Academic journal article Duke Journal of Comparative & International Law

Determining the Territorial Scope of State Law in Interstate and International Conflicts: Comments on the Draft Restatement (Third) and on the Role of Party Autonomy

Academic journal article Duke Journal of Comparative & International Law

Determining the Territorial Scope of State Law in Interstate and International Conflicts: Comments on the Draft Restatement (Third) and on the Role of Party Autonomy

Article excerpt

INTRODUCTION                                               381 I. THE PRESUMPTION AGAINST EXTRATERRITORIALITY             385         A. Introduction                                    385         B. The Presumption Against Extraterritorial            Application of State Law in International            Conflicts                                       388         C. The Presumption Against Extraterritorial            Application of State Law in Interstate            Conflicts                                       390            1. Traditional Territorialism                   391            2. Avoiding Conflict with the Laws of               Sister States                                391               a. Commerce Clause Concerns                  392               b. General Federalism Concerns               393            3. Due Process                                  394            4. Focus on Domestic Conditions                 394 II. THE APPLICATION OF GEOGRAPHIC RESTRICTIONS IN     MULTISTATE CONTRACT DISPUTES                           396         A. Current Practice                                397         B. Geographic Scope Restrictions Under the         Restatement Third                                  401 CONCLUSION                                                 403 

INTRODUCTION

Analyzing conflicts of laws requires thinking both about the scope of potentially applicable law and about priority, or choice, among potentially applicable laws. The "scope" question asks whether a particular law applies to the relevant transaction or event. It encompasses considerations of both substantive coverage (e.g., whether the law is intended to apply to all traffic accidents, or only those caused by motorized vehicles) and spatial coverage (e.g., whether the law is intended to apply to all traffic accidents, or only those occurring within the enacting state). The "priority" question asks which among competing laws should be applied. The relationship between scope and priority is central to theoretical and methodological concerns in the conflicts field, such as the nature of unilateralism versus multilateralism. (1) It is also central to intensely practical concerns, such as the function and limitations of contractual governing-law clauses. (2) The Restatement (Second) of Conflict of Laws (3) ("Restatement Second"), however, contains little guidance on how, or in what order, courts are to address these two inquiries. For the most part, it simply treats considerations of scope as one relevant factor in choice-of-law analysis. (4)

The draft Restatement (Third) of Conflict of Laws (5) ("Restatement Third," or the "draft"), in contrast, differentiates clearly the respective roles of these two analytical elements. It characterizes the resolution of a choice-of-law question as a two-step process:

First, it must be decided which states' laws are relevant, in that they might be used as a rule of decision. This is typically a matter of discerning the scope of the various states' internal laws: deciding to which people, in which places, under which circumstances, they extend rights or obligations. Second, if state internal laws conflict, it must be decided which law shall be given priority. (6) 

The first step--the scope analysis--is operationalized in two particular sections. Section 1.03(1) defines the "internal law" of a state to include "restrictions the law places on the persons who may assert rights under the law or the geographic scope of the law." (7) This definition explicitly distinguishes such scope restrictions from choice-of-law rules, which are excluded from the definition of "internal law." (8) Section 5.02 instructs a court not to apply a statute--of either its own state or a foreign state--if the transaction or event being litigated "falls outside the specified scope" of that statute. (9) In sum, this approach means that conflicts problems may be resolved solely on the basis of scope considerations, as courts both within and outside the enacting state must defer to that state's conclusion as to the scope of its own law. …

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