Choice of Law Approaches

Question 1

3 Approaches of State Choice-of-Law Rules

Answer 1

• Include:
• the Vested Rights Approach
• the Most Significant Relationship Approach
• the Interest Analysis Approach

Question 2

Deciding Which Approach to Use

Answer 2

A federal court exercising diversity jurisdiction will apply the choice-of-law rules of the state in which it sits.

Question 3

Vested Rights Approach

Answer 3

The forum must apply the law of the state where the rights of the parties “vested” (where the act or relationship giving rise to the cause of action occurred or was created).

Question 4

Using the Vested Rights Approach

Answer 4

A court will:

• characterize the cause of action; and
• apply the appropriate choice-of-law rule (which will vary depending on the cause of action).

Question 5

Vested Rights Approach: Common Choice-of-Law Rules

Answer 5

• The law of place of wrong or injury
• The law of the place of contracting
• The law of the place where the property is located

Question 6

Most Significant Relationship Approach

Answer 6

• Where the forum applies the law of the state which has the most significant relationship to the issue being decided.
• A court using this approach may apply substantive law of different states to different issues arising in the case.

Question 7

Most Significant Relationship Approach: Important Factors for Choice-of-Law Determinations

Answer 7

• The needs of interstate and international systems
• The relevant policies and relative interests of the forum state and of other interested states
• The justified expectations of the parties; and
• The notion of judicial economy

Question 8

Interest Analysis Approach

Answer 8

A forum will apply the law of the state that is most legitimately interested in its outcome. This approach applies the same regardless of what type of field of law is involved.

Question 9

Interest Analysis Approach: Default Rule

Answer 9

The forum will apply the substantive law of the forum state. The forum will apply another state’s law only if the forum state has no legitimate interest in how a particular issue is resolved.

Question 10

Limitations on and Exceptions to Choice-of-Law Approaches

Answer 10

Include:

• Due Process
• Public Policy
• Penal & Revenue Laws

Question 11

Due Process

Answer 11

Regardless of the choice-of-law approach, a choice-of-law determination must be consistent with the norms of fairness embodied in the 14th Amendment’s Due Process Clause

Question 12

Compliance with DP

Answer 12

The law to be applied must be from a state whose connections with the case are not so tenuous as to render its application unpredictable or arbitrary.

Question 13

Public Policy

Answer 13

Regardless of the choice-of-law approach used by a forum, courts will refrain from applying the law of another state when such law offends the strong public policy of the forum state.

Question 14

Penal and Revenue Laws

Answer 14

A state court will also refuse to enforce the penal laws or revenue laws of another state.