Conflict of Laws
The Conflict of Laws, otherwise known as private international law in civil law, is a set of procedural rules that govern the determination of the jurisdiction and the legal system that is applicable in cases involving a foreign element. It guides the legal relations amongst different legal jurisdictions when it comes to people, legal entities, and companies. The concept of conflict of laws arises due to the diversity of court systems and laws in different jurisdictions.
Legal disputes that consist of a foreign element, or whose matter involves more than one jurisdiction can have ripple legal repercussions in more than jurisdiction or country. Nations have thus come up with their own set of rules on how to properly adjudicate cases within their boundaries that constitute conflicting law (Murphy, 2015). The purpose of this paper is to offer an extensive overview of these set of rules, its common principles, and the judicial process of choice of laws. In addition, the paper will take a closer look at the application of the Conflict of Laws in Saudi Arabia.
DEFINITION OF THE CONFLICT OF LAWS
The nature and scope of the principle of the conflict of laws have made it difficult for legal scholars to come up with a single definition of the principle. Kebede and Kassim (2009) opine that the conflict of laws principle is a legal branch that offers guidelines to judges when presented with private litigation matters. The guidelines provide a framework for selecting a court, and the law, that are closely connected with the foreign element that is present in the private case. In addition, the authors declare that the principle ultimately comprises the rules that dictate how arbitral awards and foreign legal declarations are recognized and enforced by a forum court.
Kebede and Kassim (2009) further assert that the principle of conflict of laws elaborates the when and the why a court in the forum jurisdiction will consider recognizing and enforcing foreign law or consider the past judgments of foreign jurisdictions in a case presented before it. The rules prescribed under the conflict of laws govern the choice of law process, the recognition, and enforcement of foreign laws and judgments, as well as the question of jurisdiction.
According to Verma (2015), the Conflict of Laws is a set of rules that governs all the proceedings of cases that involve a ‘foreign’ jurisprudence factor. The majority of the procedural laws within private international law came about due to judicial decisions. The term ‘conflict of laws’ is usually applied in cases where the outcome of the dispute will depend on which jurisdiction’s laws will be applied in the case.
Lord Nicholls of Birkenhead defined the principle of the conflict of laws when he adjudicated the landmark case, Kuwait Airways Corporation vs. Iraqi Airways Co and Others (2002). The Lord decreed, “Conflict of laws jurisprudence is concerned essentially with the just disposal of proceedings having a foreign element. The jurisprudence is founded on the recognition that in proceedings having connections with more than one country an issue brought before a court in one country may be more appropriately decided by reference to the laws of another country even though those laws are different from the law of the forum court.”
The Lord continues, “…the laws of the other country may have adopted solutions, or even basic principles, rejected by the law of the forum country. These differences do not in themselves furnish reason why the forum court should decline to apply the foreign law. On the contrary, the existence of differences is the reason why it may be appropriate for the forum court to have recourse to the foreign law.” The Lord concludes by aptly saying, “If the laws of all countries were uniform there would be no ‘conflict’ of laws.” (Kuwait Airways Corporation v Iraqi Airways Co and Others, 2002).
The concept of a foreign element is embedded in every definition of conflict of laws explained above and many others. It is thus important to understand the meaning of the concept. When a case is tried as having a foreign element, it generally means that one or more of three natures is of a foreign origin (Kebede & Kassim, 2009). These three natures include the person, whereby one of the parties is a foreigner. It may also mean that the location involved is foreign, whereby the transaction that is in dispute took place partially or totally in a foreign jurisdiction. Finally, the concept may be applied when the object (both immovable and movable) that has resulted in the dispute is in a foreign jurisdiction other than the forum location.
How does the conflict of laws arise?
Different countries have diverse legal systems that are a reflection of the particular societal values involved. Each country has its own unique national laws as well as unique judicial systems that are used in the enforcement of these laws. This is why judicial systems vary from one country to another irrespective to proximity or shared history.
However, many legal disputes and situations occur across one or more legal jurisdictions. Such legal occurrences include marriage, business transactions, as well as financial and estate management, all of which can occur in foreign countries (Kebede & Kassim, 2009). Courts in each country can claim the right to adjudicate legal issues that arise from such events, and the laws of the country involved can apply in such cases to a certain extent. When legal disputes cross any jurisdictional boundaries, then procedures need to be enforced to solve them. These procedures form the body of law that legal experts refer to as Conflict of Laws, and they vary from country to country (Murphy, 2015).
It is important to note that the term ‘conflict of laws’, even though it is sometimes referred to as private international law (Kebede & Kassim, 2009), does not insinuate that there is an international body of laws that govern the interaction between the different legal systems. The term refers to rules and laws that originate from a country, and are not part of international law.
Historical and contemporary developments in the principle of the conflict of laws
According to Kebede and Kassim (2009), the history of the conflict of laws is essentially the history of choice of law and its theories. Thus, it is critical to understand the development of choice of law in order to fully understand the history of the principle of the conflict of laws. A look into these historical developments will provide the necessary insight into the essential elements of the conflict of laws.
The application of foreign laws to cases with a foreign element has been going on since the Hellenic era (Kebede & Kassim, 2009). During the Hellenic era, the Greek states had set up special tribunals that had the mandate of hearing cases that bore a foreign element. The Roman Republic also had a board of judges who dealt specifically with cases that involved peregrine (foreigners).
In addition, when Greeks and Egyptians interacted, any legal dispute that arose from contracts written in Greek form would be tried in Greek jurisdictions under Greek laws. If the contract was drawn up in Egyptian form, then the case would be heard in Egypt and tried under Egyptian law. The focus of these rudimentary forms of conflict of laws was merely on jurisdiction, and local law was always applied after the jurisdiction had been determined.
Legal experts concur that the body of conflicts of law as we know it today emerged in the 13th century. The most notable location where this development took place was in Italy, where the local rules differed from state to state, and there was a noticeable increase in the number of transactions and cases that touched on more than one state. The statutists involved attempted to classify the laws pertaining to residents or property of foreign city-states into personal and real (Kebede & Kassim, 2009). The personal statutes attempted to answer questions regarding a foreign party, and where deemed extra-territorial, while the real statutes were mainly concerned with property and seemed more territorial in their application.
Further developments in Italian law, as well as a flourishing trade and commerce industry led to the adoption of a new law known as the lex mercatoria (law of merchant). Legal experts have viewed this law as the conflict of laws principle of the middle ages. The law is seen to have given future jurisprudence the answers to choice of law problems that go beyond the national level.
The 16th century saw the development of one of the most important tenets of conflict of laws, party autonomy. Du Molin, who declared that the intent of the parties as well as their will should be seen as a source of law, strongly emphasized the doctrine of party autonomy (Kebede & Kassim, 2009). He decreed that this intent to select the law that governs their contract as essentially beyond the authority of a court to decree the law/statute that would be used. He also believed that party autonomy could be used in determining the right statute in situations where the parties had failed in electing the law they want to be used in determining their case.
In the 17th century, Savigny, a German Romanist, pushed for the change of focus from the classification of laws to the consideration of the legal relationships involved in the multijurisdictional cases. He aimed at solving choice of law problems by finding the proper seat for every legal relationship through analyzing the relationship’s connection to a particular locality whose laws would be deemed applicable (Kebede & Kassim, 2009). Savigny had hoped that localization of legal relationships would lead the codification of a universally accepted conflict of laws doctrine. However, due to the diversity of the laws this dream has never been realized.
The Vested Rights was a further important development in the body of choice of laws. the doctrine was postulated by both J.H. Beale, and A.V. Dicey, of America and England respectively. Though their wordings differ, the two essentially decreed that the rights an individual was accorded by the law of a country, should be recognized and duly enforced in any forum jurisdiction (Kebede & Kassim, 2009). Thus, parties have the reasonable expectation that the laws they subscribe to will be used in rendering judgments on their cases regardless of the jurisdiction they may be in.
Other theories that have been instrumental in the development of conflict of laws statutes in different countries are the governmental-interest and the lex fori approaches. The latter approach asserts that the law of the forum is the basic law, while foreign law is only meant to fill the gaps inherent in this basic law (Kebede & Kassim, 2009). The presumption underlying the approaches is that foreign law should only be applied in instances when the defendant will be treated unfairly if the local law is applied, or when the governmental interest of the foreign state demands the non-application of the lex fori. In both instances, however, it is mandatory that the forum’s public policy is upheld.
Further development has continued in the field of conflicts. However, there remains a lot of contention between judges and legal commentators over the principles of the conflicts of law, as well as the rules that govern choice of law.
Functions of Conflict of Laws
Since the creation of uniform laws for disputes that cross-jurisdictional boundaries is unattainable, the conflict of laws is applied in order to remove the unwanted effects of having diverse laws across the globe (Kebede & Kassim, 2009). The motivation behind the principle is to ensure justice is meted out on cases that involve a foreign element. If the principle of conflict of laws was non-existent, it would mean that forum courts judge such cases based on their own laws, which is known as the application of lex fori. Such a situation would lead to severe injustices against the parties involved in the legal dispute.
Another function of the conflict of laws is to help the judge determine the rights and obligations of each of the disputing parties, as well as respect the rights granted to the parties by the laws they follow. If by following the choice of law rules, the court has determined to apply the foreign or local laws, then it should also take into account the relevant laws, which created the rights and obligations of the parties concerned. This is known as the Vested Rights Approach.
The conflict of laws is also tasked with the objective of reducing, or completely preventing forum shopping. Forum shopping occurs when individuals take advantage of the presence of jurisdictional options, and affect the outcome of the case before the courts provided that all courts apply their own laws on cases that have a foreign element (Kebede & Kassim, 2009). Forum shopping came into existence due to the diversity of laws in different jurisdictions, as well as the intercourse of these multistate laws. It has become an impediment in the operation of the conflict of laws in cases that cross more than one jurisdictional boundary.
The conflict of laws in operation
As mentioned above, conflict of laws will only apply in cases where there is a foreign element involved, or in other words, in situations where more than one jurisdiction is involved. The first question the laws should address is which court in which location has the right to hear the matter. Secondly, the set of rules will determine what law should apply to the legal dispute. Once a court has declared jurisdiction over the matter, it has to use the tenets of the conflict of laws to determine whether to apply its own laws to the matter, or to apply the laws of the other jurisdiction involved. Thirdly, the conflict of laws will have to determine the enforcement of the judgment that has been passed. If the forum court rules in favor of the plaintiff and the defendant does not have enough resources in the jurisdiction, the court in the other jurisdiction is required to recognize the judgment by the forum court and ensure the enforcement of the judgment.
The Scope of Conflict of Laws
According to Kebede and Kassim (2009), there are two views on determining the scope of the principle of the conflict of laws. The first view, the traditional view, the principle only applies to three related areas. These areas are, in chronological order, determination of jurisdiction, choice of law, and finally, the recognition and enforcement of foreign judgments, laws, and arbitral awards.
Judicial competence/jurisdiction entails whether a forum court has the capability to hear and pass judgment on a case that contains a foreign element. Choice of law is concerned with the process of selecting the rules of law, whether the forum’s or the foreign jurisdiction’s, that the court with the judicial competence will use in deciding the outcome of the case before it (Kebede & Kassim, 2009). The third category, the recognition and enforcement of foreign precedents, awards, and laws is the heart of any conflict of laws litigation. This is the ultimate goal and consequence of the conflicts of laws jurisprudence.
However, the countries that follow the civil-law legal system such as France, argue that the determination of jurisdiction, and recognition and enforcement of foreign judicial precedents and laws is beyond the scope of the principle of conflict of laws (Kebede & Kassim, 2009). Such countries consider such matters as under the provenance of international procedural law, instead of conflict of laws (private international law). These countries contend that the conflict of laws principle only deals with questions regarding choice of law.
COMMON PRINCIPLES OF THE CONFLICT OF LAWS
Lawrence & Rizzo (2014) opine that the common principles of the conflict of laws provide a framework that helps a court determine if it shall adjudicate over a case by applying its law over the matter, or it shall apply the laws of another jurisdiction. The choice is often predicated by the public policies of the forum court’s jurisdiction. The principles also extend to determining the choice of law, recognition of foreign laws, and enforcement of foreign laws, jurisdiction, as well as the characterization and categorization of property.
Because the conflict of laws is in most instances, of national origin, there is very little international uniformity of the set of rules. Every unique judicial system has its own set of conflict of laws. However, there are a few principles that are common in almost all of the national conflict of laws practiced around the world. These principles include:
The Principle of Comity
This principle contends that sovereign states should habitually extend privileges to other jurisdictions, including when matters of legal disputes that go beyond jurisdictional boundaries arise. This principle forms the basis of a nation acknowledging and enforcing the laws of another when a matter with a foreign element is heard in one of its courts (Paul, 2008; Childress, 2010). The principle of comity is also applied in cases where there is a need to limit domestic declaration of jurisdiction in a bid to respect the sovereignty of other nations and their judicial systems.
It is important to note that comity is done out of respect of another jurisdiction’s legal system, rather than out of obligation. It is applied under the notion that a court in one jurisdiction should not act in a manner that does not degrade the judicial system, laws, and jurisprudence decisions of another jurisdiction. In addition, according to Murphy (2015), comity is only effective to the degree that the foreign judgments or laws being applied in a jurisdiction do not interfere or diminish the effectiveness of the forum jurisdiction’s public policy.
An important part of comity is the expectation of reciprocity. This means that courts act out of comity under the presumption that other jurisdictions will reciprocate the courtesy when the time comes. Many statutes relating to conflict of laws in different countries require that judgments and laws from other jurisdictions will be recognized and enforced only to the extent that its judgments are recognized and enforced in other jurisdictions.
The Principle of Domicile
According to Lawrence and Rizzo (2014), determining a party’s domicile will help in the further determination of the rights of the parties involved, their obligations, the validity of a will, if any such document is involved in the litigation matter. Domicile in this case usually offers a description of the relationship a party has to a location or country. In most jurisdictions that have common laws, domicile usually consists of two elements that have to occur concurrently. The party needs to demonstrate/prove his physical presence in the particular jurisdiction, as well as his intentions to remain in the location indefinitely.
The court can use three main legal presumptions to determine the domicile of a party. These presumptions can be divided into three categories that include domicile of choice, domicile through the operation of law, and domicile of origin (Lawrence & Rizzo, 2014). A party is able to legally receive domicile of choice if he/she has the capability to change their domicile by being in a new jurisdiction, and intending to remain in the new location indefinitely. Both conditions have to be met concurrently, and each one alone is not sufficient to effect a change in domicile.
To determine that an individual has the intent to stay, and thus eligible for domicile of choice, the court will focus on studying the individual’s social and business contacts in the jurisdiction he wants domicile in (Lawrence & Rizzo, 2014). In addition, the court will assess if the individual is a registered voter in the jurisdiction, their church membership, car registration and driver’s license information, as well as the type of home they live in in the forum jurisdiction. All this information is crucial in determining whether the party in question has been able to develop a close relationship with the jurisdiction.
Domicile can also be received through the operation of the law. An example of this type of domicile is when a husband and wife can both have different domiciles even if they are not legally separated or living apart from one another. Such a situation is recognized by many common law jurisdictions but it was not always the case (Lawrence & Rizzo, 2014). Prior to the evolution of common laws in many jurisdictions, a married woman was always presumed to share the same domicile as her husband until such a time they decided to separate or live apart from one another.
The third way of acquiring domicile is through origin. According to Lawrence & Rizzo (2014), many common law jurisdictions recognize domicile of origin. This is the type of domicile that the governing law assigns each person when they are born. Generally, a child is assigned his father’s domicile if he is a legitimate child. However, if the child is illegitimate then he or she is assigned the domicile of the mother.
It is crucial to understand that domicile and residence are two different concepts. An individual can have several residences because residence requires only a physical presence in the locality, such as owning a home in the forum jurisdiction. However, an individual can have only one domicile at a time.
The Principle of Party Autonomy
Pryles (2007) defines party autonomy as the principle that governs the procedure that will be followed in cases that involve international commercial disputes. This doctrine of the conflict of laws allows the parties involved in foreign contracts to decide in which jurisdiction their case will be heard as well as what law is applicable (Zhang, 2006). The parties are free to decide on the procedure that will be used by the tribunal hearing the case. The principle of party autonomy is usually applied through a rule-base framework, and has been accepted in many national laws as well as international legal institutions and courts.
According to Kebede & Kassim (2009), the choice of law rules, and the conflict of laws in general is supposed to protect parties that acted in compliance with the law they believe governs their everyday conduct. Each party has the right to know which law governs them, and to have a reasonable expectation that this law will be the one used to measure their obligations and rights if and when they are involved in a conflict of law case. Since a law of a certain jurisdiction has created this right, then the recognition of the existence of the law and the right should be respected in every other jurisdiction, unless the public policy of the forum jurisdiction forbids it.
The Principle of Situs
The principle of situs is applied in situations where conflict of laws arise involving immovable property, i.e. real property. Based on this principle, such cases usually follow the law of the jurisdictions where the immovable property is situated (Lawrence & Rozzi, 2014). This is the case because it is naturally assumed that the forum jurisdiction has the biggest interested in governing the management of property located within its jurisdictional boundaries.
The Principle of Nationality
Some jurisdictions prefer to use the principle of nationality to determine certain issues related to cases of conflict of laws. The determination of a party’s nationality can be based on the individual’s place of birth, parentage, naturalization, or/and political allegiance (Lawrence & Rozzi, 2014). An individual can have domicile in one jurisdiction but be a national of another location. There are also instances when an individual can claim nationality from both two countries.
It is important to note that the law of the jurisdiction of domicile and the law of situs govern the process of determining the choice of law when it comes to common law jurisdictions. The law of jurisdiction of domicile determines how movable (personal) property will be disposed whereas the law of situs governs how immovables (real property) will be disposed (Lawrence & Rizzo, 2014). However, when it comes to comes to civil law jurisdictions, the principle of nationality will be used to determine the choice of law.
Verma (2015) as well as Kebede and Kassim (2009) opine that the basic duty of a court of law is to determine whether it has the right to adjudicate the matter before it. A conflict of law case arises when there is a foreign element embedded in the case. The fact that the party is a domiciliary of another jurisdiction or the transaction took place abroad means that there is more than one state that has a vested interest in the outcome of the legal dispute. The court thus has to establish whether it has the jurisdiction to preside over the case. Generally, a court cannot assume jurisdiction over a case that has any foreign immovables.
States are often compelled to consider the interests of other jurisdictions in a case with a foreign element because of three main reasons. These three include the fear of retaliation from the other interested states, recognizability of the judgment, as well as the requirement to maintain good relations with other nations in a bid to promote high levels of commerce.
Theories of Judicial Jurisdiction
Territorial Power Theory
According to Kebede and Kassim (2009), territorial power theory asserts that jurisdiction is granted to a forum court through the relationship that the party of the case has with the forum. It does not consider the relationships that the involved parties may have with other jurisdictions such as either or both of them being non-domiciliaries, or the fact that the transaction may have transpired in another jurisdiction.
It is easy to see where the injustice occurs if this theory is applied in a matter that involves a foreign element. If one of the parties is transient or happens to be inadvertently within the jurisdiction of the forum court, then the laws of the forum jurisdiction will determine his case.
Its main defense stems from the standpoint of enforcement of judgments. Proponents of the theory argue that since the world is still not uniform in terms of laws, then comity and acceptance of foreign legal precedents for the sake of being fair to foreign parties should not be the driving factor in international legal relations. However, the theory is only effective if the defendant has sufficient resources in the forum jurisdiction to suffice the claims made against him by the plaintiff (Kebede & Kassim, 2009). This is where its limitation comes in, since the forum court cannot guarantee that its judgment will be executed if the defendant has resources in another jurisdiction without relying on the recognition and enforcement of its judgments by the foreign jurisdiction.
Minimum Contact Theory
This theory stipulates that a foreign party’s ‘minimum contacts’ within the forum jurisdiction can be seen as equal to his/her territorial presence within the forum state. This means that a forum court can exercise jurisdiction and the forum state’s sovereignty over the party, even though they may be a foreign national (Citron, 2005). In addition, the foreigner’s willingness to avail themselves to the opportunities found within the forum jurisdiction is taken to mean that the party is willing to accept the forum jurisdiction’s laws in exchange for the protection that that state will grant him/her.
According to Citron (2005), the lack of minimum contacts or evidence of the same is an infringement of the foreign defendant’s rights to due process if the forum court asserts jurisdiction over his case in complete disregard of the laws and judgments of his home jurisdiction. The lack of minimum contacts is also seen as an insult to substantive justice, as well as the legal expectations of fair play.
The Fairness theory of judicial jurisdiction postulates that a forum court to try cases with foreign elements only when it is fair, convenient, and just to all the parties involved in the case. Proponents of this theory argue that selecting a jurisdiction fairly will ensure that the laws of the forum state will receive recognition and enforcements in other jurisdictions (Kabede & Kassim, 2009). This is because fairness is an international common value, and compels other states to return the favor.
The theory is governed by three circumstances that are all relational. These include the relationship of the parties to the forum state/jurisdiction, the substantive relation of the controversy of the case to the forum, and the controversy’s procedural relation to the forum jurisdiction.
Domicile/Residence/ Nationality as Basis of Judicial Jurisdiction
Domicile consists of two main elements, viz, residence and the intent to remain in the forum jurisdiction, or lack of intent to find domicile in another jurisdiction (Kebede & Kassim, 2009). Domicile as a basis of jurisdiction is defensible because it is more than likely an individual will be inconvenienced when he is sued in his domicile forum, where it is believed he has more than minimum contacts.
However, it becomes difficult to govern issues regarding domicile such as how an individual changes his domicile, how he acquires it in the first place, as well as the different factors that should come into play when determining the intention of an individual to gain or change his domicile (Kebede & Kassim, 2009). In addition, it is extremely difficult to base jurisdiction on domicile when it comes to corporations, majority of which have businesses in other jurisdictions. If the traditional view is taken, which is that a company belongs to the jurisdiction whose laws incorporated it, then multinational companies will significantly impair the fairness and effective of judgments imparted against the businesses, or the parties that transact with these corporations.
Content/Submission as Basis of Jurisdiction
Traditionally, the courts and the state had the power to determine where a trial would take place. This means that the parties had no control as to where their trial would be held. However, in modern times, parties have the opportunity to select or consent to the place they want to have the trial held (Kebede & Kassim, 2009). Thus, the choice of the parties becomes an essential basis of jurisdiction. Choice/consent/submission as the basis of jurisdiction affords the parties a chance to minimize the costs associated with litigation issues such as travel and hotel rental expenses.
Types of Jurisdiction
Jurisdiction is categorized into two, special and general jurisdiction. Special or limited jurisdiction is when a court is restricted to only hear cases that belong to classes that are specifically outlined in the legislation, or constitution of the forum court (Kebede & Kassim, 2009). In addition, special jurisdiction requires that the defendant has limited contacts in the forum state, as these contacts are the ones that give rise to the state’s claim of jurisdiction over the case.
On the other hand, general jurisdiction usually means that a plaintiff can sue a defendant regarding any claim. General jurisdiction is applicable if the defendant is physically within the jurisdiction, or if they have domicile in the state (Kebede & Kassim, 2009). However, when it comes to corporations, this type of jurisdiction will only be applicable if the corporation has its main headquarters in the state, or if the company is incorporated within the state. In addition, general jurisdiction can also be applied if the company runs continuous and systematic transactions within the jurisdiction of the forum state.
CHOICE OF LAWS
Choice of laws is the integral element of the conflict of laws discipline. The choice of laws to be applied on a case occurs after a court has accepted jurisdiction of the case. The court is then faced with the issue of determining which jurisdiction’s laws will be applied in solving the legal dispute presented before it.
Several methods have been invented in a bid to appropriately approach choice of law problems. These methods include substantive law, multilateralism, and unilateralism approaches. The unilateralist method is based on the idea that a forum court can only dictate when its own law can be applied to a case (Lawrence & Rizzo, 2014; Kebede & Kassim, 2009). The theory mainly focuses on the reach (both territorial and personal) of the applicable forum court’s substantive rules and laws.
The multilateral approach entails determining the strongest relationship the party or the controversy of the case has amongst the potentially applicable laws. The court will select the law that has the strongest relationship or the closest connection to the issue at hand. The law selected should be applied according to the legal system in which the particular law is embedded.
The third approach, the substantive law approach, is deemed as a policy-oriented viewpoint whereby the substantive rules have the strongest impact on the outcome of the choice of law procedure. The approach entails the creation of specific rules that govern transactions that cross several one jurisdictional boundaries. The theory postulates that there is a certain purpose to be met, and the court will only apply the law that will ensure or guarantee the desired outcome.
When it comes to determining the laws to apply in a conflict of laws case, the court usually has two choices. It can decide to apply the law of the forum jurisdiction, otherwise known as lex fori, or it can decide to apply the laws of the jurisdiction where the transaction that led to the litigation matter took place. This second option is referred to as lex loci, and it is usually selected when the matter before the court is substantive. Lex fori is selected by a forum court when the matter brought before it is of a procedural nature.
Several instances throughout history have demonstrated why the lex fori (local law) is not always the proper law or lex causae when it comes to handling cases that have a foreign element. However, the court needs to decide whether to choose a foreign or local law in the hearing of a case. Through the choice of law procedures, the court can be able to establish the appropriate law to use in order to hear the case and reach a judgment (Kebede & Kassim, 2009). The choice of law rules determine which law will be used, and the judge is required to apply the law deemed appropriate using these rules, unless if by doing so, he is contravening public policy. The rules that govern the process of choice of law need to be free of bias, either for or against the law of the forum jurisdiction.
The court hearing the case also has to determine whether the issues bringing contention are substantive or procedural issues. The procedural issues are a matter of determining how the case will move forward. In most instances, procedural elements in establishing the choice of law are often decided in favor of the forum court’s procedural rules (Kebede & Kassim, 2009). This is particularly evident when the forum court is mandated with the task of overseeing the discovery process. As mentioned above, the lex fori, (law of the forum) is applied to the procedural issues of the choice of law steps while lex loci is used in handling the substantive issues reflected in the choice of laws steps.
The final step in the choice of laws procedure is the court answering the incidental questions that may arise when it decides to apply the rules involved. Such a question is one that, while not being the reason for the dispute between the defendant and the plaintiff, but its answer will have a significant impact on the outcome of the case (Rottenstein, n.d.). The main aim of the discovery process is to answer majority of the incidental questions, which means that most of them are answered before the actual trial begins.
SAUDI ARABIA AND CONFLICT OF LAWS
In order to fully understand the application of conflict of laws in Saudi Arabia, it is imperative to comprehend the country’s legal framework. Saudi Arabia is a Muslim country, which means that majority of its laws are sourced from Shariah law. The Shariah law is a set of guiding principles that have their origin in the Islamic Holy Book, the Kuran. In addition, the judicial system in Saudi Arabia is divided into different sections that include General Courts, Board of Grievances, and a variety of special committees (Shearman and Sterling LLP, 2016; Issa & Abdukhalilov, 2013). These committees include one for the Settlement of Banking Disputes, Committees for the Settlement of Labor Disputes, and the Committee for Resolution of Securities Disputes.
It is also important to note that under Shariah law, courts do not make judgments based on legal precedents. Rather, each judge settles each case set before him using his own understanding and interpretation of Shariah law. The application of the Shariah law is not uniform throughout the court system in the Kingdom, and majority of court reports and judgments are hardly ever reported to the public. Thus, the members of the public including the expatriates do not have public access to court rulings, intricacies, and proceedings, unless in special circumstances, which are rare.
Saudi Arabia’s legal system as well as the Shariah law do not recognize or accept the doctrine of conflict of laws (Issa & Abdukhalilov, 2013). This means that the issue of a foreign element in a case will not affect the choice of laws that will be used in solving the dispute. In other words, if a plaintiff brings a case before a Saudi Arabian court based on a contract or a transaction that occurred beyond the jurisdiction of Saudi Arabia, the local court will ignore the foreign law that governs the contract and apply the local law.
This is because the Shariah law does not recognize or accept the notion that there could be an absence of jurisdiction when a case is brought before court. In addition, the Shariah law does not consider the interests of foreign jurisdictions when local courts try cases that have a foreign element. As such, Saudi Arabian courts will apply local laws (lex fori) to any dispute that comes before them irrespective of the parties’ domicile, or where the transaction took place, or the parties’ choice of law to be applied on the matter.
However, despite the lack of a comprehensive conflict of laws doctrine in the country, there is the enforcement of foreign judgments as well as the conferring of arbitral awards. This is because the country is a signatory of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (Shearman and Sterling LLP, 2016). As a signatory of the New York Convention, the Kingdom should allow the awarding of foreign arbitral awards within its jurisdiction provided that certain conditions are met. These conditions of enforcement are outlined in the New York convention as well as in the Kingdom’s Enforcement Law.
The rules of the Enforcement Law sets out the conditions that a foreign award or judgment can be enforced in the Kingdom. For instance, foreign awards and judgments can be enforced if the local courts do not have the jurisdiction over the matter of the award or the judgment, and that the award or judgment was passed by an authorized and competent foreign court that had the necessary jurisdiction under the law applied in the case.
In addition, the foreign judgment or award will only be enforced if its elements or impact do not constitute a breach of Shariah law, or any other sources of Saudi Arabian law (Shearman & Sterling LLP, 2016; Issa & Abdukhalilov, 2013). For instance, the Shariah law, the principle law in Saudi Arabia condemns or speaks against payment of interest. Thus, if a foreign judgment or arbitrary award that involved the enforcement of interest payment will be unenforceable in Saudi Arabia. Another condition is that the foreign award or judgment is not in conflict with previous judgments that have been passed by the Saudi Arabian courts.
Furthermore, enforcement is also on condition that the foreign judgment or award is final in the court system that passed it. This means that a foreign judgment or award cannot be enforced in Saudi Arabia if it is still being appealed or reviewed in the foreign court that passed it. Finally, the Saudi Arabian legal system requires that before foreign judgments and awards are enforced in the country, all the parties involved in the case were properly represented, were given notice of the outcome of the case, and had the opportunity to present evidence in their defense.
Conflict of laws is a branch of national law that seeks to settle legal disputes that contain a foreign element. A foreign element in this case means that an integral part of the case has ties to another jurisdiction. Nearly every nation in the world has its own variations of the conflict of laws, and as such, there is no uniformity in this body of law.
Regardless of the lack of uniformity, there lies several similarities between the different variations of conflicts of laws applied in different countries around the world. These similarities are known as the principles of conflict of laws. The principles include but are not limited to the principle of comity and reciprocity, the principle of fairness, the principle of nationality, situs, party autonomy, and domicile. These principles govern the application of laws related to the conflict of laws, and they are all aimed at ensuring that courts pass fair and legal judgments that do not diminish or interfere with the sovereignty of other foreign jurisdictions that may be involved in conflict of laws’ cases.
Another important aspect of the conflict of laws is the determination of jurisdiction where a particular case can be heard. Forum courts do not have the right to assert jurisdiction over a case without first determining the strongest relationships that the parties or the issue at hand has with the jurisdictions, both local and foreign, involved. Forum courts have to consider the interests of other jurisdictions due to fear of retaliation, the promotion of good trade relations with the involved jurisdictions, as well as ensuring that their own judgments will be recognized and enforced in foreign jurisdictions when a situation requires it.
Several theories have been postulated regarding the basis of judicial jurisdiction. These theories include the territorial power theory, fairness theory, minimum contact theory, and the domicile/residence/nationality. The most modern theory of basis of jurisdiction is the content/submission basis, which gives the parties involved a chance to select or consent to a jurisdiction of their choice.
The integral and often confusing even for legal experts, part of conflict of laws is the choice of laws procedure. Three main methods are used in determining the procedure of the choice of laws when it comes to trying cases that have a foreign element. These are the multilateral, substantive law, and unilateralism approaches. The multilateral and unilateralism approaches are considered traditional while the substantive law method is considered the modern approach. This latter approach entails selecting a law based on its ability to reach the desired outcome of the legal dispute.
When it comes to the conflict of laws in Saudi Arabia, we find that the country does not consider the interests of foreign jurisdictions or precedents when trying cases that have foreign elements in the country’s local courts. This is because the predominant source of law for Saudi Arabia jurisprudence is Shariah law, which does not recognize absence or conflict of jurisdiction. However, the country does enforce foreign judgments and arbitral awards because it is a signatory of the New York Convention. It is important to note that the enforcement of these foreign judgments and arbitral awards is subject to the fulfillment of certain conditions contained in the country’s Enforcement Law.
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