Foreign Law (Application)

by Clemens Trautmann

1. Object, classification and relevance

Foreign law becomes applicable in a domestic court by virtue of a private international law rule of the forum law. Therefore, it is the domestic legal order which extends the applicability of a foreign rule beyond the boundaries of the enacting state.

Traditionally, the main rationale for applying foreign law was to show courtesy towards other nations by recognizing the validity and effect of their executive, legislative and judicial acts with the expectation of reciprocity (comitas gentium). Developed by Dutch theorists in the 17th century, the doctrine of comitas is still of considerable importance in common law jurisdictions while in continental jurisdictions it has been superseded by the internationalist approach originally suggested by Friedrich Carl von Savigny. This approach aims to ascertain the proper ‘seat’ for every legal relation (principle of closest connection) and thereby implies that all private law systems are on an equal footing.

The continental jurisdictions basically concur that a foreign norm is to be considered a rule of law. In contrast, common law jurisdictions regard foreign law as a question of fact (fact doctrine). Until recently, French and Spanish jurisprudence also adhered to the latter position but this has since been abandoned. The relevance of such classification is however limited as no jurisdiction consistently follows the dichotomy of law and fact with regard to the treatment of foreign rules. For instance, many jurisdictions which recognize the legal quality of foreign law still require the parties to prove its content in a way similar to adducing evidence of facts. On the other hand, English appeal courts are able to comprehensively review the correct application of foreign law despite the principle that appellate courts are bound by the factual findings of the lower court. Therefore, classification as question of law or fact is increasingly considered a fiction necessary to render a hybrid matter manageable in civil proceedings.

A domestic court today is required to actually apply foreign law, not simply make reference to it or apply a parallel domestic rule. It must give effect to foreign rules in the way that a court in the respective foreign state would construe and apply them (aliena lege artis). This concept is somewhat distinct from the theory of vested rights, conceived by Albert Venn Dicey, according to which extra-territorial effect is not given to the foreign law itself but merely to the rights which it has created and which can be ascertained like a fact. Though the vested rights theory has enjoyed considerable popularity in common law jurisdictions, its relevance has decreased. Similarly, the Italian theory of rinvio recettizio according to which foreign rules are incorporated in the domestic legal order by means of blanket norms is no longer maintained.

The application of foreign law needs to be differentiated from situations in which the domestic court merely takes account of foreign law, as most-favoured treatment provisions or the principle of home state regulation in EU law may require. Likewise, resorting to the anti-choice rule, that is evading a decision as to which national law is applicable since all conceivable laws would lead to the same substantive result (known as antikiesregel in the Netherlands, équivalence in France and Offenlassen der Rechtswahl in Germany), does not represent an application of foreign law.

Surveys of the Hague Conference on Private International Law show that up to five per cent of all judgments handed down involve the application of foreign law (a figure as high as ten per cent in the Netherlands). Of those cases, almost half concern family law (divorce, custody, maintenance), a quarter international commercial law and ten per cent encompassing, respectively, the law of tort (traffic accidents, product liability, defamation) and succession. In practice, however, courts tend to avoid the application of foreign law as the ascertainment of foreign law considerably complicates the handling of a given case. Therefore, courts show a preference for applying forum law (often by imputing a tacit choice of law agreement). This phenomenon has aptly been described as ‘homeward trend’ by Arthur Nussbaum.

2. Central issues

Whenever foreign law comes into play, the procedural law of the forum assumes a key role. Since it also determines how the proceedings are to be conducted in international cases (forum regit processum), it may establish certain procedural requirements (such as pleading) for the application or non-application of foreign law (see a) below), the means by which the content of foreign law is established (foreign law (ascertainment)), the manner in which foreign law is applied (see b) below) and to what extent the application of foreign law is subject to the review of appellate courts (see c) below).

a) Pleading requirements and procedural agreements

As regards the procedural requirements for the introduction of foreign law in civil proceedings, the European jurisdictions differ considerably. Whether a foreign law designated by a choice of law rule is actually introduced and applied depends on the procedural status and authority attached to the choice of law rules.

In most continental jurisdictions, courts are required to apply the choice of law rules to any case with an international element and give effect to the law designated by the choice of law rules—be it the forum law or a foreign law—on their own motion (ex officio), irrespective of the parties’ conduct. This approach is followed by Austria, Belgium, Germany, Greece, Italy, the Netherlands, Portugal and Spain as well as the Baltic and most eastern European States.

Other jurisdictions grant the parties procedural freedom of disposition in respect of the applicable law (facultative choice of law). Unless foreign law is pleaded and proved by the parties, an English judge must resolve the case by reference to English law, even if according to the rules of private international law it is governed by foreign law. As such a pleading requirement allows litigants to transform a foreign case into a domestic one (an effect which is also furthered by the presumption that foreign law is the same as English law in the absence of a pleading to the contrary), it effectively renders the choice of law rules a voluntary body of law. Conversely, the procedural law of the forum may allow the parties—as in France, Hungary and Romania—to derogate from the law designated by the relevant choice of law rule in favour of the lex fori by means of a procedural agreement (accord procédural).

However, the continental variants of facultative choice of law, are generally subject to one condition: the matter in dispute has to be dispositive, ie permitting a settlement, which is assessed in reference to forum law. This leads to a bifurcated approach. In non-dispositive matters (especially relating to civil or marital status) the relevant choice of law rules and the designated (foreign) law need to be applied ex officio, in dispositive matters the application depends on the parties’ pleading and conduct. This mixed model is also followed in Scandinavia. For dispositive matters, French jurisprudence has introduced an additional qualification: if the applicability of foreign law is not pleaded in a French court and the parties have not concluded a procedural agreement in favour of lex fori, the judge is not obliged to introduce foreign law but enjoys full discretion to do so.

Even in jurisdictions which prescribe an ex officio application of foreign law, the concept of facultative choice of law has received considerable support in academic writing. It is argued that the quality of judicial decision making is inferior if foreign law comes into play. As suggested by Flessner and de Boer, the parties should at least have the option of having forum law applied which would accelerate the proceedings, reduce costs and render the decision more reliable. Whether such procedural freedom of disposition is reconcilable with the more confined substantive freedom of choice of law has been a frequently revisited issue which needs to be re-assessed in the course of the Europeanization of private international law (see 3. below).

b) Application of foreign law

It is well established in the European jurisdictions that foreign law should be applied and interpreted as would be done by a court in the state of origin (principle of aliena lege artis or origin-conform application). Foreign rules should ideally be construed in the framework of the legal system of which they form a part and in accordance with its rules of interpretation. Therefore, it is a pre-requisite that the judge gathers comprehensive information not only on statutory law but also on case law and other sources considered relevant in the state of origin. Although domestic courts are not formally bound by the interpretation preferred by courts in the state of origin, they must attach the same importance to well-established jurisprudence. Some European jurisdictions, however, tend to curtail the principle of origin-conform application for the sake of practicability, as they subject the ascertainment of foreign law to the rules of evidence. Thus, the established content of foreign law may depend on which party has the onus of proof or whether the court is bound by the parties’ congruent pleading of foreign law.

There is no clear consensus regarding the extent to which a judge applying foreign law is entitled to further develop that law by means of interpretation and analogy. The restrictive formula suggested by Werner Goldschmidt, according to which the judge who applies foreign law is a photographer whilst when applying his own law he is an architect, is regarded as too narrow (nevertheless, judges tend to apply foreign law in a rather descriptive and formalistic manner in practice). An interpretation of foreign law is virtually inevitable as the relevant foreign law rarely provides rules and precedents which cover the case at hand completely. As for establishing new case law and testing the constitutionality of a foreign rule, the preponderant view is that out of respect for the sovereignty of a foreign country, domestic courts should be most reluctant in doing so. The contrary position holds that a domestic judge should have the same competence as the respective foreign judge in a comparable situation, which may very well include introducing new case law or conducting a constitutionality test.

c) Review by appellate courts

There are considerable differences between the national approaches when it comes to the question whether the highest court in a given country has the power to review the application of foreign law by a lower court. In Austria, Belgium, Greece and Italy as well as in Germany (as of a recent amendment to s 545 of the Code of Civil Procedure), the highest courts are allowed to verify a lower court’s determination of the substance of foreign law without any restriction. France, the Netherlands and Spain, however, preclude review by their highest courts. The reasons given for such restriction are, inter alia, that the highest courts’ primary task is securing the uniform interpretation of law, not effecting justice in each single case, and that high courts are neither qualified nor suited for the ascertainment and review of foreign law. In France and Spain, the restriction may also be a spillover from the long prevailing fact doctrine, for questions of fact are generally exempt from judicial review of the upper courts. In contrast, English courts allow a review of foreign law despite adhering to the fact doctrine. In this respect, they consider foreign law to be a ‘question of fact of a peculiar kind’ (Parkasho v Singh [1968] P 233 (250)) which—unlike ordinary findings on facts—can more easily be assessed by a judge experienced in judicial discourse. French law acknowledges cases of dénaturation in which the lower court’s decision clearly contradicts the wording of foreign statutory law and is therefore exceptionally subject to cassation. It should finally be noted that even in jurisdictions which do not provide for a review of foreign law, an indirect examination may nevertheless be possible as objections to procedural errors are generally admissible and the erroneous application of foreign law may result from procedural deficiencies in ascertaining that law.

3. Tendencies

It is commonly expected that the number of civil cases with international elements (intra-union as well as third-state cases) is going to increase further as globalization progresses. The application of foreign law will therefore remain an important part of the European civil practice, particularly since there are few if any feasible alternative options. Uniform law will likely remain confined to special matters of international commerce. A strict parallelism of forum and applicable law (lex fori in foro proprio) is not advisable as this would limit the available fora to one and unreasonably restrict access to justice. For intra-union cases, models like a European variant of forum non conveniens (courts abstaining from exercising their jurisdiction if the law of another Member State is applicable) or a preliminary ruling modelled on Art 267 TFEU/234 EC and the British Law Ascertainment Act 1859 (a comparable court in the Member State whose law is applicable gives a binding opinion) have been suggested.

As regards the review of foreign law by appellate courts, it is increasingly postulated that such review be allowed without reserve. Guidelines introduced by the higher courts would help lower courts to deal with frequently recurring matters under foreign law (such as the divorce of certain nationals or the treatment of certain types of foreign companies, matters which may be necessary in the wake of ECJ jurisprudence regarding the freedom of establishment of companies).

It is open to debate whether the Europeanization of private international law, in particular the EU regulations on the law applicable to contractual and non-contractual relations and maintenance obligations, prompts a re-assessment or even harmonization of the Member States’ procedural rules on the application and ascertainment of foreign law. There is a widespread assumption that these rules remain unaffected since ‘evidence and procedure’ are exempt from the material scope of the regulations (Art 1(3) Rome I and Rome II Regulation). The contrary position maintains that any form of facultative choice of law is irreconcilable with European private international law, which is aimed at market integration and decisional harmony. The regulations explicitly state the objective that the conflict of law rules in the Member States should ‘designate the same national law irrespective of the country of the court in which an action is brought’ (recital 6 Rome I and Rome II Regulation). Jurisprudence of the ECJ suggests a differentiated approach: in the absence of Union law governing the procedure, national law decides the extent to which Member State courts must raise a question of Union law on their own motion (ECJ Case 430/93 – van Schijndel v Stichting Pensioenfonds voor Fysiotherapeuten [1995] ECR 4705). As far as domestic law allows an ex officio application, the principle of effectiveness requires that a national court makes use of its powers and introduces a foreign law designated by an EU regulation. Thus, a discretionary approach as found in France is not in line with EU law. Also, introduction of foreign law for the first time at the appeal level may not be precluded (as is a long-standing practice in England and Spain) if appeal courts have the discretion to admit new factual or legal matters. However, where national procedural rules prevent the ex officio application of a designated foreign law, the principle of effectiveness may require the non-application of such rules to ensure the protection of weaker parties as afforded by EU law (ECJ Case 240/98 – Océano Grupo Editorial SA v Roció Murciano Quintero [2000] ECR 4941). Therefore, facultative choice of law is inadmissible with regard to conflict rules favouring consumers (Art 6 Rome I Regulation), employees (Art 8 Rome I Regulation) and certain types of maintenance creditors (Art 8(3) Hague Maintenance Protocol, Art 15 Reg 4/2009). Otherwise, the existing national provisions on the introduction and application of foreign law can generally be reconciled with EU law.

The review clause of Art 30 Rome II Regulation provides for a study on the effects of the way in which foreign law is treated in the different jurisdictions and on the extent to which courts in the Member States apply foreign law in practice. The annex of the Rome II Regulation contains a statement of the European Commission that, depending on the outcome of a study on the application of foreign law, it is prepared to take appropriate measures. As a preliminary assessment, it can be stated that the heterogeneous procedural rules in the European jurisdictions on the application of foreign law strongly conflict with the objective that the same national law is applied to a given case irrespective of the Member State in which an action is brought. The principle of effectiveness, as currently interpreted by the ECJ, is not capable of effecting a sufficient harmonization. Therefore, it seems likely that the European Commission will pursue a harmonization of the national rules on the application of foreign law within the next few years.

Literature

Imre Zajtay, ‘The Application of Foreign Law’ in IECL III/1 (1970) ch 14; Axel Flessner, ‘Fakultatives Kollisionsrecht’ (1970) 34 RabelsZ 547; Ted M de Boer, ‘Facultative Choice of Law—The Procedural Status of Choice-of-Law Rules and Foreign Law’ (1996) 227 Recueil des Cours 223; Richard Fentiman, Foreign Law in English Courts (1998); Maarit Jänterä-Jareborg, ‘Foreign Law in National Courts’ (2003) 304 Recueil des Cours 182; Sofie Geeroms, Foreign Law in Civil Litigation (2004); Serge Billarant, ‘The French Diptych on Foreign Law: An Analysis Through its Most Recent Retouching (2006) 8 Yearbook of Private International Law 213; Hague Conference for Private International Law, Feasibility Study on the Treatment of Foreign Law, Summary of the Responses to the Questionnaire (Prel Doc No 9A/B of March 2008); Clemens Trautmann, Europäisches Kollisionsrecht und ausländisches Recht im nationalen Zivilverfahren (2011).