02. private international law

The question

Public international law governs the relations of states. A different body of law addresses the problems that arise when a private legal relationship, a contract, a wrong, a marriage, an estate, crosses the boundary between legal systems, so that more than one system might govern it. This body of law is private international law, known in the common law world also as the conflict of laws, and it is the subject of this sub-unit. The question it answers is which legal system governs a private relationship connected to more than one of them, and which courts may decide a dispute arising from it. Despite the similarity of name, private international law differs fundamentally from the public international law of the previous sub-unit, and the distinction must be fixed before the subject is examined.

The nature of private international law

Private international law is the body of rules that determines, in a private legal relationship connected with more than one legal system, which system's law governs the relationship and which system's courts may adjudicate a dispute concerning it. Its name is apt to mislead, and the misleading appearance is worth dispelling at once: private international law is, in most respects, a part of the municipal law of each state, made by that state for application by its own courts, rather than a body of law operating above the states as public international law does.

This character connects the subject to the analysis of sources and systems earlier in the course. Each state has its own private international law, its own rules for deciding which law governs a cross-border relationship, and these rules form part of the state's municipal legal order. Two states may answer the same conflict question differently, since each applies its own private international law, and the harmonisation of these rules across states, through international conventions, is a continuing project precisely because they are in origin national rather than international. The subject is international in its subject matter, the cross-border relationship, and municipal in its source, the law of the particular state.

Consider a contract between a seller in one state and a buyer in another, performed in a third, which gives rise to a dispute. Several legal systems are connected to the relationship, and the law of each might in principle govern. Private international law supplies the rules by which a court determines which system's law in fact governs the contract and whether that court is the proper forum for the dispute. Without such rules, a cross-border relationship would have no determinate governing law, and the example shows the function the subject performs.

Private international law is therefore the municipal law of each state for resolving private relationships connected with more than one legal system, international in its subject matter and national in its source, and its distinctness from public international law is the first point the subject requires the reader to grasp.

The three questions

Private international law is organised around three questions, and the structure of the whole subject is most clearly grasped through them. When a private dispute connected with more than one legal system arises, three questions must be answered in turn, and the rules of private international law supply the answer to each.

The first question is that of jurisdiction: which state's courts are competent to hear the dispute? A court must determine whether it has authority to adjudicate a matter connected with other states, and the rules of jurisdiction identify the connections, such as the defendant's residence or the place of performance, that confer that authority. The second question is that of choice of law: which state's law governs the substance of the relationship? Even a court with jurisdiction may be required to apply the law of another state, and the choice-of-law rules determine which system's substantive law supplies the rights and duties of the parties. The third question is that of recognition and enforcement: will the judgment of one state's court be recognised and enforced in another state? A judgment is of limited value if it cannot be enforced where the defendant's assets lie, and the rules of recognition and enforcement determine the conditions under which a foreign judgment is given effect.

Return to the cross-border sale. If a dispute arises, the buyer must first determine in which state's courts a claim may be brought, a question of jurisdiction; the court seised must then determine which state's law governs the contract, a question of choice of law; and if the buyer obtains a judgment, the buyer must determine whether it can be enforced against the seller's assets in another state, a question of recognition and enforcement. The three questions structure the entire course of a cross-border dispute, and they recur in the later course on commercial law, where they are examined in their commercial application.

The three questions of jurisdiction, choice of law, and recognition and enforcement are therefore the framework of private international law, and any cross-border private dispute is analysed by addressing them in sequence.

Choice of law and characterisation

The second of the three questions, choice of law, lies at the heart of the subject and merits closer examination, for it is here that the distinctive technique of private international law appears. A choice-of-law rule selects the governing law by connecting a category of legal question to a particular legal system through a connecting factor, directing that contracts be governed by the law the parties chose, that rights in land be governed by the law of the place where the land lies, or that a wrong be governed by the law of the place where it occurred. The law so selected is termed the governing law, or lex causae, and the court applies its substantive rules to decide the case.

The operation of a choice-of-law rule depends upon a preliminary step that connects the subject to the building blocks examined earlier, the step of characterisation, by which the court determines into which legal category the question before it falls, since the connecting factor differs from category to category. Whether a question is characterised as one of contract, of property, or of wrong determines which choice-of-law rule applies and hence which law governs, and the characterisation of a question may itself be contested where it falls near the boundary between categories. The technique thus requires the court first to classify the question and then to apply the connecting factor that the classification entails.

Suppose a dispute concerns whether a buyer acquired ownership of goods that crossed several borders. If the question is characterised as one of property, the choice-of-law rule may refer it to the law of the place where the goods were situated at the relevant time; if it is characterised as one of contract, the rule may refer it to the law the parties chose to govern their agreement. The governing law, and so the outcome, may differ according to the characterisation, and the court's first task is to determine which category the question occupies. The example shows characterisation and the choice-of-law rule operating together to select the governing law.

Choice of law, operating through choice-of-law rules and the preliminary characterisation of the question, is therefore the central technique of private international law, the means by which a single governing law is selected from the several systems connected to a cross-border relationship.

The indispensability of private international law to commerce

The practical importance of private international law to cross-border commerce is difficult to overstate, and it provides the bridge from this foundational course to the commercial courses that follow. Every international transaction is connected with more than one legal system, and the certainty of the transaction depends upon the parties being able to determine, in advance, which law will govern their relationship and where any dispute will be resolved.

This dependence connects the subject to the concerns of positioning and risk that run through the later courses. Commercial parties manage the uncertainty that the plurality of legal systems creates by exercising the freedom that private international law allows them, choosing the law that will govern their contract and the forum in which disputes will be heard, and by attending to whether a judgment or award will be enforceable where it matters. The rules of private international law thus furnish the framework within which cross-border commerce is conducted, and a party that neglects them may find its rights governed by an unexpected law, its disputes heard in an inconvenient forum, or its judgment unenforceable where the other party's assets lie. The harmonisation of these rules through international conventions, and the development of regimes for the enforcement of judgments and arbitral awards, are responses to the commercial need for certainty across borders.

Imagine an enterprise contracting with counterparties in many states. By specifying in each contract the governing law and the forum for disputes, and by ensuring that any resulting judgment or award will be enforceable where the counterparty holds assets, the enterprise converts the uncertainty of operating across plural legal systems into a manageable and predictable framework. The example shows private international law not as a technical curiosity but as an instrument of commercial certainty, deployed deliberately by parties who understand it.

Private international law is therefore indispensable to cross-border commerce, supplying the framework of certainty within which international transactions are conducted, and its mastery is a practical advantage for any party operating across the boundaries of legal systems, as the commercial courses develop in detail.