Report No. 65

II. Choice of Law-General Aspects

3.4. Transactions involving contracts with more than one State.-

Where a transaction involves contacts with more than one State, the determination of the law applicable to the transaction may present problems. "The extra-forum" element is sometimes taken into account, and sometimes not. General observations by text-book writers on the conflict of laws draw attention to this aspect; but, those observations do not imply that in every case involving an extra-forum element, the foreign law must be applied. The answer to the question whether foreign law should be applied, and, if so, which foreign law should be applied, may depend on the nature of the cause of action, the relief sought and many other factors.

Moreover, where the relief sought is governed by statutory provisions, those provisions cannot be ignored. It is suggested that the correct approach is first to peruse the relevant enactment. If there is an enactment on the subject its territorial scope must then be ascertained. No doubt, there is a judicial tradition to "read down" wide statutes, so as to avoid extra-territorial application where necessary. However, what requires to be emphasised, is that the text of the applicable enactment cannot be totally disregarded.

If this process fails to yield a conclusion based on convincing reasons, then, no doubt, it is legitimate to inquire whether any other system of law should, having regard to the nature of the cause of action and the relief, and other relevant considerations, be taken into account. It is not in every case that foreign law becomes the governing law merely by reason of some foreign element. A court of a country would be bound to apply the law of its own legislature, unless it is found that by the rules of private international law or of the rules relating to the construction of statutes, that law is not applicable.

3.5. Where there is no domestic statute on the point which possesses an express or implied territorial scope embracing the particular case, and the court is faced with a case involving an extra-forum element, the court generally applies the principles of private international law to determine the governing law. A foreign statute will be relevant, if it is a part of the legal system whose law is applicable by virtue of the choice of law rule of the forum. But-to repeat what has already been stated above-it is not in every case that the law of the forum will be displaced by the foreign law.

3.6. Possible systems of law.-

The possible systems of law applicable-to mention the important ones-are:

(a) law of nationality; or

(b) law of domicile in modern times habitual residence;

(c) law of place of celebration of marriage, where the question arises out of marriage;

(d) law of place where the matrimonial misconduct was committed;

(e) law of the forum.

The Court of the forum has to decide whether it should apply its own law system (e) above-thus disregarding all foreign laws-or whether it should regard any other system of law as applicable out of systems (a) to (d) above. The answer to this question depends on a variety of factors.1

1. Para. 3.4

3.7. Marriages-validity of.-

It should first be stated that on some topics-other than divorce-the foreign law may be appropriately considered by a court. For example, the position as to the choice-of-law rule in regard to the validity of marriage, has been defined as follows1:-

"The formal validity of a marriage is referred to the lex loci celebrationis as is deemed to have existed at the date of the marriage or by the lex loci celebrationis as it stands when the validity of the marriage is called into question, either because a second ceremony of marriage is entered into, or because the issue is raised by a court of competent jurisdiction."

1. Mendes da Costa The Formalities of Marriage, p. 257, referred to in Temporal dimensions in the conflict of laws, (1963) Brit Y B Int'l Law 122.

3.8. Torts.-

Then, as regards torts, sometimes the foreign law has to be considered. Many laws of the United States and of other systems, save the British, refer to the lex loci delicti commissi as the primary measure and standard of liability in tort cases-subject, of course, to the limits set up by the forum as to questions of procedure and public policy.1

English law, following Willes J. in Phillips v. Eyre, 1870 LR 6: QB 1 (28, 29) took the position that to be actionable in English forum, the foreign tort must both be an act-(a) which, if done in Britain, would be a tort and (b) which is not justifiable according to the law of the foreign country2 where it was committed. Recently3, the requirement has been modified, and it should read-"which is actionable according to the foreign law."

This "rule has frequently been criticised, and it seems to be generally regarded as a 'rigid rule of secure, though very unhappy standing'.4 Professor Yentema even maintains that this English doctrine involves a 'gratuitous misconstruction' of the opinion of Mr. Justice Willes'5, thus constituting an 'isolated and irrational' position in law.

1. See-

(a) Yntema Dicey An American Commentary, 4 International Law Quarterly;

(b) Rabel Conflict of Laws, (2nd Edn., 1960), Vol. 2, pp. 235-236;

(c) Justice Holmes, in Cuba R. Co. v. Crosby, (1922) 222 US 473 (477); and

(d) Justice Holmes, in Western Union Telegraph Co. v. Brown, (1914) 234 US 542 (547).

2. 1963 Brit Y B Int'l Law 117.

3. Chaplin v. Boos, 1971 AC 356 (HL).

4. (a) Rabel Conflict of Laws, p. 239;

(b) Inglis Conflict of Laws, (1959), p. 476 ('notion not justifiable, far from satisfactory').

5. Yntema in (1949) 27 Canadian Bar Review 116 (122) and in (1951) 4 International Law Quarterly 8 (9).

3.9. Law in America.-

The American view, in regard to torts, is that the lex loci commissi governs. In the American Banana Co. v. United Fruit Co., (1909) 213 US 347 (355, 356, 357) (Holmes, J.) the U.S. Supreme Court said-"the character of an act as lawful or unlawful must be determined wholly by the law of the country where the act is done".

3.10. In this connection, the following famous passage in Justice Holmes's opinion in the case of the American Banana Co. v. United Fruit Co., (supra) may be cited-

"In the first place, the acts causing the damage were done, so far as appears, outside the jurisdiction of the United States, and within that of other States. It is surprising to hear it argued that they were governed by the act of Congress.

"The general and almost universal rule is that the character of an act as lawful or unlawful must be determined wholly by the law of the country where the act is done For another jurisdiction, if it should happen to lay hold of the actor, to treat him according to its own notions rather than those of the place where he did the acts, not only would be unjust, but would be an interference with the authority of another sovereign contrary to the comity of nations, which the other state concerned justly might resent.

"The foregoing considerations would lead in case of doubt, to a construction of any statute as intended to be confined in its operation and effect to the territorial limits over which the law-maker has general and legitimate power. 'All legislation is prima facie territorial'. (citing cases). Words having universal scope, such as 'every contract in restraint of trade', "every person who shall monopolize', etc. will be taken as a matter of course to mean only every one subject to such legislation, not all that the legislator subsequently may be able to catch. In the case of the present statute (the Sherman Act), the improbability of the United States attempting to make acts done in Panama or Costa Rica criminal is obvious, yet the law begins by making criminal the acts for which it gives a right to sue......

"For again, not only were the acts of the defendant in Panama or Costa Rica not within the Sherman Act, but they were not torts by the law of the place and therefore were not torts at all, however contrary to the ethical and economic postulates of that statute."

It may be noted that even as regards tort, recent trends are in the direction of not adhering very rigidly to the rule in Philips v. Eyre, 1870 LR 6: QB 1 28 (29), para. 3.8, supra. It is sufficient to refer to two decisions-one of the House of Lords1, and the other of the High Court of Australia2-which show the emphasis placed on the law of the forum in regard to certain aspects (for example, the quantum of damages in the House of Lords case).

1. Chaplin v. Boys, 1971 AC 356: (1969) 2 All ER 1085 (HL).

2. Anderson v. Eric Anderson, (1966) 114 CLR 20 (Australia).

3.11. Contracts.-

As regards contracts, the general principle is that the proper law of a contract is that legal system which is to govern the obligations of the parties by virtue of the particular contract. In England1, and in some other common law jurisdictions2 also, it is the law which the parties have either expressly or by implication chosen to govern their contractual relations. Thus, intention is the connecting factor. There are other cases also where foreign statutes have been applied to regulate contracts, where they formed part of the governing state's law3.

1. See Mount Albert Borough Council v. Australasian Temperance Society, 1938 AC 224 (240) (per Lord Wright); Claim by Helbert Wagg & Co. Ltd. (in re:), (1956) 1 Ch 323 (340).

2. See 1963 Brit Y B Int'l Law 134.

3. See for example, Claim by Halbert Wagg & Co. Ltd. (in re:), (1956) 1 Ch 323 (German oratorium Law applicable to a contract the proper law of which was German); Kahler v. Middland Bank Ltd., 1950 AC 24 (Czechoslovak legislation applicable to a contract governed by Czechoslovak Law); R. v. International Trustee for the protection of Bondholders Aketiengesellschaft, 1937 AC 500 (U.S. Congressional Resolution having the force of law applicable to a contract governed by American Law).

3.12. Present inquiry not concerned with tort or contract.-

But we are not concerned with the question of proper law of tort or contract. The precise question to be considered is-what law is applied by the courts when granting dissolution of marriage?

We proceed to consider this question, first with reference to the Indian law1; and then with reference to English2 and American law.3 Thereafter, we shall consider the question whether any change is needed.

1. Para. 3.13, et seq., infra.

2. Paia. 3.20, et seq., infra.

3. Para. 3.33A, et seq., infra.

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