), where the governing law (or the law reating the vested or acquired right) is determined by the relevant laws applicable to the formation of the contract. The theory has also been held to be incorrect in the sense that a right unenforceable or unrecognised under a chosen law may be recognised by the law which becomes applicable under the conflicts rules of the court exercising jurisdiction over the right.24 Today the vested or acquired rights theory is rarely resorted to. However, the theory may arguably still be relevant to the enforcement of a foreign judgment, where the right in question has been vested or acquired under a specified foreign law.
Local law theory25

[3.39] [3.40]
[3.40]
[3.40] The local law theory was developed by Cook, who explained its meaning and function as follows:26 The forum, when confronted by a case involving foreign elements, always applies its own law to the case, but in doing so adopts and enforces as its own law a rule of decision identical, or at least highly similar though not identical, in scope with a rule of decision found in the system of law in force in another state or country with which some or all of the foreign elements are connected, the rule so selected being in many groups of cases, and sub21. North and Fawcett, supra note 1, pp 2730; Sykes and Pryles, supra note 15, pp 89; Nygh, supra note 1, pp 1819; and Brilmayer, Conflict of Laws: Foundations and Future Directions, Little Brown and Co, Boston, 1991, pp 1141. 22. Sykes and Pryles, supra note 15, p 9. 23. Ibid. 24. North and Fawcett, supra note 1, p 29. 25. Id, pp 301; Sykes and Pryles, supra note 15, pp 910; and Nygh, supra note 1, pp 1920. 26. North and Fawcett, supra note 1, p 30; Sykes and Pryles, supra note 15, p 9; and Nygh, supra note 1, pp 1920.
70
[3.42]
ject to the exceptions to be noted later, the rule of decision which the given foreign state or country would apply, not to this very group of facts now before the court of the forum, but to a similar but purely domestic group of facts involving for the foreign court no foreign element. The rule thus incorporated into the law of the forum may for convenience be called the domestic rule of the foreign state, as distinguished from its rule applicable to cases involving foreign elements. The forum thus enforces not a foreign right but a right created by its own law.27
This theory intends to justify conflicts rules, which require the consideration of foreign law or give effect to foreign rules, by treating the application of conflicts rules as a process of applying a local law identical or similar to the foreign law that is applicable to the same circumstances. The theory appears to have endeavoured to justify (or to search for a higher theory or reason to explain) why a sovereign court wants to (or has to) give effect to rights recognised under a foreign law, or even to enforce the relevant foreign law.
[3.40] [3.41] [3.41]
The real significance of this theory is not expressly seen in the above quote, but in the extended construction of this statement. For example, North and Fawcett argue that the gist of the local law theory is the proposition that a local court applies its own rules to the total exclusion of all foreign rules and it often for reasons of social expedience and practical convenience, takes into account the laws of the foreign country in question to apply the local law in a manner as close as possible to the way in which the relevant foreign law would apply.28 Similarly, Nygh observes that the major importance of the theory is the realisation that the function of the conflict of laws is not the preservation of international order but the carrying out of local law and policy.29 Such constructions of the local law theory would give a local court wide discretion in applying conflicts rules and in justifying its decisions.
[3.41] [3.42] [3.42]
[3.41]
The influence of the local law theory can be seen in the judgment of Gaudron J in Oceanic Sun (1988) 79 ALR 9 at 55, where her Honour stated that in my view, it is the lex fori which provides the answer to the same question when asked in the process of determining the proper law, it follows that it must also provide the answer when it is necessary to determine whether or not a stay should be granted on the basis of submission to a foreign jurisdiction. This suggests that legal theories may have an impact upon judicial practices, even though judges will inevitably interpret any theories in their own words, according to their own preference and for their own purposes (see, for example, Deane Js comment on comity theory in Oceanic Sun). Gaudron Js observation can be identified with local law theory in the sense that both believe that local law provides rules for the determination of conflict of laws issues.
[3.42]
[3.42]
27. Cook, The Logical and Legal Bases of the Conflict of Laws, Harvard University Press, Cambridge, 1942, pp 201. 28. North and Fawcett, supra note 1, p 30. 29. Nygh, supra note 1, p 20.
71
[3.43]
[3.43]

[3.43]
Public (or government) interest theory (or analysis)30
[3.43] The public (or government) interest theory (or analysis) was created by Brainerd Currie of the United States. He examined a number of US cases, such as A laska Packers A ssociation v Industrial A ccident Commission 294 US 532 (1935), and rationalised the judicial practices by formulating them into the theory of government interest analysis. He initially set out his views on government interest analysis in 1959 and modified them in 1963.31
The major points of his theory are as follows:

in a conflict of laws situation, there are government policies and interests in the relevant laws which compete for jurisdiction over the matter in dispute; a court should identify the policies and interests underlying the competing laws; not every case of conflict of laws necessarily involves a conflict of government interests, and in such a case, one of the competing laws, which represents a government interest, applies; if both competing laws represent competing government interests, the interest of the local government prevails and thus local law applies; and in the case of disagreement or uncertainty, the court is obliged to apply local law to guarantee the litigants access to justice unless a sole government interest of another country is later clearly established.
In the light of these major points, we can argue that government interest analysis is not really a theory in the sense that comity theory, vested rights theory and local law theory are theories. It is more a method or approach to resolving conflicts in a particular case. However, it may indirectly provide philosophical guidance or justifications for a court to take into account policy implications in determining the appropriateness of a forum or of a law, such as Deane J did in Oceanic Sun (1988) 79 ALR 9 at 501.
[3.43] [3.44] [3.44]
ing discussions (or revolution32) on the theory of conflict of laws in the United States33 and has affected the development of conflict of laws rules in that country. Although Australian courts of law have not shown any significant interest in this theory (a brief comment on the US practice was made by Deane J in Oceanic Sun (1988) 79 ALR 9 at 49), some
30. Sykes and Pryles, supra note 15, pp 2036; Brilmayer, supra note 21, pp 1048; Brilmayer, The Other States Interests (1991) 24 Cornell International Law Journal pp 23343; Castel, supra note 9, pp 911. 31. Currie, Notes on Methods and Objectives in the Conflict of Laws [1959] Duke LJ 171; and Selected E ssays on the Conflict of Laws, Duke University Press, Durham, 1963. 32. For example, see Simson, Plotting the next Revolution in Choice of Law: a Proposed Approach (1991) 24 Cornell International Law Journal p 279. 33. For example, some recent articles on the interest analysis are Kramer, More Notes on Methods and Objectives in the Conflict of Laws (1991) 24 Cornell International Law Journal p 245; Singer, Facing Real Conflicts (1991) 24 Cornell International Law Journal p 197; Brilmayer, The Other States Interests (1991) 24 Cornell International Law Journal 233; and Simson, Plotting the next Revolution in Choice of Law: a Proposed Approach, (1991) 24 Cornell International Law Journal p 279.
[3.44] Curries innovative approach to conflict of laws has inspired lasting and continu-
72
[3.48]
knowledge of the theory would be beneficial to a student of conflict of laws. Sykes and Pryles discuss public interest analysis in A ustralian Private International Law , pp 2036.
[3.44] [3.45] [3.45]
Interest analysis represents a single approach to the conflict of laws. All it deals with is whether a state has an interest in applying its law to a particular dispute or which state has a better interest in applying its law to the dispute in question. Currie intended to establish the government interest theory as the sole, fundamental or starting point for resolving any conflict of laws. He insisted that government interest is the basis for resolving a conflict of laws. According to his theory, because government interest is the reason and justification for the application of the law representing that interest, courts of law should interpret the laws of the relevant states to identify whether there is any government interest, or which is a better interest, in the application of these laws. Once the interests are identified, compared and balanced, the governing law will be chosen in the order of priority as suggested by Currie: see [3.43] .
[3.45] [3.46] [3.46]
[3.45]
Bearing in mind what interest analysis means, we may argue that it represents an effort to establish or create a uniform determining or connecting factor between the matter and applicable laws. The determining or connecting factor is so-called government interest, which is largely determined by examining the policy and purposes of a particular piece of legislation and by ascertaining the governments reason (benefit, advantage or disadvantage) for applying the legislation to the matter in question. The result of applying interest analysis will vary, depending on the selection of relevant factors, the construction of legislative purposes and policy, and the interpretation of the relationships between the policy (or legislative purpose) and the relevant factors, all of which represent a mixed exercise of objective and subjective criteria. This is why the critique of interest analysis often argues that it is inadequate for the court of one country to assess or evaluate the policies and government interests underlying the law of another country.
[3.46] [3.47] [3.47]
[3.46]
The fate of interest analysis in Australia appears to be rather uncertain. The Law Reform Commission of Australia has made the following comments in relation to interest analysis: The Commission rejected a rule selecting approach based on interest analysis as a general technique because it leads to too much uncertainty. As a way of solving true conflicts it requires the court to evaluate competing laws without clear rules to guide them. However, aspects of the approach have influenced the proposals in particular it is acknowledged that it may be helpful to take into account the objects and purposes of legislation as an ancillary aspect in choice of law decisions within Australia. Not only will this help to eliminate false conflicts, it will be consistent with s 118 of the Constitution.34
[3.47] [3.48] [3.48]
[3.47]
To sum up, for our purposes we need to know that interest analysis represents a new approach to conflict of laws (in particular a method for selecting one of the competing jurisdictions or laws). However, the basis of the analysis, that is, identifying the true conflict and determining the most important connection (government interest) between
34. The Law Reform Commission, supra note 5, para 2.11.
[3.48]
73
[3.48]
the matter and relevant laws, can be seen in the concept of lex causae (see [3.73] ), which pre-dates the creation of the interest analysis theory. As suggested by the Law Reform Commission Report, the influence or significance of interest analysis in Australia will probably be seen in a conscious assessment of the policy and purposes of the relevant laws by the Australian courts in certain circumstances, such as Oceanic Sun (1988) 79 ALR 9 per Deane J at 49.
[3.48] [3.49]
Summary of the theories

[3.49] We have dealt with five major theories in the above paragraphs. These are:
[3.49] [3.50]
[3.49]
international comity theory: see [3.35] [3.37] ; economic interdependence theory (for commercial cases only): see [3.38] ; vested or acquired rights theory: see [3.39]; local law theory: see [3.40] [3.42] ; and government interest (or public interest) analysis or theory: see [3.43][3.48] .
[3.50]
True conflict and false conflict

[3.50] A true conflict refers to a situation where the application of the laws of relevant countries results in different or conflicting results. For example, Chinese law requires certain international commercial contracts to be approved before becoming binding, but Australian law does not have such a requirement. Suppose a contract for the sale of a vessel (which is not governed by the Vienna Sales Convention) is entered into between a Chinese buyer and an Australian seller in China, but the vessel is to be delivered in Australia. No governing law of the contract has been expressly chosen in the contract. The contract is not enforceable in a Chinese court of law until it is approved by a competent government authority (if this contract is subject to approval), but is enforceable in an Australian court as soon as the contract has been duly executed. Substantial differences result from the application of the Chinese and Australian laws, if the parties disagree as to the terms of the contract which has not been approved by the Chinese authority. This is a true conflict, because under the Chinese Foreign Economic Contract Law the contract can be void, but under Australian law the contract is enforceable. The Chinese party, if it intends to terminate the contract, may argue that Chinese law is the governing law because the contract was made in China. In contrast, the Australian party, if it intends to enforce the contract, may argue that Australian law is the governing law, because the contract was intended to be performed in Australia and the performance is the real and determining connection in this case. Both grounds represent valid rules of conflict of laws which may be taken into account by a court of law in dealing with (if not balancing) the conflict of interests represented by the laws in conflict.
[3.50] [3.51] [3.51]
[3.51] A true conflict exists in all cases where courts of law apply conflicts rules to
resolve the disputes concerned. See, for example, China Ocean Shipping Co v PS Chellaram & Co L td (1990) 28 NSWLR 354; and In re Missouri Steamship Company (1889) 42 CD 321.
[3.51]
74

[3.52]
[3.53]
[3.52]
A false conflict refers to a situation where the application of the laws of different countries will not result in any real difference to the interests of the parties. For example, an Australian seller and a Chinese buyer entered into a contract for the sale of a certain amount of Australian wheat to China (which is governed by the Vienna Sales Convention, see Chapter 5 and Appendix 1). The contract was entered into in China, but the goods were to be delivered at the Port of Melbourne. The parties disagreed as to the contractual description of the goods. The contract did not specify the governing law. Nor did it exclude the application of the Vienna Sales Convention. The Chinese party would insist on the application of Chinese law, and the Australian party would prefer the matter to be dealt with under Australian law. But a court would find there is no substantial difference between the competing laws, because both Australia and China are members of the Vienna Sales Convention which governs the contract in dispute. The Vienna Sales Convention is the same under both Australian and Chinese law.
[3.52] [3.53] [3.53]
[3.52]
A false conflict may also arise within Australia when the laws of different states provide similar remedies to the matter in dispute.
[3.53]
McKain v R W Miller & Company (South Australia ) Pty Ltd (1991) 174 CLR 1; 104 ALR 257 No real conflict between the competing laws
Facts: McKain, the plaintiff, was employed by R W Miller & Company, the defendant, as a marine steward on board the vessel Troubridge, plying between South Australian ports. The plaintiff was allegedly injured in the course of a lifeboat drill when the vessel anchored at Port Lincoln in South Australia on or about 22 February 1984. The plaintiff, who was resident in New South Wales, commenced proceedings against the defendant for personal injuries in the Supreme Court of New South Wales on 4 January 1990. The defendant contended that the action was statute barred under s 36(1) of the Limitation of Actions Act 1936 (SA) which set out a three-year limitation period. Decision: The High Court by a 43 majority held that the proceedings were not statute barred because s 36(1) was procedural in nature and did not afford a defence to the action. In the view of the majority judges (Brennan, Dawson, Toohey and McHugh JJ) there was no conflict between the law of New South Wales where the action was entertained and the law of South Australia where the alleged tort occurred. The minority judges (Mason CJ, Deane and Gaudron JJ) held that s 36(1) was not merely procedural and it afforded a good defence in the proceedings.
A false conflict also arguably arises from circumstances where a close examination of the issue in dispute reveals that the apparent conflict between two competing laws does not in fact exist.
[3.53]
75
[3.54]
[3.54]

[3.54]
[3.54] Kim Meller Imports Pty Ltd v Eurolevant SpA and Others (1986) 7 NSWLR 269 No real conflict exists between the laws applicable to the parties
Facts: A bill of lading for the carriage of goods from Italy to Australia stated that all disputes arising from the bill should be arbitrated in London. Section 9 of the SeaCarriage of Goods Act 1924 (Cth), which has been replaced by the Carriage of Goods by Sea Act 1991 (Cth), imposed an exclusive jurisdiction of Australian courts over such bills. The shipowners were sued not as a party to the bill of lading, but as the owners of the vessel. They applied to the court for a stay of the proceedings on the ground of the arbitration clause in the bill. Decision: Rogers J of the Supreme Court of New South Wales found that s 9 did not apply to a third party. The shipowners, who were not a party to the bill of lading entered into between the charterer of the vessel and the Australian importer, were allowed to rely on the arbitration clause. No conflict between the arbitration clause and s 9 existed.
[3.54] [3.55] [3.55]
[3.55] The distinction between a true and a false conflict helps us to avoid unnecessary
debate on the technicality of the rules of conflict of law. In the case of a false conflict, the court of forum, where the proceedings are initiated, may have a wider discretion in upholding its own jurisdiction, because no conflict exists between the laws of the relevant jurisdictions. The court of law may also refer the dispute to another forum merely for convenience of administration. A false conflict implies that there is no substantial difference in the parties interests no matter which law applies, but it does not necessarily suggest that the forum court must assume its own jurisdiction on the ground of a false conflict.35
[3.55] [3.56] [3.56]
Characterisation and conflicts rules

[3.56] Characterisation is an important issue in conflict of laws. The expression characterisation refers to a process of legal reasoning in which a judge (or a person) identifies, analyses, assesses and evaluates a legal issue (or relationship or a cause of action, etc) and ultimately characterises the issue by identifying it with an existing (or innovative) category or compartment of legal principles for the purpose of matching the appropriate rules of law to the issue concerned. A detailed discussion of characterisation in the context of conflicts rules is seen in Collins and Others, eds, Dicey and Morris on the Conflict of Laws (12th ed, Sweet & Maxwell, London, 1993) pp 3447.
[3.56]
35. For a general discussion on the true or false conflict, see Kramer, Rethinking Choice of Law (1990) 90 Columbia Law Review p 277.
76

[3.57]
[3.58]
[3.57]
The importance of characterisation in the context of conflict of laws is seen, for example, in Oceanic Sun (1988) 79 ALR 9. In this case, the majority judges (Brennan, Deane and Gaudron JJ), who decided that the Supreme Court of New South Wales should hear the dispute, characterised the principal issue in dispute as the determination of the governing law of the contract. They found expressly or implicitly that the contract of carriage (or the transactions leading to the conclusion of the contract) was made, or carried out, in New South Wales: (1988) 79 ALR 9, per Brennan J at 40, per Deane J at 51 and Gaudron J at 59). In contrast, the dissenting judges (Wilson and Toohey JJ), who decided that New South Wales was not an appropriate forum to hear the dispute, characterised the principal issue in question as an action in tort for a wrong allegedly committed by an appellant which is incorporated in Greece and carries on business there, in respect of an accident which occurred in Greek waters on a Greek vessel in the course of a cruise which had its point both of departure and return in a Greek port (as opposed to an action for breach of contract): see (1988) 79 ALR 9 at 22. Because the judges characterised the main issue of the dispute differently, they reached different conclusions after having applied the relevant laws which are deemed to be appropriate to the character of the issue in dispute. Similarly, in V oth v MFM (1990) 171 CLR 538, the judges also characterised the principal issue in dispute in different ways. The joint judgment characterised the cause of action as a negligent omission. It held that the alleged cause of action involved a failure to give adequate advice in performing accountancy services which was an act complete in itself, or, if not complete in itself, one that was initiated and completed in the one place. That place was Missouri: see (1990) 171 CLR 538 at 569. By characterising the cause of action as an issue of negligence, the majority judges found the law where the alleged negligence occurred to be appropriately applicable. By characterising the accountancy services as an act which began and ended at the same place, the majority judges excluded the applicability of New South Wales law to the alleged negligent act. This contributed to the conclusion that New South Wales was clearly an inappropriate forum. In contrast, Brennan J characterised the cause of action as a misrepresentation and held that the misrepresentation was made and completed in the place where it was received or relied upon. Brennan J found that New South Wales was the place where the misrepresentation was received and relied upon and where the damages flowing from the misrepresentation occurred: (1990) 171 CLR 538 at 5789. This is why Brennan J found that the law of New South Wales governed the cause of action. This finding contributed to his Honours determination that New South Wales was not clearly an inappropriate forum. The essentiality of characterisation to the application of conflicts rules is evident.
[3.57] [3.58] [3.58]
[3.57]
It must be pointed out that characterisation is relevant not only to the determination of fundamental issues, but also to the determination of any subsidiary issues of the case. This is because characterisation, in plain words, means that a court of law identifies, defines or characterises the nature or existence of the relevant legal issues to be dealt with in a given case. The differences in the way judges characterise the relevant issues may
77
[3.58]
[3.58]
explain why in certain circumstances judges agree with each other on the basic issues concerned but differ from each other as to the appropriateness of applicable laws or adequacy of remedies available in the case.
[3.58] [3.59] [3.59]
Selected rules and tests of conflict of laws

An overview
[3.59] One of the major difficulties with the study of conflicts rules is the confusion, or lack of clarity, in the use of terminology. The expressions, such as rules, tests, methods, techniques or doctrines, etc, have been employed in the study of conflict of laws without any clearly defined distinction between them. In this section of the book, we will deal with a number of common tests, rules or techniques applicable to a conflict of laws situation. Most of the rules or tests are expressed in Latin.
[3.59] [3.60]
Forum non conveniens
[3.60]
[3.60] Forum non conveniens is a doctrine upon which a local court may find a foreign court to be more appropriate than the local court to deal with the issue in question. The Latin meaning of this phrase is irrelevant, because the meaning of this doctrine as adopted by the English courts today has no connection to the words Latin origin. This was discussed by Deane J in Oceanic Sun (1988) 79 ALR 9 at 46, where his Honour stated as follows: the Latin phrase forum non conveniens is potentially misleading as a description of the current United Kingdom and United States doctrines to which it is commonly applied: see Spiliada at 4745; Loftus v Lee (1958) 308 SW(2d) 645 at 658. Even to one with some acquaintance with Latin, conveniens (lit coming together ie conformable, consistent, appropriate) is likely to suggest convenient (Latin: commodus) whereas both United Kingdom and United States doctrines, while taking account of convenience, also stress the importance of consideration of the ends of justice: see eg, Spiliada, at 483, 487; Koster v (A merican) Lumbermens Mutual Casualty Co (1947) 330 US 518 at 527.
As we have seen earlier, courts of law have been endeavouring for centuries to search for higher theories or doctrines to guide and justify their practices of conflict of laws. The development of the forum non conveniens doctrine suggests such endeavour. The forum non conveniens doctrine, as a ground or test for determining the appropriateness of the selected courts jurisdiction, was initiated in Scotland,36 and later accepted by the courts of the United States.37 It was applied in a 1908 Australian case Maritime Insurance Co Ltd v Geelong Harbour Trust Commissioners (1908) 6 CLR 194. The doctrine became more significant (at least to Australian law) when the English courts began to explore the possibility of replacing the traditional test of oppression and vexation by some more liberal test, such as the forum non conveniens doctrine, in 1974. In The A tlantic Star [1974] AC 436, the House of Lords indicated a desire to interpret the traditional test of oppression or vexation more
36. Collins et al, supra note 16, p 398; and North and Fawcett, supra note 1, p 220. 37. Ibid.
78
[3.61]
liberally and to consider certain factors of convenience, such as advantages and disadvantages of the parties in the competing forums. The trend continued in MacShannon v Rockware Glass Ltd [1978] AC 795, where balance of convenience and injustice to the parties as a result of staying the proceedings in the selected forum was discussed. This case was followed by The A bidin Daver [1984] AC 398, where Lord Diplock (at 411) was of the opinion that the forum non conveniens should be accepted in English courts. The forum non conveniens doctrine was finally accepted by the House of Lords in Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 and has been the English test for determining an application for a stay of proceedings in favour of a foreign forum since. The forum non conveniens doctrine adopted by English courts consists of the following major considerations or elements:

the court will refuse to stay the proceedings if it is satisfied that there is no other clearly more appropriate forum to deal with the dispute; the court will grant a stay if it is satisfied that there is some other clearly more appropriate forum to deal with the dispute; the other available forum should be prima facie clearly more appropriate than the selected forum; and the appropriateness of a forum should be assessed by taking into account the interests of the parties and the ends of justice.
The considerations for determining the appropriateness of a forum, such as advantages or disadvantages, interests, justice and ends of justice, have been criticised by several Australian judges as uncertain and discretionary: see Oceanic Sun (1988) 79 ALR 9 per Brennan J at 3840 and Deane J at 467 and 49. The English version of the forum non conveniens doctrine has been expressly rejected by the majority of the High Court in Oceanic Sun (1988) 79 ALR 9, [3.5] and V oth v MFM (1990) 171 CLR 538, [3.6] . But in V oth v MFM, the joint judgment (Mason CJ, Deane, Dawson and Gaudron JJ) compared the clearly inappropriate forum test and the clearly more appropriate forum test which is one of the basic elements of the forum non conveniens doctrine, and admitted that the two tests lead to the same result in the majority of cases: (1990) 171 CLR 538 at 558. Could this be an indication that the High Court is adopting a modified version of the forum non conveniens doctrine in Australia? Indeed, Toohey J in V oth v MFM reached the same decision as the joint judgment under the forum non conveniens doctrine merely by referring to (or borrowing from) the joint judgments discussion of the determining and connecting factors (cause of action, advantages and disadvantages of both parties) in the case.
[3.60] [3.61]
The clearly inappropriate forum test
[3.61]
[3.61] The clearly inappropriate forum test has been accepted by the majority of the High Court (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ) to be the test for determining the appropriateness of a selected courts jurisdiction in Australia. The test was initially proposed by Deane J in Oceanic Sun (1988) 79 ALR 9 at 48, and later not only 79
[3.61]
endorsed, but also enunciated, by the joint judgment of Mason CJ, Deane, Dawson and Gaudron JJ in V oth v MFM (1990) 171 CLR 538 at 55664. The notion of the clearly inappropriate forum test can be seen in the following statement by Deane J in Oceanic Sun (1988) 79 ALR 9 at 48: It follows that, on my view of the modern content and practical operation of traditional principle, the question whether the United Kingdom doctrine should be accepted in this country can, for practical purposes, be stated in terms of whether the rule that, in a case where there is an available and appropriate foreign tribunal, proceedings will, in the absence of exceptional circumstances, be stayed or dismissed as vexatious or oppressive if the local court is a clearly inappropriate one, should be extended to embrace any case in which it appears that the available foreign tribunal is the natural or more appropriate forum. So stated, the practical impact of the answer to the question is confined to those probably rare cases in which an available foreign tribunal would be the natural or a more appropriate forum but in which it has not been demonstrated by the defendant that the local tribunal is a clearly inappropriate one. Even when the practical significance of the answer to the question is acknowledged as being so confined, the question itself remains a fundamental one of not inconsiderable importance. In the above statement, the expression a clearly inappropriate forum was applied. But the statement as a whole did not clearly suggest the meaning or definition of the clearly inappropriate forum test. It appears that his Honour applied the vexatious and oppressive test for the purpose of determining whether the selected forum was clearly inappropriate. Rather than expressly defining a test, Deane J here raised a fundamental issue of not inconsiderable importance which reveals the defective or unsatisfactory effect of the forum non conveniens doctrine as adopted in the United Kingdom. The defect of the forum non conveniens doctrine, inter alia, is that in certain circumstances the selected forum cannot be proved to be clearly inappropriate even though there is another more appropriate forum to hear the issue in dispute. The jurisprudential basis of Deane Js clearly inappropriate forum test appears to be related to the assumed common law right of a plaintiff to commence an action in a competent court of law. It follows that in order to protect this right, a plaintiff s action should be denied only when the selected forum is clearly inappropriate. By the same token, the plaintiff s right to invoke a court of regular jurisdiction (an expression used perhaps to distinguish a sincere action from an act of forum shopping) cannot be denied merely because there is available another clearly more appropriate forum.
[3.61] [3.62] [3.62]
[3.62] In V oth v MFM the joint judgment sought to distinguish the clearly inappropriate
forum test from the traditional test of oppression and vexation by saying that the traditional test is too rigid and its rigidity leads to injustice in the case of forum shopping (which means that a plaintiff deliberately and yet legally chooses the forum of action under the relevant conflicts rules to maximise his or her advantages), because of the difficulties in establishing vexation and oppression: see (1990) 171 CLR 538 at 5567. The joint judgment also drew a distinction between the clearly inappropriate forum test and the clearly more appropriate forum test employed in the forum non conveniens doctrine. The
80
[3.63]
main distinction was based on Deane Js observation in Oceanic Sun, which was quoted above at [3.61] . The joint judgment admitted that while the two tests lead to the same result in most cases, there are rare cases where the existence of a clearly more appropriate forum does not necessarily mean the selected forum is clearly inappropriate: see (1990) 171 CLR 538 at 5589. Again, we may argue that the distinction between the two tests was determined as a matter of principle, because the majority of the High Court thought it unfair, impractical, illogical and unsafe if the plaintiff s right to invoke a courts jurisdiction could be restricted or eliminated by merely establishing the existence of a more appropriate foreign forum.
[3.62] [3.63] [3.63]
Although the joint judgment did not provide a clear definition of the clearly inappropriate forum test, the major characteristics of this test can be summarised as follows:
[3.63]
the clearly inappropriate forum test is more liberal than the traditional test of vexation and oppression and may be regarded as a compromise between the traditional test and the forum non conveniens doctrine; the clearly inappropriate forum test focuses on the inappropriateness of the selected forum, but the clearly more appropriate forum test concentrates on the greater appropriateness of another forum; the clearly inappropriate forum test and the clearly more appropriate forum test produce the same result in most circumstances, but in rare cases the existence of a more appropriate foreign forum does not necessarily prove the inappropriateness of the selected forum; the clearly inappropriate forum test and the clearly more appropriate forum test are not interchangeable, because in certain cases the appropriateness of a foreign forum does not necessarily suggest the inappropriateness of the selected forum; the clearly more appropriate forum test is unreasonable and risky because it involves the balancing of conveniences and assessment of justice in foreign law and policy, which is not what a local court is competent to do; in contrast, the clearly inappropriate forum test only involves assessment of the courts own law and policy; and the clearly more appropriate forum test makes a decision upon the presumed ability and willingness of a foreign court, which is a practice inconsistent with the public policy of Australia; in contrast, the clearly inappropriate forum test relies on the ability and willingness of Australian courts, which is a practice consistent with Australian public policy.
In light of the above summary, we may argue that the clearly inappropriate forum test has been defined (if it has been defined at all) on the ground of its contrast with other existing tests or doctrines. It is in fact an approach to (or technique or principle for) the determination of jurisdictional issues. It declares that the means of resolving a conflict of jurisdictions is to ascertain whether the selected forum is clearly inappropriate, rather than to find out whether there is another forum which is clearly more appropriate.
[3.63]
81
[3.64]
[3.64]

[3.64]
[3.64] While, in theory, the distinction between the clearly inappropriate forum test and
the clearly more appropriate forum test is appreciable, in practice the difference between them, with respect, is not reasonably ascertainable. This is because the words appropriate or inappropriate imply comparativity and relativity. Bearing in mind that conflict of laws implies a contest between two or more legitimate interests or laws with equal sovereignty to apply to the same dispute, it is unrealistic and impossible to determine the inappropriateness of any local forum by examining the legality or justice of the local forum alone (even though a local court is always competent to do so). If competing jurisdictions and laws must be assessed and balanced, what is the practical necessity of the clearly inappropriate forum test being a distinctive test from the forum non conveniens doctrine? To a large extent, the justification for the independent existence of the clearly inappropriate forum test the presumed co-existence of a clearly more appropriate foreign forum and of the clearly appropriate local forum; or alternatively, the presumed non-existence of either a more appropriate forum or the clearly inappropriate forum in any conflict of laws situation is based on an unstated presumption that appropriate or inappropriate are undefinable. It can be argued, with respect, that the hypothetical example of a road accident given by the joint judgment in V oth v MFM (1990) 171 CLR 538 at 5589, which was provided for the purpose of illustrating a situation where even though the local law is clearly inappropriate there is no other more appropriate forum to entertain the claim, is fallacious, because it is based on a false conflict. When there is no contest between the jurisdictions and laws, there is no conflict of laws. In addition, it is doubtful that the selected forum can ever be found inappropriate in a circumstance where the plaintiff has a common law right to invoke the jurisdiction of the selected forum whilst no other jurisdiction can competently compete with the jurisdiction of the selected forum. Therefore the clearly inappropriate forum test endorsed by the majority of the present High Court is yet to be further tested, or modified, in practice. This test was applied to dismiss an application for stay of proceedings at the Australian Federal Court in Kawasaki Steel Corporation v Owners and Others Interested in the Ship Daeyang Honey (1993) 120 ALR 109.
[3.64] [3.65]
The clearly more appropriate forum test
[3.65]
[3.65] There is no need to examine this test in detail. The meaning of this test has been explained when dealing with the test of a clearly inappropriate forum in the preceding paragraphs. The judgments of Brennan J and Deane J in Oceanic Sun (1988) 19 ALR 9 at 39 and 49, and of Mason CJ, Deane, Dawson and Gaudron JJ in V oth v MFM (1990) 171 CLR 538 at 5549, discuss this test in detail.
[3.65] [3.66]
Connecting or determining factors
[3.66]
[3.66] A connecting or determining factor is not a test in the same sense as the forum non
conveniens doctrine, and the clearly inappropriate forum test. The expression refers to any factors, or facts, which may allow a court of law to identify or establish a connection between a law and the issue in dispute and to determine which jurisdiction or law applies. For example, the public (or government) interest analysis suggests that the interest
82
[3.69]
involved is the connecting or determining factor upon which the issue of jurisdiction and issue of governing law can be determined. Similarly, in Oceanic Sun (1988) 79 ALR 9, the formation of the contract of carriage and the place where the contract was concluded were regarded as connecting or determining factors, but the judges reached different conclusions by applying different techniques of characterisation: see [3.56][3.58] . In V oth v MFM (1990) 171 CLR 538, the connecting or determining factor was the cause of action. The issue of jurisdiction was determined by referring to the nature of the cause of action and the place where the cause of action arose. Five judges (Mason CJ, Deane, Dawson, Toohey and Gaudron JJ) held that the cause of action was a failure to provide adequate advice (negligent omission) and it took place in Missouri. One judge (Brennan J) held that the cause of action was a misrepresentation, which occurred in New South Wales. Consequently, the majority held that the law of Missouri applied and the courts of Missouri had appropriate jurisdiction, but Brennan J held that the law of New South Wales governed the dispute and the courts of New South Wales had appropriate jurisdiction. The importance of connecting or determining factors is evident.
[3.66] [3.67] [3.67]
In the following paragraphs [3.68] [3.82] we will deal with a number of Latin phrases. They represent the rules for determining the appropriate jurisdiction, the governing law, and the connecting or determining factor in a given case.
[3.67] [3.68]
[3.67]
Lex domicilii
[3.68]
[3.68] This means the law of the place where the person concerned has his, her or its (in the case of a legal person) domicile, a permanent legal residence. A person may obtain domicile in the place where he or she was born and a company may be deemed to have domicile in the place where it was incorporated. Lex domicilii emphasises the connection between a person and the law of the place where the person has his, her or its legal home. The domicile of a person should be determined by applying the relevant law dealing with the matter in dispute. For example, the domicile defined under a law of marriage may differ from domicile defined under a company law. In this sense, lex domicilii is only a rule of uncertain content which may justify the application of a particular jurisdiction or law to a particular person once the connection (domicile) between the person and the jurisdiction or law is established.
The rule of lex domicilii is based on the jurisdiction of a sovereign state over the persons who domicile in that state. It can be argued that because a state has sovereignty to make laws and sovereignty over the persons who domicile within the territory of the state, the rule of lex domicilii allows the forum where a person has domicile to have jurisdiction over the person. Similarly, the rule of lex domicilii also allows the law of the place where the persons domicile is to determine the rights and obligations of the person in a conflict of laws situation. The rule of lex domicilii suggests the importance of knowledge of public international law to the study of international commercial law.
[3.68] [3.69] [3.69]
The rule of lex domicilii is accepted by the Brussels Convention, which was signed by several European countries in 1968. It was restated in the Lugano Convention of 1988,
83
[3.69]
[3.69]
which modified the principles of the Brussels Convention for the purpose of accommodating the EFTA countries (see [2.49] ), which had some reservations on the provisions of the Brussels Convention. The Brussels Convention and the Lugano Convention coexist today. The members of the Brussels Convention are Belgium, France, Germany, the Netherlands, Italy, Luxembourg, Denmark, the United Kingdom, Ireland, Greece, Spain and Portugal and the members of the Lugano Convention are the fifteen members of the European Union (see [2.51]), and three members of EFTA. Each convention operates only among its members. Under the rule of lex domicilii adopted in the Brussels and Lugano Conventions, a court of the forum where the defendant domiciles has the appropriate jurisdiction in a case of conflict of laws. The rule of lex domicilii is used as the uniform test, subject to the exceptions prescribed in the conventions (such as contract, tort, trusts and salvage, etc) for determining the appropriateness of a courts jurisdiction. It must be pointed out, however, that this is different from saying that the law of domicile is the appropriate law governing the substantive issues in dispute.
[3.69] [3.70] [3.70]
[3.70] Lex domicilii may also refer to the law of the place where the person has his, her or
its residence. Residence is also a legal concept, and what constitutes residence should be determined in the context of a particular law. It is often used as a test when the domicile of a party is not determinable, or when the residence of the party represents the true connection between the party and a country.
[3.70] [3.71] [3.71]
[3.71]
Polites v The Commonwealth (1945) 70 CLR 60 Example of the application of lex domicilii
Facts: This case involved the operation of the National Security Act 193943 which gave the Governor-General a power to require persons to place themselves, their services and property at the disposal of the Commonwealth. Regulation 7 of the National Security (Aliens Services) Regulations provided compulsory enrolment of aliens in the armed forces. A number of Greek citizens resident in Australia were required to serve in the armed forces. However, there was a rule of international law which said that aliens could not be compelled to serve in the military force of a foreign country. The regulations were challenged in the Australian High Court. Decision: The High Court held that the regulations were valid, because the relevant Act allowed the Governor-General to make such regulations in spite of the existence of the international law.
This decision was probably motivated by a policy consideration that war justified a wider power of the government to manipulate national resources, that is, the natural, human and financial resources within the territory of Australia. The jurisdictional basis for the Governor-General to require aliens to serve in the Australian army and for the court to affirm the validity of this requirement is lex domicilii. It was implied in this case
84
[3.74]
that, because of the rule of lex domicilii, Australian law rather than the relevant international law governed the matter in question.
[3.71] [3.72]
Nationality
[3.72]
[3.72] A persons nationality and domicile are not always the same. It is common for a national of country X to have permanent residence in country Y . Nationality may be used as a test (a determinant or a connecting factor) for determining the relationships between the person and a jurisdiction or a law. The courts of law may investigate the nationality of the parties to a dispute to determine whether any determining connection can be established between the nationality of a party and a relevant jurisdiction or law.
The nationality test is also based on the states jurisdiction over persons, because nationality, which contains specific rights (or privileges) and obligations of a person under a particular law, represents a legal relationship between the person and the country which granted him or her citizenship. Although it is more likely that the courts will prefer lex domicilii to the nationality test,38 it cannot be assumed that a court of law must necessarily apply the rules and tests in that order in all circumstances. The real question is which test or determinant reflects the real connection between the person and the jurisdiction or law in question.
[3.72] [3.73]
Lex causae
[3.73]
[3.73]
Lex causae means any system of law which under a conflict of laws rule of forum is applicable to any given question.39 It involves a process by which a court of law identifies the connecting or determining factor between a matter and a law, and determines the governing law of the matter in question. This is probably why lex causae is also described as a convenient shorthand expression denoting the law (usually but not necessarily foreign) which governs the question.40 Lex causae is not a rule in the same sense as, for example, lex domicilii., which suggests the basis for applying a particular law to a particular person. The rule of lex causae indicates only that the law applying to a person or matter is the law which governs the person or matter. More specific tests or determinants are needed before lex causae (whichever law it is) can be applied to justify the determination of a court.
[3.73] [3.74]
Lex fori
[3.74]
[3.74]
Lex fori refers to the law of the place where the court of law is situated. It means local law or the domestic law of the forum. A court may prefer lex fori to any foreign law, but it must establish the reason (connection between the matter or person and the local law) before applying lex fori. Specific tests or determinants, such as domicile, validity of a marriage, conclusion or performance of a contract, or the location of property, are necessary to justify the application of lex fori. Sometimes the application of lex fori can be based
38. For a comparison between domicile and nationality, see North and Fawcett, supra note 1, pp 16571. 39. Castel, supra note 9, p 9. 40. Collins et al, supra note 16, p 30.
85
[3.74]
on general or broad justification (as opposed to specific tests). For example, Gaudron J in Oceanic Sun (1988) 79 ALR 9 at 55, was of the opinion that in an application for a stay of proceedings in favour of a foreign jurisdiction clause, to allow questions as to the existence, construction or validity of a foreign jurisdiction clause to be determined by application of any law other than the lex fori would invite unnecessary complexity. Her Honour appears to say that in this case lex fori should govern the questions as to the existence, construction or validity of the foreign jurisdiction clause because lex fori governs the process of resolving a conflict of laws.
[3.74] [3.75] [3.75]
[3.75] Green v Australian Industrial Investment (1989) 90 ALR 500 Lex fori and the extra-territorial operation of the Trade Practices Act 1974 (Cth) (TPA)
Facts: The dispute involved an English company, BE Ltd, and a Western Australian company, AII. G, a representative of BE Ltd, entered into an agreement with L and B, representatives of AII, in London to sell BEs shares to AII. The shares were to be paid partly in cash and partly by the issue of preference shares in AII. G later claimed that L and B made fraudulent misrepresentations as to AIIs financial position and sought recession of the agreement to sell in the English court. AII filed a petition and was granted an interim injunctive relief against BE Ltd. G then took action in the Australian Federal Court, alleging a breach of s 52 of the TPA by AII, seeking either to rescind the agreement or to declare the agreement void ab initio. AII applied for a stay of the proceedings. Decision: French J of the Federal Court applied the oppressive and vexatious test endorsed by the majority of the High Court in Oceanic Sun and dismissed the application for a stay of the proceedings. His Honour held that the TPA has extra-territorial effect and the alleged breach of the Act in London invoked the statutory jurisdiction of the Act, which cannot be excluded by any choice of law clause in the contract.
[3.75] [3.76]
Lex situs
[3.76]
[3.76] Lex situs (law of the situs) means the law of the place where a subject matter (or thing), in particular a property, is located. It is sometimes interchangeable with lex loci rei sitae or lex rei sitae.41 Under this rule, a selected court may decide that the court of the place where the real estate is located is a more appropriate forum for hearing the dispute, or alternatively, that the law of the place where the real estate is located is the governing law, although the matter can be heard in the selected court.
Lex situs can be regarded as a particular test for determining the lex causae or the application of lex fori, because lex situs may lead to the operation of a lex fori, or a lex causae which could be either a local law or a foreign law.
[3.76]
41. Castel, supra note 9, p 8.
86

[3.77]
[3.82]
[3.77]
Lex loci42
[3.77]
Lex loci appears to be based on the same logic as lex situs, because lex loci refers to the law of the place where the cause of action arises. Since there are various causes of action, lex loci is usually specified, inter alia, as lex loci actus, lex loci contractus, lex loci celebrationis, lex loci delicti commissi, lex loci solutionis, etc. These rules suggest that a certain connection between a party and a governing law can be established or identified by the cause of action involved. These particular rules are also the bases for determining lex causae or lex fori.
[3.77] [3.78] [3.78]
Lex loci actus refers to the law of the place where the determining act is carried out or the cause of action arises. The act concerned is usually limited to the performance of a contract or the execution of a legal document, because certain other acts which may give rise to a cause of action, such as torts or matrimonial ceremony, are governed by other specified rules of lex loci. The question as to what constitutes the determining act is decided by the discretion of the court. This can be illustrated by the disagreement as to the place where the alleged negligence occurred between the joint judgment and Brennan J in V oth v MFM: see [3.66] .
[3.78] [3.79] [3.79]
[3.78]
Lex loci contractus refers to the law of the place where the contract in question was entered into. This rule suggests that a connection or the determining factor between the person and the law can be established or identified by exploring the place of the contract. The rule applies to contract disputes.
[3.79] [3.80] [3.80]
[3.79]
Lex loci celebrationis is a particular rule which suggests a connection between a person and a law, that is, the issue of a marriage certificate. It literally means the law of the place where a marriage ceremony is held. On this basis other legal relationships, such as the validity of the marriage or the status of a child, may be determined.
[3.80] [3.81] [3.81]
[3.80]
Lex loci delicti commissi is a rule usually relating to actions in torts. It refers to the law of the place where a wrong (a cause of action), such as a tortious act that caused the damage in question, is committed (or arises). The same rule can also be applied to criminal acts or other acts which caused the damage or claim in question.
[3.81] [3.82] [3.82]
[3.81]
Lex loci solutionis is usually related to contract law. It means the law of the place where certain acts of performance, such as performance of a contractual duty or payment of money, are carried out. Breach of a contractual duty or failure to pay a debt fall under lex loci solutionis.
[3.82]
[3.82]
42. For a general discussion on lex loci doctrine, see McLaughlin, Conflict of Laws: the Choice of Law Lex Loci Doctrine, the Beguiling Appeal of a Dead Tradition, Part One (1991) 93 West V irginia Law Review p 957.
87
[3.83]
[3.83]
Renvoi
[3.83]
[3.83] Renvoi is a French word. It describes a situation where, due to the inconsisten-
cies between the conflicts rules of countries, a selected forum determines under its own conflicts rules that the law of country X is the governing law; but the law of country X (which includes its conflicts rules) says the law of the selected forum is the governing law, or alternatively, says the law of country Z governs the matter in dispute. However, the law (including the conflicts rules) of the selected forum or the law of country Z may subsequently refer the matter back to country X, or another country. Renvoi reveals the uncertainties arising from the lack of a uniform system of conflicts rules. This situation creates difficulties for both courts and litigants. Renvoi may be illustrated by the following diagram:
First country
1st step: As a result of the application of the conflicts rules of the first country the matter is transferred to the law of the second country
2nd step: As a result of the application of the conflicts rules of the second country the matter is referred back to the law of the first country, or the law of a third country
Second country
Third country
It must be pointed out that the whole process usually takes place in a hypothetical or constructive process, in which the first country may work out the result by first applying its own law and then the law of the second country, and so on. Of course, there is always a possibility that the matter may be physically transferred from the court of the first country to the court of the second country and then either referred back to the first country or to a third country. It is also necessary to point out that when we say the law of a country, we refer to the law of that country in relation to both jurisidictional matters and substantive matters, including conflicts rules. Jurisdictional matters involve the issue of whether a court has jurisdiction to hear a case, and substantive matters are concerned with the specific rights and obligations of the parties to a particular dispute. The differences between these matters explain why a court which has decided to exercise jurisdiction over a given dispute may want to apply a foreign law to resolve the dispute.
88
[3.84]
As suggested in the above diagram, there is a risk and possibility that the matter will continue to be referred from one country to another under the conflicts rules of each country, because their conflicts rules are different, or are in conflict with each other. This situation must be ended if any conflict of laws can be satisfactorily resolved.
[3.83] [3.84] [3.84]
In the absence of a universal system to deal with renvoi, three methods or resolutions (though the methods can also be categorised into four groups) have been developed for resolving the problem of renvoi.43 These methods are summarised as follows:
[3.84]
Ignoring the conflicts rules of the second country which is referred to by the conflicts rules of the selected forum (the first country): for example, if the conflicts rules of the selected forum (the first country) say that the law of the second country applies, the law of the second country should be used to resolve the dispute regardless of whether the conflicts rules of the second country may refer the matter somewhere else. The matter can be dealt with by the selected forum in accordance with the law of the second country (excluding its conflicts rules). Single renvoi: this means that renvoi can only occur once. The selected forum will examine the law of the second country as a whole. If the law (including the conflicts rules) of the second country refers the matter back to the selected forum (the first country) or a third country, the selected forum will not consider the implications of the relevant conflicts rules in the subsequent application of the law of the selected forum or of the third country. This methods shows respect to the integrity of the second countrys law, because, unlike the first method, it chooses to ignore its own conflicts rules (if the matter is referred back to its law). It appears to be more tolerant to foreign law than the first method in the sense that it ignores the conflicts rules of the third country (if relevant) only when the law of the second country has transmitted the matter to the law of the third country (occurrence of renvoi). Total renvoi: this refers to a situation where the selected forum makes a decision presumably in the capacity of a court of the second country (use the above diagram again). The law of the second country should be examined as a whole and the position of the second country to renvoi should also be taken into account. A decision made under this method can fall under either of the above two methods, or something else (such as continuous renvoi), depending on the presumed interpretation and application of the relevant law by the court of the second country. This method is a combination of the above two methods. It shows even more respect for the integrity of the law of the second country than the second method. The difficulty with this method, however, would be whether any selected forum is able to interpret and apply the law of the second country in the same way as a court of the second country. Thus the practicability of this method is questionable.
[3.84]
43. For discussion, see Nygh, supra note 1, pp 2067; Sykes and Pryles, supra note 15, pp 21828; and North and Fawcett, supra note 1, pp 5966.
89
[3.85]
[3.85]

[3.85]
[3.85] To summarise the problem of renvoi, we may say that renvoi is an inevitable
product of the divergence, if not contradiction, of nation-based conflicts rules. Any discretionary and unilateral approach to the resolution of renvoi will inevitably offend the conflicts rules of some country (because of the conflict of states economic, political and legal interests), unless no conflict exists between the conflicts rules of the countries concerned. The search for a higher theory to justify or guide any particular method for resolving renvoi has not yielded any satisfactory result. The reason for this failure lies in the conflicts rules themselves, which cannot be satisfactorily unified unless a much higher level of political, economic and social cooperation can be achieved between countries. The recent development of conflicts rules within the European Union may provide useful experience for the future search for a set of universal conflicts rules.44
[3.85] [3.86] [3.86]
Action in personam
[3.86] Action in personam refers to a particular type of jurisdiction under which a court
of law may hear a complaint, or to a ground on which the court may determine certain rights of the parties involved in a dispute. For example, Holmes J in Tyler v Judges of the Court of Registration (1900) 175 Mass 71 described action in personam as follows: If the technical object of the suit is to establish a claim against some particular person ... or to bar some individual claim or objection, so that only certain persons are entitled to be heard in defence, the action is in personam, although it may concern the right to, or the possession of, a tangible thing. Action in personam, as a term describing generally a cause of action, is relevant to personal rights, obligations or claims which are based on certain legal relationships. A courts jurisdiction over a particular claim based on action in personam can be, but is not necessarily always, supported by the physical presence of the defendant within the territory of the courts jurisdiction at the time when the alleged cause of action arises. For example, s 9 of the Admiralty Act 1988 (Cth) allows proceedings to be commenced as an action in personam on a maritime claim or a claim for damages done to a ship in the circumstances described in ss 4 and 5 of the Act. Besides maritime claims, action in personam is also a cause of action in property or contract disputes.
[3.86] [3.87] [3.87]
Action in rem
[3.87] Action in rem also describes a basis for determining the jurisdiction of a court of law. In Roman law an action in rem was one brought in order to vindicate a jus in rem, ie a right such as ownership available against all persons, but the only action in rem known to English law is that which lies in an Admiralty court against a particular res, namely a ship or some other res, such as cargo, associated with the ship.45 For our purposes, action in rem is a particular cause of action which allows a court of law to hear a complaint
44. For discussion of Brussels and Lugano Conventions, see North and Fawcett, supra note 1, pp 282336. 45. Id, p 213.
90
[3.89]
against a ship, cargo or things associated with the ship on the ground that the rem is physically located within the jurisdiction of the court,46 regardless of whether there is any other connection between the law of the forum and the matter in dispute. Action in rem is a ground for bringing an admiralty action under the Admiralty Act 1988 (Cth).47 The following case illustrates the operation of action in rem:
[3.87] [3.88] [3.88]
[3.88]
Kawasaki Steel Corporation v Owners And Others Interested In The Ship Daeyang Honey (1993) 120 ALR 109 Action in rem allows the plaintiff to sue the defendant against any ships owned by the same defendant
Facts: Kawasaki Steel was the true indorsee of the iron ore carried by the ship, which sank in a typhoon on 22 October 1992 several hundred miles off the coast of the Philippines. Kawasaki Steel was a Japanese company. The other three plaintiffs were also Japanese companies which acted as agents for Kawasaki Steel in purchasing the iron ore from BHP in Australia. BHP delivered the iron ore to the ship and endorsed the three bills of lading issued by the shipmaster to the agents of Kawasaki Steel. Kawasaki Steel chartered the ship from a time charterer, Navix Line Ltd, which was also a Japanese company. Navix Line Ltd chartered the ship from its owner, Pan Ocean Shipping Co Ltd, which was a Korean company. The lost ship, Daeyang Honey, was a Korean registered ship. It was alleged that the loss of the ship in the typhoon was due to the defective structure of the ship. Kawasaki Steel and other plaintiffs commenced action in rem against a number of ships owned by Pan Ocean Shipping for the loss of the iron ore. The shipowner applied for a stay of the proceedings on the ground of, inter alia, forum non conveniens. Decision: The Federal Court of Australia held that the shipowner had not established that Australia was a clearly inappropriate forum. The application for a stay of the proceedings failed.
[3.88] [3.89]
The concept of justice and conflicts rules
[3.89]
[3.89] English writers and judges have suggested that justice is the philosophical basis of English private international law. It is undeniable that English judges possess a certain
46. Action in rem provides merely a cause of action or a basis for the courts jurisdiction. Thus, in Rosenfeld Hillas & Company Pty Ltd v the Ship Fort Laramie (1923) 32 CLR 25, the High Court of Australia entertained a claim for non-delivery of the goods against the shipowners in an action in rem, without dealing with the issue whether the validity of the bill of lading under which the plaintiff s rights to the goods were established should be governed by American or Australian law. 47. For example, in Ocean Industries Pty Ltd v The Owners of the ship M V Steven C [1994] 1 Qd R 69, the appellant (plaintiff at trial) who had obtained a judgment in an action in personam under the Admiralty Act 1988 (Cth) against the owners of a vessel brought an action in rem against the same owners under the Act because the same debt remained unsatisfied.
91
[3.89]
measure of flexibility to develop the law and apply its principles particularly in a subject as fluid and uncodified as private international law. A sense of what is fair and just will often influence a judge and obviously should do so. Whatever the reasoning employed (which is often open to criticism on theoretical or formalistic grounds) the decisions in English and Australian cases often seem right or just.48
[3.89] [3.90] [3.90]
[3.90] However, the fundamental question is: what is justice? Is it the justice of the
result that is, synonymous with just or fair? Or is it justice in the sense of judicial administration that is, a synonym for the administration of the judicial system? The Supreme Court of New South Wales appears to have used the expression justice in the context of the interests of justice, that is, the interests of the courts in the administration of justice.49 In addition, we may wonder how to apply notions of fairness and justice or the interests of justice to the conflict of laws.50 Can the proposition that our most fundamental institution about law is its function to regulate human action and its consequences51 provide any assistance? Brennan J in Oceanic Sun (1988) 79 ALR 9 at 40, raised the question of how, in dealing with conflict of laws a court in New South Wales [could] identify the ends of justice [a term which constitutes part of the tests for applying the forum non conveniens doctrine in English courts]. Mason CJ, Deane, Dawson and Gaudron JJ in V oth v MFM (1990) 171 CLR 538 at 560, observed that the court does not, and indeed cannot, evaluate the justice or relative merits of the substantive laws of the available forums (including the chosen forum). It appears that the concept of justice is not readily defined or universally accepted.
[3.90] [3.91] [3.91]
[3.91] Bearing in mind that the emphasis on the notion of justice is its function as the
basis or justification for a courts discretion in applying conflicts rules, the test of justice perhaps functions as a philosophical guideline for evaluating, assessing and balancing the conflicting interests in a given dispute. This reflects a different approach to the conflict of laws, and suggests that whatever rules, procedures and interests are adopted in the process of resolving a conflict, the result must appear to be fair and just in the eyes of judges, who are entrusted with a duty to protect democracy and justice in any democratic society. This is perhaps why Lord Kinnear said in Sim v Robinow (1892) 19 R 665 at 668 that a conflict should be resolved in a manner which is suitable for the interests of all the parties
48. Sykes and Pryles, supra note 15, p 11. 49. Bankinvest A G v Seabrook (1988) 90 ALR 409,per Street CJ at 409, per Kirby P at 411, and Rogers AJA at 425. 50. In Oceanic Sun (1988) 79 ALR 9 at 24, Wilson and Toohey JJ made the following comment:
The expression the interests of all the parties and the ends of justice is a composite one. This is best understood and given effect to by recognising that the initial onus lies on the appellant (in this case) to demonstrate that some forum other than New South Wales is more appropriate because it is the forum with which the action has the most real and substantial connection.
This statement was intended to explain the meaning of the interests of the parties and the ends of justice in Oceanic Sun. But, by emphasising the onus of proof, it provides little guidance as to the general meaning and application of the expression. 51. Kramer, More Notes on Methods and Objectives in the Conflict of Laws (1991) 24 Cornell International Law Journal 245 p 255.
92
[3.94]
and for the ends of justice. However, it must also be pointed out that this approach of the English courts has been criticised by Brennan J as unworkable in Oceanic Sun (1988) 79 ALR 9 at 38.
[3.91] [3.92] [3.92]
Forum shopping
[3.92] Forum shopping refers to a situation where a plaintiff deliberately chooses a particular forum (court or country) from a range of available fora for the purpose of taking full advantage of the law to advance his or her case, or to maximise the disadvantage to the defendant. There are discussions as to whether such activities should be allowed or restrained.52 Under the common law tradition as adopted in England and Australia, a plaintiff has a right to resort to the court pursuant to the relevant procedural requirements. The common law in England and Australia does not prohibit or curtail a plaintiff s access to law as far as the plaintiff can establish a cause of action and his or her standing to sue under the relevant law. This means that forum shopping may not be regarded as an issue under Australian law.
[3.92] [3.93] [3.93]
Conflict of laws in Australia

[3.93] Anglo-Australian methodology in choice of law has basically remained the same since Story wrote. The cause of action is put into one of several categories, each possessing its own choice of law rule which indicates which states laws govern the matter. Some of the choice of law rules consist of fairly rigid territorial criteria of the type advocated by Beale. Thus, property questions concerning immovables are governed by lex situs and foreign torts are at least prima facie and to a limited extent governed by lex loci delicti. But a few choice of law rules are flexible, such as those applicable to contract and trusts.53
[3.93] [3.94] [3.94]
Given the legal tradition of Australia, the methodology and system of conflicts rules in Australia are indeed similar to the English ones. However, as we have seen, the present High Court of Australia has moved away from the forum non conveniens doctrine adopted in the United Kingdom and, with variations, in the United States.54 The clearly inappropriate forum test is the test for determining most applications for a stay of proceedings in Australian courts. The differences between the clearly inappropriate forum test and the clearly more appropriate forum test (forum non conveniens) were discussed in the joint judgment of Mason CJ, Deane, Dawson and Gaudron JJ in V oth v MFM (1990) 171 CLR 538 at 55761. The clearly inappropriate forum test is perhaps the most important distinction between the Australian conflicts rules and UK conflicts rules.
[3.94]
[3.94]
52. For example, Forum Shopping Reconsidered (1990) 103 Harvard Law Review p 1677; and Walker, Forum Shopping for Stale Claims: Statutes of Limitations and Conflict of Laws (1989) 23 A kron Law Review, p 19. 53. Sykes and Pryles, supra note 15, p 13. 54. Deane J compared the doctrine of forum non conveniens in the United Kingdom and the United States in Oceanic Sun (1988) 79 ALR 9 at 468.
93
[3.95]
[3.95]
[3.95] In Australia, rules and practices governing conflict of laws may vary from state [3.95] to
state. This is because each state and territory has the power to deal with many matters which are not exclusively subject to the federal legislative power. This results in variations of the rules of conflict of laws in Australia. Conflict of laws may become an issue when interstate matters are involved,55 although this is not our major concern in the study of international commercial law.
[3.95] [3.96] [3.96]
[3.96] The Australian Law Reform Commission identified in 1992 the following areas
of interest concerning Australian conflicts rules:

whether the Constitution has any role to play in determining the issue; how to apply the choice of law rules in connection with federal jurisdiction and under the cross-vesting legislation; the inappropriateness of forum law as a choice of law rule in Australia; uncertainty in the choice of law rules in cases involving torts, and substance and procedure; difficulty in applying choice of law rules to statutory schemes; whether the common law is adequate for modern conditions; and whether choice of law rules need to be the same within the federation of Australia as in the international situation.56
The major recommendations of the Commission in relation to the abovementioned issues are to retain the existing common law-based jurisdiction selecting approach (which means the disagreement as to the test for determining an application for a stay of proceedings in Australia between the judges of the High Court will likely remain) and to achieve uniformity through legislative amendment to individual legislation where uniformity is needed, rather than through a uniform choice of law code in Australia.57 The Commission proposed draft federal legislation in its report,58 which has not yet yielded any concrete result.
55. For example, in McKain v R W Miller & Company (South A ustralia) Pty Ltd (1991) 174 CLR 1, the High Court of Australia was asked to determine whether an action in the Supreme Court of New South Wales for torts committed in South Australia was barred by the Limitation of Actions Act 1936 (SA). The court had also to determine whether the denial of the action in the Supreme Court of New South Wales by the law of South Australia raised issues of conflict of laws. 56. The Law Reform Commission, supra note 5, para 1.9. 57. Id, paras 2.12 and 2.13. 58. Id, p 143.
94

Firstch 03

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Firstch 03

Uploaded by

Copyright:

Available Formats

Chapter Three

Introduction to Conflict of Laws

Introduction to Conflict of Laws

International Commercial Law

Introduction to Conflict of Laws

International Commercial Law

What is a conflict of laws?

[3.10] Example of conflict of laws within Australia

Introduction to Conflict of Laws

[3.10] [3.11] [3.11]

International Commercial Law

Explaining the expression conflict of laws

Introduction to Conflict of Laws [3.16]

Defining conflict of laws

International Commercial Law

[3.20] Bearing in mind the difficulty of reaching a universal definition of conflict of

Three operating areas of conflicts rules

Determination of jurisdictional issues

Introduction to Conflict of Laws

International Commercial Law

Determination of governing law

Introduction to Conflict of Laws

Enforcement of foreign judgments

International Commercial Law

[3.30] At present, the enforcement of foreign judgments in Australia is mainly dealt

Why consider conflicting foreign laws in the context of trade?

Introduction to Conflict of Laws

Major theories of conflicts rules

International Commercial Law

Theory of international comity

Introduction to Conflict of Laws

The economic interdependence theory

International Commercial Law

Theory of acquired or vested rights21

Local law theory25

Introduction to Conflict of Laws

International Commercial Law

Public (or government) interest theory (or analysis)30

The major points of his theory are as follows:

Introduction to Conflict of Laws

International Commercial Law

Summary of the theories

True conflict and false conflict

Introduction to Conflict of Laws

International Commercial Law

[3.54] [3.55] [3.55]

Characterisation and conflicts rules

Introduction to Conflict of Laws

International Commercial Law

Selected rules and tests of conflict of laws

Forum non conveniens

Introduction to Conflict of Laws

The clearly inappropriate forum test

International Commercial Law

Introduction to Conflict of Laws

International Commercial Law

The clearly more appropriate forum test

Connecting or determining factors

Introduction to Conflict of Laws

International Commercial Law

Introduction to Conflict of Laws

International Commercial Law

41. Castel, supra note 9, p 8.