A recent article by Professor John Coyle, published in the Washington Law Review, provides an in-depth review of the approaches of different state and federal courts to interpreting choice of law provisions. [4] The article is a treasure trove of information for practicing lawyers. However, the most important contribution of this article is its conclusion that it is not necessary to understand the different approaches of the courts to the interpretation of the standard choice of law clause if, instead of continuing to rely on a model clause, the authors of the directive have in fact formulated the choice of applicable law clause in such a way that it covers all issues that lead to the different approaches of these courts. And he even proposed a clause that seems to exclude any question of whether the chosen law applies to both procedural and substantive law, as well as to contractual and non-contractual claims. [5] In general, when deciding on the choice of law, each state has its own policies and procedures for making that decision. Accordingly, courts will have recourse to their own state`s own law to determine whether the law of another state should be applied. In other words, the process of determining the law to be applied is subject to the law of the state in which the lawsuit was brought – that is, the « forum state ». In the past, courts did not apply choice of law provisions because they were perceived as an attempt by private parties to usurp the legislative function. However, modern courts follow the rule set out in the reformulation (second) of the conflict-of-laws rules, which provides that the applicable legal provisions are presumed enforceable as long as there is a connection between the transaction and the jurisdiction whose law would apply, or another reasonable basis for choosing law for a particular jurisdiction. There are a variety of issues to consider when determining which laws of a jurisdiction should govern a particular transaction. Obviously, drafters preparing an agreement, or litigants applying a document with a choice of law provision, must know the laws of the chosen state as well as possible.
In addition, some States have better developed case law in certain areas. For example, New York and New Jersey have a well-developed equipment rental law. Other considerations include whether the chosen right is generally hostile or friendly to the type of client represented and the type of transaction documented or litigated. For example, Alabama law is very favorable to lenders in terms of wear and tear requirements. The choice of law provisions come in many forms, and some of them are much more detailed than others. The following issues must be considered when drafting or applying choice of law provisions: The drafting of jurisdiction clauses for federal courts or their application in federal courts raises additional issues. The U.S. Supreme Court, in Bremen v. Zapata Off-shore Co., 407 U.S. And Coface included competition at the national level, as opposed to the more California-focused competition described in Ascension. However, the fact that two courts using the same reprocessing analysis may reach different conclusions on very similar situations illustrates the difficulty of providing for the enforceability of choice of law provisions. To improve the chances of a Delaware court complying with a Delaware choice of law provision, practitioners may wish to include in the choice of law a confirmation in the parties` agreement that they have chosen Delaware law to promote the parties` mutual business objectives and waive the application of non-delaware law, notwithstanding the fact that other provisions of their agreement with law or public order may be incompatible with another jurisdiction.
In tort actions, better known as personal injury lawsuits, there may also be choice of law issues, as the offense may extend to multiple states or may affect parties from multiple states. Accordingly, the choice of law rules of many States with respect to tort claims provide that the « substantive law of the State having the most important relationship with the parties and the event » should govern the prosecution. See Elvig, 696 F.Supp.2d at 1210. In other words, even if a lawsuit was brought in a State other than the State where the bodily injury actually occurred, the presiding State will still apply the law of the State most significantly connected to the event. A 2009 article in The Business Lawyer proposed a similar proposal and clause. [6] Based on Professor Coyle`s recent article, I would propose a slightly revised version of the choice clause of the law proposed in 2009 as follows: Given that commercial transactions and contractual obligations can transcend jurisdictional boundaries within a country, both physically and electronically, as well as international borders, the choice of law may arise if it is necessary to interpret the terms of a contract, or in the event of a dispute relating to a contractual dispute. Because laws vary from jurisdiction to jurisdiction, it is possible that contractual terms may be interpreted differently from jurisdiction to jurisdiction or that parts of a contract that are enforceable in one jurisdiction may not be enforceable under the laws of another. The parties may therefore agree in advance to interpret the Agreement in accordance with the laws of any jurisdiction set forth in their Agreement.
[4] Parties engaged in interstate and international trade seek certainty as to the rules governing their relations by choosing the law. If it were to be assumed that their choice is effective only with regard to the determination of contractual claims and not with regard to tort actions to terminate the contract on the basis of misrepresentation, this would create uncertainty exactly the kind that the parties sought to avoid by the choice of law provision. In this context, it should also be noted that the relationship between contract law and tort law with regard to the avoidance of contracts due to misrepresentation is extremely complex and cumbersome, even in the law of each jurisdiction. Placing the tort law of one State over the contract law of another State reinforces this complexity and makes the outcome of disputes less predictable, the kind of contingency that sound commercial law should not promote. It should also be noted that the revised Article 1 of the UCC amends the standard rules on compliance with applicable law by parties under the Code. So far, Article 1 has been passed by Alabama, Hawaii, Idaho, Minnesota, Texas and Virginia, but will likely be adopted in all states at some point. The new rule states that parties to commercial transactions can choose a law even if it does not have a « reasonable connection » to the transaction. UCC §1-301. By law, Delaware has confirmed the ability of the parties to agree that their rights, remedies, responsibilities, powers and obligations will be governed by the laws of Delaware.
Section 6 of Title 6 of the Delaware Code recognizes that the parties` choice of contract law provision is itself a « material and reasonable relationship with that state and is applied regardless of whether or not there is another relationship with that state. » A recent decision of the Delaware Court of Chancery shows that the ability of the parties to enforce Delaware`s choice of law provisions remains an important limitation. Since civil litigation can involve multiple parties in multiple states, an important question can often be which law applies to the claims applicable in the lawsuit. In particular, if the dispute has links with more than one State, the presiding court must determine which state laws are to be applied to the claims in the trial. Determining the law applicable to claims is called a « choice of law » and the decision is often made early in the case. Because laws can vary greatly from state to state, deciding which state laws to apply is important and can have a significant impact on the outcome of the case. .