Conflicts of Law
Paper Produced by Betsy Rosenblatt and Abridged by Michael Silverman
Excertped from Principles of Jurisdiction on the Internet by Betsy Rosenblatt

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     As discussed in the readings on personal jurisdiction, the Constitution and states' long-arm statutes may permit court jurisdiction over out-of-state conduct, depending on the specific long-arm statute and the conduct involved.  This means that many states may have concurrent jurisdiction over the same conduct.  A similar situation exists in the international context.  Because it is generally accepted as a matter of international law that nations may govern conduct of citizens of the nation taking place outside the nation, conduct by non-nationals that take place elsewhere but has significant and intended effects in the state or nation, conduct that threatens the sovereignty or security of the nation, and conduct that constitutes a universal crime such as torture and genocide, many situations may arise in which several nations' laws could govern the same conduct.  To use a real-space example, imagine that A (an American shipping company) ships a batch of B's widgets from New York to B in Belgium, by way of France.  The widgets are damaged during the French stopover and that this damage gave rise to a cause of action in tort between A and B.  Assuming that A had significant enough contacts with both France and Belgium to warrant jurisdiction in both courts, B could sue A in the U.S., in France, or in Belgium, depending on which legal system would treat B more favorably.  Additionally, B could sue in U.S. court but request that the court apply Belgian law to the dispute, or sue in Belgian court but request that the court apply French law, or any other combination of courts and laws.

     The many applicable laws will not necessarily be substantively compatible.  Different states and nations will have different interests and each will want its laws to govern each dispute.  This situation becomes extremely poignant when laws are not only inconsistent, but also incompatible; for example, in some states of the U.S., it is illegal to provide or engage in Internet gambling, but in Liechtenstein, such gambling is government-sponsored.   Although the situation of inconsistent laws occurs with moderate frequency now (especially in the antitrust and securities fields)  it is likely to become even more common as cyber-commerce becomes more prevalent. This is because, in cyberspace, cross-border transactions are no more difficult than transactions with local parties.

     When conflicts of law arise, courts must decide which law will govern.  A court need not decide a dispute according to its own law; for example, a court deciding a dispute arising out of an automobile accident in another state would be likely to apply the driving standards of the state where the dispute arose, rather than of the forum state.   Several methods exist to aid courts in the decision between laws.  Historically, U.S. courts decided a dispute according to the law in the lex loci delicti, the "place of the wrong."  In transnational cyberspace, however, the place of the wrong might be any of the nations that are on-line.  There is no lex loci delicti.

     The Restatement (Second) of Conflicts of Law rejected this historical formulation, preferring the so-called "most significant relationship" test, which values (1) the needs of the international system; (2) relevant policies of the nation in which the suit was brought; (3) the relevant policies of all interested states; (4) justified expectations of the parties; (5) certainty, predictability, and uniformity; (6) and ease of administration.

     Several other approaches to choice of law have also been posited and accepted by some courts.  The "center of gravity" approach, first adopted by the Court of Appeals of New York, might be characterized as a simplified version of the "most significant relationship" test  of the Second Restatement. This approach authorizes courts to look at all the existing contacts between the various parties to a suit and various jurisdictions. Ultimately, the court should choose the law of whatever jurisdiction is most closely tied to the case.

     Legal scholar Brainerd Currie espoused the "interest" approach, which encouraged courts to look to the history of the applicable laws and, if the laws of one state could be applied without impairing the other state's interests, those laws were to apply.  In the case of a true conflict, in which one state's interests would always be impaired, Currie suggested using the law of the forum.   California has accepted this approach, but instead of automatically applying the law of the forum in true conflicts cases, applies a "comparative impairment" analysis and applies the law of the state that creates the least impairment.

     Finally, professor Robert Leflar has devised a test in which courts consider 1) predictability of result, (2) maintenance of interstate and international order, (3) simplification of the judicial task, (4) advancement of the forumís governmental interests, and (5) application of the better rule of law.

     Currently, U.S. states and the U.S. itself take a variety of approaches; none of the above approaches have been universally accepted.

     Interestingly,  most approaches other than the "place of wrong" approach eliminate the need to decide "where" the conduct in question occurred before deciding what law governs (although determining the location of an action may help create the list of nations' laws from which to choose).  As the few reported cases show, however, courts may ignore traditional choice-of-law principles entirely and simply apply forum law to Internet-related disputes. Indeed, at least one state, responding to the problem of Internet-based gambling, has announced an intention to apply its own law to lawsuits resulting from in-state Internet contacts.   The Minnesota Attorney Generalís office, has interpreted existing Minnesota law to prohibit all forms of on-line gambling, and noting that "[g]ambling is just one example of illegal activity on the Internet" and "the same jurisdictional principles apply with equal force to any illegal activity."   Courts have tended to apply the law of the forum state in Internet cases, without discussion.

     It should be noted that many Internet activities are commercial and that many of these involve contractual transactions.  These contracts may contain choice-of-law clauses defining what state's law will govern any dispute arising out of the transaction.  Most ISPs, for example, include choice of law clauses in their service agreements; such clauses may greatly simplify choice of law questions on the Internet, as choice of law clauses are, for the most part, honored as a matter of international law.   Many Internet activities are not commercial or even transaction-oriented, however, and choice of law clauses may not cure problems arising from non-transaction-oriented activities.  Case law does not indicate what route courts might take in resolving true choice of law disputes arising from such activities.  One commentator has suggested the creation of a choice-of-law treaty for the Internet.