Justification for Private International Law
The premise of modern private international law is that domestic law and foreign law are equal in multistate disputes that are of civil and commercial nature,and the judges may choose one from the relevant competing rules,domestic or foreign,which it should apply; therefore,in theory there is a similar,if not equal,opportunity for a foreign law to be applied by domestic courts.
Then,what justification is there for applying a foreign law by a domestic court? Why not just apply the law of the forum to every case? Why does private international law exist at all? After all,the parties have come before a domestic court,and the local lawyers and judges know domestic law much better than foreign law.Moreover,it may be difficult for a domestic court to discover accurately what the relevant rule of foreign law is.And there is another tough question: does the use of a foreign law means the surrender of the sovereignty to a foreign country? Obviously,these are vital matters on which it is necessary to be clear before we proceed any further.This section will first analyze these confusing questions from different perspectives,and then it goes on to introduce the Chinese doctrine on this issue.
5.1 Justice and Reciprocation
The most apparent reason for the existence of private international law is that it might work a grave injustice if the court applies its own law in every dispute that involves foreign elements.For example,if the parties to a contract have selected Hong Kong law to govern their rights and liabilities under it,and have regulated their positions on the assumption that it does govern,it would in most cases be wholly wrong for a People’s Court in Mainland China to impose different rights and duties on them by applying Chinese law.Or if,for example,two persons have gone through a ceremony in Saudi Arabia which makes them husband and wife,it would be unjust for Chinese law to step in and say that their children are illegitimate when they come to live in China on the ground that the man has two wives at the same time and Chinese law prohibits polygyny.Therefore,the invariable application of the law of the forum would often lead to gross injustice.
Therefore,an underlying reason for applying a foreign law,rather than domestic law,is to serve the interests of the parties to the case and achieve justice.As Cheshire and North put it in the following terms:29
There is no sacred principle that pervades all decisions but,when the circumstances indicate that the internal law of a foreign country will provide a solution more just,more convenient and more in accord with the expectations of the parties than the internal law of England,the English judge does not hesitate to give effect to the foreign rules.
As a matter of fact,in addition to serving the interests of the parties to the case and achieving justice,the court of one country sometimes applies foreign law and protects the interests of a foreign country partly in the expectation that the favor will be returned.That is to say,the application of foreign law is based on the expectation of reciprocation,which is a very practical consideration in modern world.30
5.2 Sovereign Justification
There is a criticism that the use of foreign law by a domestic court is an encroachment on the sovereignty of the forum.31 This point,at least superficially,seems an obvious one: “to the extent that a state is subject to law made elsewhere,it has lost its sovereignty,and,perhaps,in some deep way,its rights to call itself a ‘state’.”32 True,perhaps; but as a reason for categorically barring the use of foreign law,nonsense!
As an initial matter,the argument fundamentally misconceives the nature of sovereignty.Sovereignty is the right to independence,“that is the right to exercise,within a portion of the globe and to the exclusion of other states,the functions of a state.”33 Sovereignty embodies the right “to be left alone,to exclude,to be free from any external meddling or interference.”34 Sovereignty is,therefore,what a nation makes of it.It can not be violated if a nation,through one of its branches,executive,legislative,or judicial,makes an autonomous decision to align its laws with other nations.This choice,exercised independently,constitutes an exercise of,not a violation of,a state’s right to self-determination.Therefore,the application of a foreign law in this fashion implies no sacrifice of sovereignty.It merely derives from a desire to do justice.
5.3 Economic Justification
From an economic perspective,the openness toward application of foreign law that can be found in all modern legal systems is surprising: since courts are usually more familiar with domestic law,it seems that it would be more costly and difficult for a court to prove and apply foreign law.Against the background of these seemingly strong arguments in favor of applying forum law,is there nevertheless an economic justification for the application of foreign law? Essentially,two arguments can be made: first,the application of foreign law enhances pre-litigation predictability,and second,it discourages forum shopping.[7]
One of the most prominent arguments in favor of a lex fori approach is its alleged simplicity,clarity and predictability.At the first sight,this argument seems persuasive: after all,under this approach,both parties know that the forum will always apply its own domestic law.However,a closer look reveals that a lex fori approach enhances predictability only after a suit has been brought.Prior to litigation lex fori provides for considerable uncertainty because parties do not know where litigation will take place.This is because in a transaction involving foreign elements,it is more than one jurisdiction that is concerned,therefore,it is often the case that more than one country may claim the jurisdiction over the same cause of action,therefore,the parties usually cannot predict precisely the place where litigation will take place.Under such a circumstance,they will only be able to determine the eventually applicable law if they have already entered into a forum selection agreement or if they know who will be the plaintiff in a future legal dispute and where the plaintiff will sue.In all other cases,the parties will be left in the dark about the applicable substantive law.As a result,they cannot structure their transactions around a specific substantive law.35
On the other hand,if courts of most countries refer to conflict rules and take an open stance toward application of foreign law,the clarity and predictability will be improved significantly.The major reason is that contract disputes constitute the overwhelming majority of the disputes in international commercial practice,and if parties’ right to choose the applicable law are widely recognized and affirmed,they will be able to predict and ascertain the applicable law well in advance,so that they can adjust their behavior to the respective legal framework.Consequently,pre-litigation predictability strongly encourages the open attitude toward application of foreign law.
It is obvious that if courts apply the law of the forum to every international civil dispute,the parties will be encouraged to choose a particular forum,that is to say,lex fori approach will encourage forum shopping.However,if courts take an open stance toward application of foreign law,and apply the law by reference to its conflict rules,forum shopping will be discouraged.As a matter of fact,the basic objective of the classic private international law is to achieve uniformity of result or,to put it negatively,the prevention of forum shopping.36 Then,from an economic perspective,is forum shopping identified as being efficient or inefficient? This issue becomes the crux.
To begin with,we must make it clear that the essence of forum shopping is the selection of the forum by the plaintiff unilaterally.And the plaintiff will always choose the forum based upon their own preferences.That is to say,forum shopping favors the interests of the plaintiff while undermining the interests of the defendant.In practice,the plaintiffs manifest two inclinations when they choose the forum.First,they incline to file the suit in a court that is closest to their domicile,proceeds in their native language,and applies their favorite procedural law.In this way,they can not only acquire psychological advantage and practical convenience,but also reduce their relevant costs.Second,they may choose a forum that is remote and inconvenient for them if only the forum is likely to apply their favorite substantive law and render a judgment that favors their interests.(https://www.daowen.com)
In the first instance,it is difficult to conclude whether the purely plaintiff-oriented choice of the forum produces inefficiencies because very often plaintiff’s benefits will directly correspond to the defendant’s losses.37 For example,the language advantage the plaintiff will have in his/her home court directly corresponds to the language disadvantage the defendant has in a foreign court.In other words,forum shopping in this case will be a “zero-sum game” that does not cause obvious extra cost as a whole.
However,things will be different in the second instance,since the plaintiffs choose a remote or unconnected forum,so in this case,it tends to result in litigation far from the “natural” forum,i.e.,that is the closest to,most knowledgeable about,or most accessible to the litigants.38 Under such a circumstance,the zero-sum game will be overbalanced,and the litigation costs will be increased inevitably.So,generally speaking,forum shopping may increase the litigation costs,while impossible to decrease it.
More importantly,there are further important reasons which may prove the inefficiency of forum shopping.First,the possibility of forum shopping creates an incentive to engage in a “race to the courthouse” because each party will try to be the first to file a lawsuit as soon as a legal dispute becomes likely.39 The natural defendant,knowing that the natural plaintiff will strategically choose the forum based on his preferences,will try to preempt the natural plaintiff’s choice of jurisdiction by filing the action before the natural plaintiff has the time to file the action in his preferred forum.The natural plaintiff,in turn,knowing that the natural defendant may file the suit before him,will have to file the suit as early as possible.As a result,the possibility of forum shopping is likely to induce the filing of lawsuit that may not yet have matured into court claims.At worst,it might even induce the filing of a lawsuit that might have been settled out of court had the threat of the plaintiff’s or the defendant’s choice of jurisdiction not be imminent.It should be noted that litigation is a more expensive dispute resolution compared with ADR,[8]therefore,forum shopping will increase the cost of dispute resolution undoubtedly.
Second,in addition to fostering “a race to the courthouse”,the possibility of forum shopping increases the chances that the parties will argue about the appropriateness of the forum apart from the merits of the case.40 As the place of litigation will influence the outcome of the case,both parties will increase their respective expenses and thereby waste valuable resources.
In contrast,if courts take an open stance toward application of foreign law,and apply the law by reference to its conflict rules,forum shopping will be discouraged,if not prevented completely.It is apparent that the cost of disputes resolutions will be reduced.
In this light,it is convincing to say that private international law will promote the efficiency from the global and long-term perspective,which,therefore,is justifiable in terms of economy.
5.4 Chinese Doctrine
The last four decades have witnessed a substantial change in China in its attitudes towards application of foreign law,and a remarkable progress in its private international law scholarship.In short,the change can be best described as going from sovereignty-sensitive exclusion to foreign law to reform-served openness regarding the application of foreign law,and from complete blank of private international law scholarship to the existence of various doctrines boasting “Chinese characteristics.”
With regard to the reason or justification for the application of foreign law,many western theories,say,“Comity” and “Vested Right” are well received in China.However,it should be noted that Chinese scholars are not satisfied with the introduction and discussion of foreign theories; instead they have been exploring new doctrines to justify the application of foreign law.Focusing on promoting the benefit of international community,Chinese doctrines are more cosmopolitan in general,which eclipse the parochial western doctrines.Nevertheless,at present,Chinese doctrines,in spite of its preferable ideology,still need to be further refined and improved before they can gain international recognition.Given “the Doctrine of Equality and Reciprocity in International Exchange” is dominant in China which has developed a relatively comprehensive framework,this subsection will discuss the doctrine in detail.
Most Chinese scholars believe that the application of foreign law in civil and commercial disputes involving foreign elements is an inevitable phenomenon as the consequence of the development of human society.41 They maintain that with the rapid development of international trade and the acceleration of globalization,the civil and commercial disputes that involve the interests of more than one country have become unprecedentedly common and the interests of different countries have become interrelated and interact on each other.Within such a setting,the pursuit of absolute self-interest is no longer tenable,and it becomes necessary for a forum court to apply foreign law in international civil cases,subject to certain conditions; otherwise the interest of the forum state and the benefit of international community as a whole will be undermined in the long run.To be more specific,the necessity to apply foreign law in civil cases involving foreign elements are reflected in the following aspects:42
First,in international civil and commercial exchanges,the civil capacity and the vested civil rights of foreigners as well as foreign corporations should be determined by the lex personalis.For instance,in order to judge whether a foreign corporation investing in a host country is a qualified corporate body,the law of this foreign country other than that of the host country shall apply.As a matter of fact,the principle constitutes a major premise to international civil and commercial exchanges that one country should recognize the civil capacity and the vested civil rights of foreigners as well as foreign corporations subject to certain requirements.
Second,in order to promote international exchanges a country shall safeguard the stability of legal relations established under foreign laws.For example,basically speaking,the marriage established pursuant to the lex loci celebrationis should be recognized by other countries; otherwise,the stability of family will be imperiled.
Third,the recognition of a foreign law by one country will encourage that foreign country to recognize the law of the first country on the same condition,thus a reciprocal relation is expected to develop between the two countries which is beneficial to the protection of the interest of the nationals of both countries.Consequently,if reciprocal relations are extensively established,it is conceivable that the benefit of the international community will be greatly promoted.
Finally,under the principle of sovereignty,the law of one country governs everybody and everything within the territory of this country and every transaction that is there affected; therefore,every country shall respect the validity of the law of another country within the territory of the latter.Consequently,the occasions are frequent when the courts in one country must take account of some rules of law that exist in another.
A court of one country may voluntarily choose to apply a foreign law in a case that has a foreign complexion,and in theory,it can,if it chooses,refuse to consider any law but its own.The adoption,however,of this policy of indifference is impracticable in modern world where the interests of different nations are closely integrated,and nations have long found that they cannot,by sheltering behind the principle of territorial sovereignty,afford to disregard foreign rules of law merely because they happen to be at variance with their own internal system of law.In essence,the application of foreign law as long as it does not violate the ordre public of the forum is essentially driven by the needs that arise in international civil and commercial transactions,and is a necessary precondition to the development of international exchanges under the principle of equality and reciprocity.Hence,Chinese scholars define the above argument as “The Doctrine of Equality and Reciprocity in International Exchange”.43