Characterisation (law)

In conflict of laws, characterisation is the second stage in the procedure to resolve a lawsuit involving a foreign law element. This process is described in English law as classification and as qualification in French law. In those cases where a different result would be achieved depending on which of several possibly relevant laws is applied, this stage of the process reveals the relevant rule for the choice of law but it is not necessarily a simple process (see the incidental question). The first stage is for the court to determine whether it has jurisdiction, where appropriate confronting the problem of forum shopping.

Discussion

Once the forum court has decided that it does have jurisdiction to hear the case, it then must characterise or classify the cause(s) of action. This is regarded as the most important and difficult problem in conflict of laws as trade and travel between states have become the norm and the effects of broken promises, defective goods, traffic accidents, and marital squabbles are no longer confined to the sovereign territory of one particular state or nation. But local laws are usually enacted to satisfy domestic interests by legislators who focus on keeping the support of their constituents rather than on harmonising their own laws to conform to international principles. This reflects a prevailing tension between legal unilateralism and multilateralism. Hence, every law has both a territorial and a personal application so it is applied by courts within the boundaries of the state yet, as an aspect of the social contract, it also claims to bind those individuals who owe the government allegiance, no matter where they may be.

Which law will be applied to characterise?

Characterising by reference to the lex causae (the law identified in the choice of law stage of the conflict process as the one to be applied to determine the case) would be problematic. Although it may appear logical to allow the whole of the lex causae, including its characterisation rules, to apply, it actually produces a circular argument, i.e. the lex causae is to apply to the process of characterisation before the process of characterisation has led to the choice of the relevant lex causae. So the conflict rules of the lex fori (the domestic law of the court dealing with the case) are usually applied even though, in extreme cases, the application of only the substantive provisions of the foreign law by the forum court could produce a judgment that neither the lex causae nor the lex fori would normally have produced. Nevertheless, in Macmillan Inc. v Bishopsgate Investment Trust plc [1996] 1 ALL E R 585, the most recent English case, Auld LJ. accepted that, ". . .the proper approach is to look beyond the formulation of the claim and to identify according to the lex fori the true issue or issues thrown up by the claim and the defence".

There are several cases when characterisation is not made by the lex fori:

• choice of law clause (lex voluntatis)
• subsequent characterisation (which is a problem of the lex causae)
• real estate or immovables (when lex situs applies)
• renvoi
• unknown legal institutions
• law of nationality (when lex patriae applies)
• international treaties

The process

The court is required to analyse the pleadings prepared by the parties and to assign each component element to the most appropriate juridical concept or category. The rules of any given system of law are arranged under different categories, addressing procedure, status, contract, tort, divorce, nullity, etc. For each category, there is one or more choice of law rule(s). Hence, for example, all questions as to the status of a person before a court, viz. an infant or adult, legitimate, legitimated or illegitimate, married or not, mentally incapacitated or not, bankrupt or not, etc. will all be governed by the person's personal law, namely the law of nationality (the lex patriae) or habitual residence in a civil law state, or the law of domicile (the lex domicilii) in a common law state.

Characterising laws as either procedural or substantive is necessary, but this part of the process can be abused by the forum court to maximise the use of the local law.

The generality of the characterisation process is not, and cannot be, a wholly scientific process. It is always a matter of interpretation. For example, if A who is a national of Arcadia, dies having made a valid local will leaving land situated in Barsoom to C who is domiciled in Catilage, how is the issue to be classified? One might say that any rights that C might have are vested by the will that was made in Arcadia (i.e. the lex loci actus). Equally, the right to succeed to title might be an aspect of C's status as the oldest surviving male heir under Cartilagean law (the lex loci domicilii). Or it may be a matter for the law of Barsoom since all matters of title to land must be adjusted by the lex situs as the law of the place where the land is situated. Thus, completely different judgments might result depending on how the forum court characterises the action. One of the most enduring solutions to this problem was proposed by Savigny (1779–1861). He argued that it was always necessary for the court to find the "natural seat" or "centre of gravity" for the case by identifying the largest cluster of "connecting factors" to a particular legal system. If all courts adopted such an international outlook, he reasoned, this would eliminate forum shopping by producing the same choice of law no matter where the case was begun. Unfortunately, the theory has not delivered the desired results. Forum shopping remains a problem, and neither legislators nor judges have been able to agree on characterisation issues, producing classifications that extend rather than reduce international divergences. In an attempt to avoid obviously unjust results in particular cases, some judges therefore created a number of public policy exceptions to justify decisions "on the merits". Ernest G Lorenzen commented that this strategy was a warning that there must be serious problems with the rules if policy exceptions were the solution.

Exclusion of the foreign law

Because the early system of connecting factors was mechanical and inflexible, the results could offend a court's sense of justice. For example, with the development of the motor car, the classification of the cause as tort required the application of the lex loci delicti commissi rule. In France, the Cour de Cassation's insistence on this linkage frequently barred or severely limited relief for French parties injured in states that had no developed law for the compensation of such victims. Consequently, the lower courts used a variety of judicial devices to avoid the injustice. In the U.S., the New York Court of Appeals set a national trend in Babcock v. Jackson, 240 N.E.2d 279 (N.Y. 1963), when it decided to abandon the lex loci delicti rule completely. Most jurisdictions have not been so radical, preferring to retain the framework of categories and choice of law rules but leave public policy in place as the avoidance device.

This exception provides that states will not apply any 'foreign' law that offends the deeply held principles of the forum state's legal system. For example, it would be considered improper to give enforcement to a law that defined the status of a person as a slave or as in the possession of another, e.g. for the purposes of sexual exploitation. In cases involving alleged immorality or injustice, this rule has been criticised as susceptible to abuse, for a court could characterise almost any statute or rule as being offensive to the public policy of their state. Less controversial are bars to any cases that would give extraterritorial effect to laws which are confiscatory, seeking to collect taxes owing in another state, or penal, i.e. laws that are designed to punish the party committing the wrong, rather than to compensate the party that suffered loss or injury. This can sometimes lead to a fine balancing act between claims for compensatory and exemplary damages. States traditionally will not apply the penal laws of other states in civil suits, just as one state would not apply the criminal laws of another state against a person charged with committing a crime.

In the U.S., the concept of governmental interest analysis was developed by Brainerd Currie and is favoured by many American conflicts writers. Currie focused on each state's substantive rules rather than on a metaphorical test for the seat of the legal relationships and assumed that governments are less interested in what happens within their territorial boundaries than in the well-being of their subjects. The methodology he proposed relies almost entirely on the personal nexus between the litigants and the states. However, there is no single test for this nexus at an international level. Some states use the concept of domicile, others nationality, and the remainder citizenship; and definitions of domicile vary from state to state. So this methodology has never been accepted outside the U.S. Further, if the litigants are from different states, relying on one personal law rather than another may be arbitrary. To cope with this difficulty, Currie advocated that the lex fori should be applied whenever his method produced what he called a "true conflict". Critics have therefore alleged that Currie's approach is nothing more than a complex pretext for not applying foreign law when there are two or more personal laws.

Modern approach

Given that the characterisation system and the choice of law rules were operating in an inflexible way, the solution has been to allow the growth of judicial discretion within both parts of the system. Hence, most legal systems have opted for what English law calls the proper law approach, i.e. the identification and application of the law that has the closest connection with the cause(s) of action. It is accepted that the words have the same apparent spirit as the older approach, which requires some caution in their evaluation. In theory, this flexibility will preserve an international outlook and multilateral approach by the courts and, outside America, the results are not unencouraging. In the U.S., however, the test now adopted is termed the most significant contacts test or, in a slightly modified form defined in the Second Conflicts Restatement, the most significant relationship test. But, because different courts have interpreted these impressionistic phrases in different ways, there has been little judicial consistency.

References

• Currie, Brainerd. (1963). Selected Essays on the conflict of laws p. 180.
• Lorenzen, Ernest G. (1947). Selected Articles on the conflict of laws. pp. 13–14.
• Savigny, Friedrich Karl Von. (1849). System des heutigen römischen Rechts". Vol. 3, pp. 121–26.