Private International Law

Module-1
Meaning & Definition of Private International Law
Private International Law or the conflict of laws is the branch of legal service that is
implemented when two or more sets of legal structures clash over a particular topic. It is a
collection of procedural rules which determine which legal system and jurisdiction shall
apply to a particular dispute. During colonial rule, India consisted of several states with
distinct cultures and beliefs, often due to which there was a dispute between British law and
personal laws in India, as various laws applied to citizens belonging to different beliefs.

Until independence and even till state recognition, India was a nation that had distinct legal
structures between British India and native Indian princely states. In British India’s judicial
system, the judgment pronounced by the courts of princely states was considered as
international judgments. During the British time, therefore, there was an inter-state conflict of
laws. 

Also during the British era when the Indian merchants were trading outside India, there were
cases of commercial litigation with an international dimension in it before the Indian courts.
Since India was a British colony, it followed nearly all British rules concerning private
international law. Nevertheless, the irony of the situation is that the Indian legislation has
struggled to pass sufficient legislation in the field of private international law, even after so
many years of independence

Legislation which addresses ties between private entities generally involved in cross-border
transactions is known as Private International Law. Private International Law sets procedural
rules relating to the substantive law applicable to the relationship between the parties. It
includes the proper venue for resolving their conflicts and the effect that a foreign judgment
is to be issued. It is primarily based on national or local legislation. Private International Law
focuses primarily on individual-to-individual or business-to-business ties.

In a conventional context, “conflict of laws” is correlated with the rule which undertakes to
resolve discrepancies between the laws of various countries, or to determine which law is
applicable. For instance, if Infosys had to supply software to a Chinese buyer and the
software failed, the buyer would probably want to sue Infosys in China. Private international
law would recognize the relevant domestic law and resolve issues related to the dispute
between the two laws, one, perhaps China’s law, and the other, perhaps India’s law, where
Infosys has its headquarters.  Private international law also deals with the matter of the proper
venue, such as whether a court may exercise personal authority over a foreign party and
impose any judgment beyond the authority of the country in which it was entered. 

A crucial element of private international law is its understanding that states vary in their
application of the law and that it is important to balance that variation. Every society, in
reality, has its own rules that are dependent on its own conventional, religious, cultural, or
societal values.
1. Origin and Development of Private International Law in the Continent

Private International Law can be developed only when law has become territorial in
application. In ancient times when law was largely personal in application, then the necessity
of Private International Law was not felt. Development of private international law in the
continental countries (i.e. Italy, Germany, Netherlands, and France etc.) is mainly by product
of juristic writings. Hence it is explained by some theories.

a. Rome:

The contribution of Roman legal system towards the evolution of Private International Law is
the rules of Origo and Domicilumi. e. law of natives and alien. A person had his

Origo in the place to which his father or mother (if he is illegitimate) belonged.

  Domicilium meant the relation between a man and the urban community which he had
chosen for his permanent residence. Roman civil law ( jus  civile ) being inapplicable to non-
citizens, special tribunals had jurisdiction to deal with multi-state cases. The officers of these
specialized tribunals were known as the praetor peregrini. The Praetor peregrini did not
select a jurisdiction whose rules of law should apply. Instead, they "applied" the jus gentium.
The jus gentium was a flexible and loosely-defined body of law based on international norms.
Thus the praetor peregrini essentially created new substantive law for each case. Today, this
is called a"substantive" solution to the choice-of-law issue.

b. After the fall of Roman Empire:

After the fall of Roman Empire law again became personal. In such system, the rule of law to
which the defendant belonged must prevail. So, there was no scope for the growthof Private
International Law.

 c. 11th and 12th Centuries:

Gradual development of feudalism in North and growth of Italian cities in the South, in 11th
and 12th century gave rise to the territorial nature of law. A large number of cities
likeFlorence, Bologna, Milan and Padua emerged. Each of these cities was subject to
different system of laws which were applicable to the residents therein.

d. 13th to 18th Century:

With the development of commerce and transaction dispute arose between individuals of two
cities of Italy. Jurists tried to solve those problems by focusing on rules of Roman law, who
are known as Glossators. However, the early Glossators were not so much successful to this
end, but the post-Glossators in 13th century were. The post Glossators discovered the Statute
theory. According to this theory law can be divided into two categories:

I. Real Statute and
II. II. Personal Statute
The main purpose of real statute is to regulate things and the purpose of personal
statute is to deal about personal matters. Real statutes were considered essentially
as territorial while personal statutes were personal. The law of person would be
applicable unless
such personal law was opposed to the “Public Order” of the city. Bartolus was a gr
eatestscholar amongst other during this period. However, this theory was not perfe
ct asclassification of ‘real’ and ‘personal’ was not unanimous amongst cities and t
hedefinition of ‘public order’ was not clear.

e. France:

Statute theory was carried to France in 16thnCentury. It was refined and developed
there by the jurists. The famous jurists of this time are Dumoulin and D’Argentre. By the end
of 16 th century with the fall of feudalism and rise of sovereign national state, the concept of
national statute developed in Europe. Then the territorial nature of law came to be widely
accepted.

d. Netherlands: Development by Huber in 17th Century

Dutch jurists specially, Max Huber refined statute theory. Huber formulated threemaxims of
Private International Law:

•The laws of the state have force only within the territorial limits of the sovereignty of the

state.

•All persons within such territory are bound by the laws of the sovereign.

•By reason of comity, every sovereign admits that the consequences of theoperation of a law
in a foreign country shall be recognized by the courts of the country unless such
consequences will not prejudice the subjects of the sovereign by whom its recognition is
sought.

 The formulations of Max Huber have been named as theory of acquired rights. And these
formulations have practical influence on the development of conflict of laws in England even
today.

f. Germany: Development by Von Savigny in the 19th Century

German Jurist Von Savigny made a definite break from the previous approaches to the
subject and formulated a new theory of Private International Law. Savigny has
rejected both the statute theory and territorial theory of Private International Law. Savigny’sf
ormulations can be briefly stated as follows:

•Each legal relation has its natural seat in a particular local law and it is that law which must
be applied when it differs from the law of the court. This is the ‘natural law’ concept of law
predominantly considered to be the connecting factor of modern Private International Law.

•There are rules of private international law which are universal andcommon to all legal

systems. The second proposition of Savigny has been subjected to criticism because it is
not possible that Private International Law of different countries entails universalizedcharacte
ristics. But his contention on the natural seat of each legal relation made to the rules of
Private International Law is more scientific and accurate.

2.Origin and Development of Private International Law in England:

The comparative geographic isolation of England from the continent was an obstacle in
shaping private international law in UK. It is true that in England there were two sets of legal
rules one was equity administered by chancery courts and another was common law
administered by common law courts. But this conflict should not be confused with
theconflict of choices of law. Equity and Common law were two sets of legal rulesapplicable
in the same country. When Scotland was unified with England a new situation arose. England
was influenced by Anglo-
Saxon Law while Scotland was influenced by Roman law. Then there weresome obvious
conflict of laws with the unification of Scotland and England. The problem of this kind was
firstly arisen in

Calvin’s Case
In that case the English courts had to recognize and apply the laws of Scotland. From that
time Private International law in England has been developed by judicial decisions from case
to case and situation to situation. The first treatise on Conflict of Laws was written by famous
jurist Joseph Story (1779-1845). Westlake and Dicey followed him. The main concern of
their writings is attaining justice in a given case involving foreign element. To be able to do
justice in a case they have formulated the Rules of Conflict of Laws.

Private international law has a function to perform.

It has three main objects.

First, to prescribe the conditions under which the court is competent to entertain such a
claim. Secondly, to determine for each class of case the particular municipal system of
law by reference to which the rights of the parties must be ascertained.

Thirdly, to specify the circumstances in which (a) a foreign judgment can be recognised
as decisive of the question in dispute; and (b) the right vested in the judgment creditor
by a foreign judgment can be enforced by action in England.

The raison d’être of private international law is the existence in the world of a number of
separate municipal systems of law—a number of separate legal units—that differ greatly
from each other in the rules by which they regulate the various legal relations arising in daily
life. Courts in one country must frequently take account of some rule of law that exists in
another. A sovereign is supreme within his own territory and, according to the universal
maxim of jurisprudence, he has exclusive jurisdiction over everybody and everything within
that territory and over every transaction that is effected there. He can, if he chooses, refuse to
consider any law but his own. Although the adoption of this policy of indifference might have
been common enough in other ages, it is impracticable in the modern civilised world.
Consequently, 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 different from their own internal system of law. Moreover, as will be shown later, it is no
derogation of sovereignty to take account of foreign law. The recognition of a foreign law in
a case containing a foreign element may be necessary for at least two reasons. In the first
place, the invariable application of the law of the forum, i.e the local law of the place where
the court is situated, would often lead to gross injustice. Suppose that a person engaged in
English litigation is required to prove that she is the lawful widow (p. 4) of a man who has
just died, the marriage having taken place abroad many years ago. The marriage ceremony,
though regular according to the law of the place where it was performed, did not perhaps
satisfy the formal requirements of English law, but nevertheless to apply the English
Marriage Act 1949 to such a union, and thereby to deny that the couple were man and wife,
would be nothing but a travesty of justice. Secondly, if the court is to carry out in a rational
manner the policy to which it is now committed—that of entertaining actions in respect of
foreign claims—it must, in the nature of things, take account of the relevant foreign law or
laws. A claimant, for instance, seeks damages for breach of a contract that was both made
and to be performed in France. Under the existing practice the court is prepared to create and
to enforce in his favour, if he substantiates his case, an English right corresponding as nearly
as possible to that which he claims. However, neither the nature nor the extent of the relief to
which he is rightly entitled nor, indeed, whether he is entitled to any relief can be determined
if the law of France is disregarded. This is because to consider English law alone might
reverse the legal obligations of the parties as fixed by the law to which their transaction, both
in fact and by intention, was originally subjected. A promise, for instance, made by an
Englishman in Italy and to be performed there, if valid and enforceable by Italian law, would
not be held void by an English court merely because it was unsupported by consideration. In
justifying this reference to a foreign law, English judges and textbook writers have frequently
used the term comity of nations, “a phrase which is grating to the ear, when it proceeds from
a court of justice”. Although the term has been often used, analysis of it reveals that it has
been employed in a meaningless or misleading way. The word itself is incompatible with the
judicial function, for comity is a matter for sovereigns, not for judges required to decide a
case according to the rights of the parties. Again, if the word is given its normal meaning of
courtesy it is scarcely consistent with the readiness of English courts to apply enemy law in
time of war. Moreover, if courtesy formed the basis of private international law a judge might
feel compelled to ignore the law of Utopia on proof that Utopian courts apply no law but their
own, since comity implies a bilateral, not a unilateral, relationship. If, on the other hand,
comity means that no foreign law is applicable in England except with the permission of the
sovereign, it is nothing more than a truism. The fact is, of course, that the application of a
foreign law implies no act of courtesy, no sacrifice of sovereignty. It merely derives from a
desire to do justice. Private international law, then, is that part of law which comes into play
when the issue before the court affects some fact, event or transaction that is so closely
connected with a foreign system of law as to necessitate recourse to that system. It has,
accordingly, been described as meaning “the rules voluntarily chosen by a given State for the
decision of cases which have a foreign complexion”. The legal systems of the world consist
of a variety of territorial systems, each dealing with the same phenomena of life—birth,
death, marriage, divorce, bankruptcy, contracts, wills and so on—but in most cases dealing
with them differently. The moment that a case is seen to be affected by a foreign element, the
court must look beyond its own internal. (p. 5) law, lest the relevant rule of the internal
system to which the case most appropriately belongs should happen to be in conflict with that
of the forum. The forms in which this foreign element may appear are numerous. One of the
parties may be foreign by nationality or domicile; a businessman may be declared bankrupt in
England, having numerous creditors abroad; the action may concern property situated abroad
or a disposition made abroad of property situated in England; if the action is on a bill of
exchange, the foreign element may consist in the fact that the drawing or acceptance or
endorsement was made abroad; a contract may have been made in one country to be
performed in another; two persons may resort to the courts of a foreign country where the
means of contracting or of dissolving a marriage are more convenient than in the country of
their domicile. It is the existence of such foreign elements as these that has caused the courts
to frame a number of different rules for the choice of law which demonstrate the most
appropriate legal system to govern the issue that has arisen.

2. Space and Time

(a) Space It is frequently stressed that the function of private international law is to indicate
the area over which a rule of law extends—that it “deals primarily with the application of
laws in space”. The essence of this is that a rule of substantive law, eg the English rule that
every simple contract must be supported by consideration, is generally expressed in universal
terms and seems to have no dimension in space, for according to its wording it applies to all
contracts wherever made. But its dimension in space, ie its sphere of authority, is the very
thing that is fixed by private international law, because a sovereign is free to provide, if he
chooses, that the area over which a rule of substantive law, whether domestic or foreign, is to
prevail shall be wider than the territorial jurisdiction in which it originated. If, for instance, an
English court decides that the goods situated in England belonging to a man who died
intestate and domiciled in France shall be distributed according to the provisions of the Code
Napoléon, what it decides in effect is that the rule of the French internal law relating to
intestacy is, in the case of persons domiciled in France, to be given effect outside the
territorial limits of the French law-maker, provided of course that French law so permits. In
the words of Savigny: It is this diversity of positive laws which makes it necessary to mark
off for each, in sharp outline, the area of its authority, to fix the limits of different positive
laws in respect to one another. This method of expressing the function of the subject does not
mean that the sphere of application of each rule of law is, or can be, determined once and for
all for every situation to which it may be relevant. The area over which any given rule of law
extends will vary with the particular circumstances in which its operation is under
consideration. Consequently, the English rules governing contractual capacity will apply to
certain transactions effected by domiciled Englishmen abroad, but not to others.

(b) Time

There are certain circumstances in which the factor of time as well as that of space may
require consideration. In the dimension of space, for instance, the rights of a husband and
References (p. 6) wife to each other’s property are usually governed, in the absence of a
marriage settlement, by the law of the domicile. But does this rule of selection refer to
domicile at the time of the marriage or to domicile as it may change from time to time?
Again, whether a will has been effectively revoked by the execution of a later will or by its
destruction is determinable by the law of the testator’s domicile, but if his domicile does not
remain constant this selective rule will produce no decision until it has been decided whether
the reference is to the law of the domicile at the time of the execution, or of the act of
destruction, or at the time of the testator’s death. Another type of case in which the factor of
time is relevant arises where, subsequently to the transaction in issue, there has been a change
in the foreign law selected to govern the rights of the parties. Here, it is essential to ascertain
whether the English court must apply the foreign law as it stood at the time of the transaction
or as it now exists after the change. Generally, courts prefer the latter solution. A variety of
situations in which the factor of time is pertinent will be considered at later stages in this
book.

3. Scope of Private International Law

Private international law is not a separate branch of law in the same sense as, say, the law of
contract or of tort. It is all-pervading. It starts up unexpectedly in any court and in the midst
of any process. It may be sprung like a mine in a plain common law action, in an
administrative proceeding in equity, or in a divorce case, or a bankruptcy case, in a shipping
case or a matter of criminal procedure. . . . The most trivial action of debt, the most complex
case of equitable claims, may be suddenly interrupted by the appearance of a knot to be
untied only by Private International Law. Nevertheless, private international law is a separate
and distinct unit in the English legal system just as much as the law of tort or of contract, but
it possesses this unity, not because it deals with one particular topic, but because it is always
concerned with one or more of three questions, namely:

(a) Jurisdiction of the English court.

(b) Recognition and enforcement of foreign judgments.

(c) The choice of law.

We must be prepared to consider almost every branch of private law, but only in connection
with these three matters.

(a) Jurisdiction - The basic rule at common law is that the English court has no
jurisdiction to entertain an action in personam unless the defendant has been
personally served with a claim form in England or Wales. This rule, which cannot be
satisfied while the defendant is abroad, applies, 8 9 10 11 12 13 14 15 References (p.
7) of course, whether the case has a foreign complexion or not, but there are three
reasons which require the question of jurisdiction to be separately treated in a book on
private international law. First, there are certain circumstances in which the court is
empowered by statute to assume jurisdiction over absent defendants, a power which
naturally is of greater significance in foreign than in domestic cases. Secondly, there
are certain types of action, such as a petition for divorce, where the mere presence of
the defendant in the country does not render the court jurisdictionally competent.
Thirdly, there is a separate regime of jurisdictional rules in the case of a defendant
domiciled (in a specially defined sense) in a Member State of the European Union.
(b) Recognition - Where there has been litigation abroad, but the defendant has most
of his assets in England, it will be important to ascertain whether English law will
recognise or permit the enforcement of the foreign judgment. Provided that the
foreign court had jurisdiction to adjudicate on the case, according to English private
international law, the English court will generally recognise the foreign judgment as if
one of its own and it can be enforced accordingly. Again, our membership of the
European Union has led to the introduction of important specific rules for the
recognition of judgments from courts of the Member States. (c) Choice of law - If
the English court decides that it possesses jurisdiction, then a further question, as to
the choice of law, must be considered; ie which system of law, English or foreign,
must govern the case? The action before the English court, for instance, may concern
a contract made or a tort committed abroad or the validity of a will made by a person
who died domiciled abroad. In each case that part of English law which consists of
private international law directs what legal system shall apply to the case, ie, to use a
convenient expression, what system of internal law shall constitute the applicable law.
English private international law, for instance, requires that the movable property of a
British subject who dies intestate domiciled in Italy shall be distributed according to
Italian law. These rules for the choice of law, then, indicate the particular legal system
by reference to which a solution of the dispute must be reached. This does not
necessarily mean that only one legal system is applicable, for different aspects of a
case may be governed by different laws, as is the case with marriage where formal
and essential validity are governed by different laws. The function of private
international law is complete when it has chosen the appropriate system of law. Its
rules do not furnish a direct solution of the dispute, and it has been said that this
department of law resembles the inquiry office at a railway station where a passenger
may learn the platform at which his train starts. If, for instance, the defence to an
action for breach of contact made in France is that the formalities required by French
law have not been observed, private international law ordains that the formal validity
of the contract shall be determined by French law. But it says no more. The relevant
French law must then be proved by a witness expert in the subject. (p. 8) It is
generally said that the judge at the forum “applies” or “enforces” the chosen law, or
alternatively that the case is “governed” by the foreign law. These expressions are
convenient to describe loosely what happens, but they are not accurate. Neither is it
strictly accurate to say that the judge enforces not the foreign law, but a right acquired
under the foreign law. The only law applied by the judge is the law of the forum, the
only rights enforced by him are those created by the law of the forum. But owing to
the foreign element in the case, the foreign law is a fact that must be taken into
consideration, and what the judge attempts to do is to create and to enforce a right as
nearly as possible similar to that which would have been created by the foreign court
had it been sensed of a similar case which was purely domestic in character.
4. Meaning of “Foreign Law”
For the purposes of private international law the expression “foreign system of law”
means a distinctive legal system prevailing in a territory other than that in which the
court functions. It therefore includes, not merely the law existing in a state under a
 foreign political sovereignty, but also the law prevailing in a subdivision of the
political state of which the forum is part. Thus, for the purpose of private international
law and so far as English courts are concerned, the law of Scotland, of the Channel
Islands, of Northern Ireland, or of one of the member countries of the Commonwealth
or European Union is just as much a foreign law as the law of Japan or Brazil.

Sources of Private International Law –

National laws are the primary sources of Private International Law, but is also embodied in
treaties and conventions, model laws, legal guides, and other instruments that regulate
transactions. 
PIL deals with a variety of topics, such as international contracts, torts, family matters,
recognition of judgments, child adoption and abduction, real property, and intellectual
property.
- Major treaties
- Important International bodies
- By subject – Business, Commercial Arbitration, Families, Property

THEORIES OF PRIVATE INTERNATIONAL LAW:

I. Statutory Theory: Personal law may be applied if it is not opposed to public

policy or public order.
II. International Theory: There are rules of conflict of laws which are universal
and common to various legal systems of the world.
III. The Territorial or Acquired Rights Theory: Courts of sovereign state do not
apply foreign law but merely recognize the consequences of the operation of a
foreign law. This theory tries to reconcile the territoriality of a law and the need
for private international law. Dr. Cheshire has vehemently criticized this theory
as being, ‘unnecessary’, ‘untrue’, and ‘unhelpful’.
IV. Local Law theory: This theory is a slight variation from territorial theory. The
gist of this theory is that the court recognizes and enforces a local right that is
created by its own law. But as the dispute in question has a foreign element the
court would necessarily apply the rule of the forum that would be applied in the
case of a purely domestic dispute. But for reasons of social expedience and
practical convenience it takes into account the laws of a foreign country in which
the decisive facts have occurred. Cheshire has observed that this theory is a
 ‘sterile truism’. Sterile because it affords no basis for the development of a
system of Private International Law.
V. The Theory of Justice: The approach of English courts to private international
law is pragmatic and ethical. It has sociological, ethical and legal aspects towards
the end of justice. According to Dr. Graveson, the basis of Public International
Law is sociologically, in the international need for fair treatment in the private
transactions of individuals, ethically, in the desire of English courts to do justice;
and legally, in the obligation of their oath in office. In essence the rules of
Private International Law in England are made from the precedents with the
ultimate view of doing justice.
Module 2 – Characterization

Characterisation, or characterization, in conflict of laws, is the second stage of the procedure

to resolve a lawsuit that involves foreign law. The process is described in English
law as Characterisation, or classification within the English judgments of the European Court
of Justice. It is alternatively known as qualification in French law.[citation needed]
It is used to determine the correct choice of law rules based on the circumstances of the case,
primarily relating to matters of property. This is to reconcile differences between laws of
different legal jurisdictions.
The objective of characterisation is to determine the nature of the action brought by the
defendant in order to determine what relevant rules of applicable law apply. This may result
in applying laws which differ from the lex fori. Additional factors make this determination
not necessarily a simple process as the incidental question and renvoi can make determining
the initial point of reference difficult. The leading authority in England and Wales
is Macmillan Inc v Bishopsgate Investment Trust plc (No 3) [1996] WLR 387

Decision on Law to be Applied

Although it may appear logical to allow the whole of the lex causae, including its
characterisation rules, to apply, it actually produces a circular argument: the lex causae is to
apply to the process of characterisation before the process of characterisation has led to
the choice of the relevant lex causae. Certain exceptions to the application of the Lex
Causae are outlined below.
Thus, the conflict rules of the lex fori, the domestic law of the forum, (i.e. the court dealing
with the case,) are usually applied even if, in extreme cases, the application of only the
substantive provisions of the foreign law by the forum court could produce a judgment that
neither the lex causae nor the lex fori would normally have produced. Nevertheless, there are
several cases when characterisation is not made by the lex fori:
 choice of law clause (lex voluntatis), such as those regulated by Article 4 of the Rome II
Regulation
 subsequent characterisation (which is a problem of the lex causae)
 real estate or immovables (when lex situs applies)
 renvoi
 unknown legal institutions [
 law of nationality (when lex patriae applies)
 international treaties

1. Characterization by the lex causae:-

The legal isolationism generated by the process of characterization according to the lex fori
has given rise to a dissenting opinion in favor of characterization by the lex causae.
Formulated initially in France by Despagnet, it has been refined by Pacchioni in Italy and
Wolff in Germany. Despagnet advances the proposition that the law governing the legal
relationship must control its characterization and that the relevant court must accept the
characterization adopted by the foreign law in order to comply with the rules of private
international law sanctioned by the forum law. To Wolff, it would mean "falsifying" the
content of the foreign law if it were characterized by the lex fori without regard to the foreign
law's characterization. "[e]very legal rule takes its classification from the legal system to
which it belongs.' "
2. Characterization by the lex fori –
Of the various attempts to formulate a general theory for the solution of the conflict
of characterization, Bartin's "theory of characterization" was the first to attract general
attention. Bartin asserts that whenever the application of the domestic law of the
forum or of another country depends upon the nature of a particular legal relationship,
the law of the forum must decide what the nature of the relationship is. In a nutshell, a
court, when dealing with the question of characterization, must always (subject to
certain exceptions) decide the matter on the basis of the concepts of its own domestic
law. Bartin would apply the forum law in the case where the legal relationship has no
real connection with the forum state, and the foreign country (or countries) with
which it is connected, qualifies it in a different manner. Similarly, in an article
published in 1891, six years before Bartin's article, Kahn held inter alia that the law of
the forum was itself competent to define the particular institution, relationship or legal
concept, where there is a "latent conflict of laws," i.e. a conflict of characterization.'
Primary and secondary characterizations
 According to A. Robertson, the problem of the conflict of characterization can be
solved by distinguishing between primary characterization, a matter for the lex fori,
and secondary characterization, a matter for the lex causae.91
Primary characterization is "the allocation of the issue to its correct legal category"
or "the subsumption of facts under categories of law," so that "each state is competent
to perform this process of subsumption in any way it sees fit, i.e., the determination of
exactly what is contract, tort, and the like, may be decided for each state by itself."
Secondary characterization consists of "the delimitation and application of the proper law,"
which "is made necessary by the fact that the judge has to determine exactly how much of
the foreign law is to be applied to the case before him; clearly not the whole of it."93
Primary characterization precedes, and secondary characterization follows, the selection of
the proper law. For reasons of practical convenience rather than logical necessity, primary
characterization ought, with certain exceptions, to be governed by the lexfoi (by which is
meant its conflict rules and not its domestic rules). In addition, secondary characterization
ought to be governed by the lex causae and the connecting factor should be interpreted in
accordance with the lex fori. Robertson's approach is not far from Bartin's. Indeed, to the
general principle of characterization on the basis of the domestic law of the forum, Bartin
formulates a second qualifying principle, which restricts the application of the first principle.
This second principle is that once the court of X has ascertained, by means of the application
of the relevant rule of private international law, and by such characterization according to
the general principle as is necessary, that the matter under consideration is governed by the
law of country Y, then the court of country X should apply the law of Y as it is applied in Y,
including such subsidiary characterizations as may be involved (characterization in "sub-
orders"). 95 There is some similarity between the theory of primary and secondary
characterization and the approach adopted by the Italian school. Anzilotti has the merit of
having distinguished two stages in the process of characterization. The first stage is aimed at
choosing the lex causae. Furthermore, the purpose of the second stage is to determine,
within the foreign law, the applicable substantive rules. Similarly, Ago considers the true
problem of characterization to be a problem of interpreting a conflict rule for the purpose of
individualizing the applicable law, as opposed to the subsequent problem of interpretation
of the foreign law to which the rule refers. The great majority of Italian scholars adhere to
that distinction.

Comparative Law: The scholarly study of the similarities and differences between the legal
systems of different jurisdictions.
  A comparison between the civil law system of Quebec and the common law system of
Ontario would be in the realm of comparative law.
 Paradoxically, "comparative law" might be a deep dive into a single body of law. If it
is a scholarly study of a legal system, it is considered comparative law.
 Comparative law by necessity starts with foreign law (or U.S. law), in that it is the
actual laws of jurisdictions being compared.
 Note that Comparative Law differs from Conflict of Laws, which in the FCIL context
is known as Public International Law.


Firstly, a court must characterize the legal question involved in the particular factual
situation.

This proposition may be expressed here in slightly expanded form by way of introduction to
the subsequent detailed discussion. Whenever, by virtue of a conflict rule of the law of the
forum, it is contended that a given domestic rule of law is applicable to the factual situation,
what may be called a concrete legal question presents itself, that is, the question to which the
rule of law relates, and the court must characterize this legal question for the purpose of
deciding whether it is of the same nature as the legal question specified in the conflict rule .
The domestic rule of law may be a rule of the law of the forum or it may be a rule of a
foreign law. In the latter event, the court, before it can characterize the question, must
ascertain the terms and meaning of the rule of law, or, under the usual AngloAmerican
practice, must be informed by the evidence of witnesses who are experts in the foreign law.
At this stage the domestic rule of law may be called a potentially applicable rule . There may
of course be another rule, or other rules, potentially applicable, as to which the same problem
of characterization arises .

Secondly, the court must select the proper law. In other words, the court, by the use of the
connecting factor" specified in a given conflict rule, selects the law of a given country as the
law appro priate to the legal question specified in the conflict rule, as far as that law contains
a domestic rule characterized by the court as being a rule relating to the legal question
specified in the conflict rule.

Thirdly, the court must apply to the factual situation the relevant provisions of the
proper law," that is, a rule or rules of law relating to the legal question specified in the
conflict rule.

Doctrine of Renvoi:-

Meaning & Definition:

The Renvoi Doctrine is the process by which the court adopts the rules of a foreign
jurisdiction with respect to any conflict of laws that arises . The ideas behind the doctrine is
to stop forum Shopping and there for the same law is applied to realize an equivalent
outcome no matter whether the case is really addressed. Renvoi is a French Word, which
indisputably means  to send back or return.
The Doctrine of Renvoi is the process by which the Court adopts the rules of a foreign
jurisdiction with respect to any conflict of laws that arises. The idea behind this doctrine
is to prevent forum shopping and the same law is applied to achieve the same outcome
regardless of where the case is actually dealt with.

The foreign court theory.

This is that, when the forum looks to the law of another jurisdiction, it should do as a court of
that jurisdiction would.175 The adoption of this theory is a natural reaction in dealing with
this type of case, and, as pointed out, was the original reaction of the courts. Even when not
expressed, it has been felt and applied unconsciously. This theory is relied upon more than
any other by the distinguished contemporary advocate of the doctrine, Professor Griswold of
the Harvard Law School. He quotes Mr. Justice Jenner, in a decision of a century ago: "The
Court sitting here decides from the evidence of persons skilled in that [foreign] law, and
decides as it would if sitting in Belgium."176 For his own reasoning, Professor Griswold
says: "It is . . . the thesis of this article that domestic courts referred abroad should not blind
themselves to foreign rules of conflict of laws. They should instead, as a matter of course,
look first at the 'whole law' of the other state, and undertake to dispose of the case as the
foreign court would dispose of it; and if the foreign court would in its disposition apply some
rule of conflict of laws the domestic court should do the same. There will be a few cases
which will not lend themselves to this approach, but it is believed that these will in fact be
rare and that they can be handled as and when they arise."177 255
(2) Disclaimer, or mutual disclaimer, of jurisdiction.
This theory is to the effect that if it is not the conflict-of-laws rule of the jurisdiction looked
to by the forum to apply its own domestic law, the foreign State disclaims jurisdiction, and
that then there is no objection to the forum's applying its own domestic law, which it does.l78
The theory is sometimes referred to as one of mutual disclaimer, with the thought that the
forum disclaimed jurisdiction when it looked to the foreign law in the first instance.179 The
disclaimer theory applies whether the foreign jurisdiction looked to by the forum refers the
matter back to the forum or on to the law of a third jurisdiction.1B0 The theory therefore
results in applying the domestic law of the forum whenever the conflict-of-laws rule of the
jurisdiction looked to by the forum is different from its own.
MODULE3 : DOMICILE AS A CONNECTING FACTOR
Definition
Kindersley V.C. propounded a definition of domicile as "That
place is properly the domicile of a person in which he has
voluntarily fixed the habituation of himself, and his family, not for
a more special and temporary purpose, but with a present intention
of making it his permanent home, unless and until something (which
it unexpected or the happening of which is uncertain) shall occur
to induce him adopt some other permanent home."
In other words, a person can have his nationality is one country and domicile in another.
Domicile connects a person with a system of law. His connection with the places only in this
sense that his lex domicilii prevails there.

General Principles
rules or general principles relating to the concept of *Domicile under English and Indian
Private International law are state;
below:-
● Domicile is mandatory compulsory: It is a well establisher
rule of Private International Law that, there can be no
person without domicile since Domicile connects an
individual with a system of law so as to regulate his
her legal relations. Every one is free to change his/her domicile. No one is allowed to live
without domicile.Even a stateless person also has been conferred domicile by the state.Every
person acquires domicile by birth. His/her domicile
is of his/her father, in case he/she is a legitimate child and of his mother in case he is an
illegitimate. This prevails until in case he/she is an illegitimate a new domicile has been
acquired. His domicile of origin adheres to him until he actually settles with the requisite
intention in some other country. Thus every independent person must have a domicile, either
of origin or of choice.
in)
● No person can have simultaneously two Domiciles at a time: No person can be
allowed by law to have more than one domicile at a time/simultaneously. If allowed,the
purpose of law to connect a person with a particular
legal system will be defeated/frustrated.
● Domicile should be connected with territorial system of law:
The purpose of domicile is to connect a person to a particular system of law to be
governed. When we speak about the domicile of a country, the same system of law
will prevail all over that country. However, the laws relating to succession, marriage
and divorce might vary (differ) from religion to religion in the same country.
● The presumption is in favor of continuance of an
existing domicile: Under the both English and Indian Private International Law, a
person is presumed to be in continuance of an existing domicile, unless contrary is
proved. The burden of proving change in domicile lies
on the person, who alleges the change is domicile of a person. The House of Lords in
- Winas v. A. G ((1904)A.C. 287] laid down that the domicile of origin continued
to exist till the end.
Domicile of origin
There is a well established rule that, there can be no person without domicile. Law
confers domicile on every individual including a stateless person on birth. Such
domicile is called domicile of originThe domicile of origin is also called as the
domicile on nativity.

Domicile of Choice: Any independent natural person is at liberty to acquire a

domicile of his/her choice. However, his/her choice/option for change of domicile is
determined by the law of his/her existing domicile.Under English law, before the
coming into force of theDomicile and Matrimonial Proceedings Act, 1973, a minor,
lunatic and married woman had no capacity to acquire
a domicile of choice, while under the Indian law a married woman can acquire a
domicile of choice under certain circumstances.
Conditions for Acquisition of Domicile of Choice: In order
to acquire the domicile of choice, the following two
conditions are to be satisfied.
1) He/she must have a residence in the country of the domicile of choice and
2) He/she must have an intention/inclination to live permanently in the country of the
domicile of choice.

Distinction between Domicile of Origin and Domicile of Choice:

Following are the notable points of difference between
the Domicile of Origin and Domicile of Choice.
1) The domicile of origin comes into existence by operation of law, independently of
the volition of a person and every person gets it on birth. On the other hand, the
domicile of choice is a domicile which is acquired by the free volition of the
person concerned. For its acquisition the existence of animo et facto is necessary.
2) There is a very strong presumption in favor of the continuance of the domicile of
origin. In comparison with domicile of choice, domicile of origin, in the words of
Lord Macnaghten, "is more enduring, its hold is stronger and less easily shaken
 of." An extreme application of this rule was made in Ramsay v. Liverpool Royal
Infirmary ((1930) A.C. 588].
3) Domicile of origin cannot be abandoned easily. Since it
is a creature of law and not of free will, domicile of
origin cannot be lost by mere abandonment. Until a domicile of choice is acquired, the
domicile of origin continues.
4) Another outstanding feature of domicile of origin is that it is never lost; when a
domicile of choice is acquired,it remains in abeyance. As soon as the domicile of
choice is abandoned or lost, it immediately revives.
Domicile of dependents
those who cannot stand on their own legs are called dependence. Married women and
mentally disordered persons namely children, lunatics, idiots, physically or mentally
disordered persons come within the meaning of dependents.
The dependents are incapable of acquiring the domicile of their own choice but are conferred
with the domicile of the person on whom they are dependent. The domicile of the person
changes when the person on whom he or she is dependent changes his or her domicile. A
dependent person cannot abandon his domicile of dependency. Under English private
international law the capacity to acquire a new domicile is governed by English law and not
by the law of the previous domicile or the law of the intended new domicile.
Domicile of a married woman
Under the common law in England wife was regarded as a dependent of her husband whether
she is in the matrimonial home or living separately under domicile is that of her husband
whom she is deemed to be dependent on.
Position in India
Sections 15 and 16 of succession act 1925 provides the general rule on marriage that the wife
acquires the domicile of her husband. Then it is laid down that wife can acquire her own
domicile in the following two cases :
1 .If the wife is living separate under a decree of the court
Or2.if the husband is undergoing a life sentence.
Domicile of children or minors
In respect of the domicile of natural minor children the established rules of private
international law are:
a) The domicile of legitimate minor children, if parents have not separated, during
minority (i.e. up to 16years),
i) Is the domicile of the father so long as the father is alive and it changes with the
domicile of the father.
ii)After the death of the father it is the domicile
of the mother so long as the mother is alive and
 changes with the domicile of the mother.
b) The domicile of an illegitimate minor child during minority is the same as that of
the mother and changes with the domicile of the mother.
c) The domicile of the minor orphan (i.e. whose both parents are dead cannot be
changed and
d) When the minor attains majority he can change his domicile.
Domicile of lunatics or mentally disordered people
In English private international law there is no direct authority on the domicile of lunatics.
Thus it seems that lunatic will remain the domicile which he had when he became a lunatic
even if he goes to another country and settles there.
In Indian law we have a statutory provision in section 18 of the Indian succession act 1925
which states an insane person cannot acquire a domicile in any other way then by his
domicile following the domicile of another person.
Domicile of corporation or legal persons
The law of domicile is the same to confer the status of domicile for both individuals and the
corporation. In the case of legal persons it is the country in which it is incorporated. If it is an
unincorporated association it is treated as domiciled in the place of its registration or creation.

Module – 4 Law of Property

MOVABLE PROPERTY
• Movable properties are either tangible or intangible. The transfer of movables can be
effected by the act of parties or by operation of law.
• The preliminary and the vital question is whether only one common system of principles
should be allowed to determine every question that arises in respect of movables or whether
there should be different set of rules that could possibly be applied to different aspects of the
transfer, such as assignability of movables, to formal validity and to material validity.
THEORIES GOVERNING TRANSFER OF TANGIBLE MOVABLES
(1) Lex domicile
(3) Lex Situs
(2) Lex Actus
(4) Proper law theory
(1) Lex domicile theory :
This theory is founded upon the principle that since movables have no fixed situs, their situs
can be shifted at any time by its owner. Therefore, the medieval Italian statutists propounded
the principle of mobile sequenter personam. The maxim means that goods follow the person.
The doctrine had wide acceptance beyond the continental Europe in England and in the USA.
• In Sill v. Worswick [(1791) 1 H B1 665; 126 E.R.379]
This case laid down the doctrine that with respect to the disposition of moveable property,
with respect to the transmission of it, either by succession, or the act of the party, it follows
the law of the person. It was held that personal property has no locality, thus meaning that
rights over movables are to be governed by the law of the owner's domicile.
(2) Lex Actus theory:
This theory has not gained much value in the contemporary legal discourse, though there
have been a few instances of judicial acceptance of its crux (most important point at issue).

• Alcock v. Smith [(1892) 1 Ch. 238]

It was laid down that, the validity of a transfer depends not upon the law of the domicile of
the owner but upon the law of the country in which transfer of the movable took place.
Cheshire criticized this on the point that a mere fact that a transaction was entered into a
particular place is no adequat reason to accord control to the local law.
• Graveson supported this view, on the point that, a reasonable man is expected to comply
with the law of any country in which they would have performed the transaction.
(3) Lex Situs theory :
• The lex situs theory obviously has its advantages, important among them being that situs
law provides a single and easily ascertained system of law based on the focal point of the
transaction, namely, the goods that the transaction concerns itself. Moreover, the right of
control satisfies the expectations of the reasonable man as for a party to transfer naturally
conclude that the transaction would be subject to the law of the country in which the subject-
matter is situated.
But it is difficult to ascertain in matters where the goods are in transit.
• Graveson opined that this problem can be met by mercantile practices of treating the normal
documents of title to such goods as bill of lading as representing the goods themselves so that
in effect the relevant situs is generally that of the document of title.
(4) Proper law theory :
• Cheshire propounded a new theory to explain the law governing issues arising out of the
transfer of movables is that the law of the country with which the transfer has the most real
connection or to be more specific, i.e., the proper law of transfer.
• The ascertaining of the proper law would not present any difficulty if the proper law and the
lex situs is the same.
• Difficulty arises in a situation where the two factors are grounded in two different legal
systems.
The content of transfer of property tangible movables largely addresses three issues:
(1) Matters arising between parties to the transfer (Contractual / proprietary)
(2) Matters arising from the transfer affecting third parties
(3) Certain special types of transfers (Gifts / donatio mortis causa / goods in transit).
THEORIES ON INTANGIBLE MOVABLES:
An intangible movable may be described as an interest which is not directly related to a
physical object or land.
• For e.g. shares, patents, copyrights, debts, and negotiable instruments.
They may also be referred to as "choses in action".
• Theories relating to intangible movable properties also includes:
(1) Lex domicile theory
(2) Lex situs theory
(3) Lex loci actus theory
(4) The proper law theory
(1) Lex domicile theory:- Philimore was the main proponent to apply this in relation to
intangible movables. He explained that debts, rights and causes of action are universally
perceived as attached to the person of the creditors and hence should be governed by the law
of the domicile of that creditor.
(2) Lex situs theory:- Dicey and Justice Atkin applied this theory in the instances of debt.
While situs theory has an advantage of ascertaining the law in an easier fashion, its difficulty
arises when trying to locate within the place of the debtor.
Since the situs of the debt is a debtor, it becomes difficult to ascertain the situs if the debtor
resides at several places, for e.g., corporations.
• (3) Lex loci actus theory - The place of assignment, or the place where the documents
assigning the debt are executed is the governing factor and the law of that place of execution
of the assignment governs the assignment.
(4) Proper law theory :- To govern issues on intangible movables two principles is applied
proper law of assignment (where assignment is most closely connected) & proper law of
debt.
The Mozambique rule:- allows a local court no discretion in the matter regardless of the
wishes of the parties and regardless of the convenience of litigating here a matter which has
some connection with land or immovables situated outside of the state.
Exceptions:-
(a) there is a contract or, equity between the parties;
(b) the court otherwise has jurisdiction in the administration of a deceased person’s estate;
(c) the court’s admiralty jurisdiction is invoked; or
(d) there is a dispute regarding property between de facto spouses.
Module 5 - Law of Contractual Obligation
Theory of Proper Law of Contracts

English Law, until fairly recently [till enacting the Contracts (Applicable Law) Act, 1990] applied the
proper law of the contract, which was a succinct expression to describe the law governing many of
the matters affecting a contract. The doctrine of the proper law was of common law origin and a vast
case law developed to take account of the difficulties. It was both sophisticated and flexible in its
approach.

According to Lord Wright. The proper law of the contract means that law which the English Court is
to apply in determining the obligations under the contract English law in deciding these matters has
refused to treat as conclusive any rigid or arbitrary criteria such as lex loci contractus or lex loci
solutionis and has treated the matter as depending on the intention of parties to be ascertained in
each case on a consideration of the terms of the contract, the situation of the parties, and generally
of all the fact

Westlake held that, the governing law is in fact selected on substantial considerations, the
preference being given to the country with which the transaction has the most real connection and
not to the law of the place of contract as such. According to this theory, the proper law is the law of
the country in which the contract may be regarded as localized. Its localization will be indicated by
the grouping of its elements as reflected in its formation and its Terms

Dicey formulated the rules of proper law of contract thus: The term proper law of a contract means
the law, or laws by which the parties intended. Or may fairly be presumed to have intended the
contract to be governed, or (in other words) the law or laws to which the parties intended or may
fairly be presumed to have intended, to submit themselves. Whenever the parties choose their
proper law expressly. Dice’s formulation still holds good, but when parties have not expressly chosen
the law to govern the contract. Dicey’s formulation of “presumed intention has given way to
concrete test. This test was formulated by Lord Simonds thus: the system of law by reference to
which the contract was made of that with which the transaction has its clos and most real
connection Lord Denning also formulated the test thus with what country the transaction has the
closest and most mal connection.

As Graveson remarks, that this alleged divergence of view between the Objective Theory of
Westlake and the subjective View of Dicey is less marked than has sometimes been supposed is
apparent from the qualifications in favour of objective ascertainment of the proper law which Dicey
expressed as operating in the absence of a direct or indirect choice of proper law by the parties. As
in many cases of conflicting theories on a single issue, the answer is not that one is right and the
other wrong, but that neither is a complete expression of the matter. Where Westlake was correctly
expressing the historical development of English law in its procedural evidentiary, and jurisdictional
aspects. Dicey, while not neglecting these matters, laid his emphasis on the private philosophical
principle of individual liberty of contracting.

Regarding the features of the proper law of the contract, cheshire says as follows: The parties could
choose the proper law, with very little restriction on this right. If the parties did not express a choice,
and one could not be inferred by the courts, an objective test was applied. This sought to localise the
contract, by looking for the system of law with which the transaction was most closely connected.
The twin theories which underlay the proper law were therefore the subjective theory, which looked
to the intentions of the parties, and the objective theory, which sought to localise the contract.
Special rules were adopted for particular issue. The proper law was usually relevant, but the court
was required to go beyond the proper law when considering certain issues. Thus, for example. with
the issue of illegality the courts were concerned not only with illegality by the proper law but also
with illegality by the law of the place of performance. There were also special rules for particular
contracts, such as insurance contracts. These rules either made special provision for ascertaining the
proper law of departed from the proper law altogether.

The modern proper law theory is in reality the blending of the intention theory of Dicey and the
most real connection theory of Westlake. If parties have chosen a law applicable to their contract,
then ordinarily that law will apply. When parties have not expressed any intention about the law
that will govern the contract, the law of the country with which the contract has most real
connection will apply.

Paras Diwan says the modern proper law theory has the following two legs:

1) when the parties have chosen the law governing their contract.

In other words, when parties have expressed an intention in favour of some law which they
contemplate to govern the obligations arising out of the contract, then that law is ordinarily the
proper law of the contract.

(2) when parties have not chosen any law, in other words, when parties have not expressed their
intention, then it is the law of the place with which the contract has closest contact.

As Cheshire holds: "According to the subjective theory, the court purports to ascertain the actual an
intention of the parties and is, indeed, prepared to adopt any intention which has been expressly
declared. According to the objective theory, the court imputes intention to the parties, or rather
imposes upon them the intention that in the circumstances of the case they should as reasonable
men have formed. They are free to choose the connecting factors, such as the lex loci contractus and
the lex loci solutionis, but having done this their intention taken to be that the governing law shall be
the law of the country in which the chosen factor show the contract to be localized. Men must be
taken to intend the natural consequences of their acts, and to say that the proper law is the law,
intended by the parties is, according to this theory only another way of saying that they must have
intended to submit to the law indicated by their own acts. On this view, the express selection of a
governing law will not be permissible if conflicts with the natural seat of the contract as disclosed by
the grouping of its elements.

In Boissevain s. Well [(1949) 1 KB 482) Denning LJ. expressed that the proper law of the contract
depends not so much on the place where it is made, nor even on the intention of parties or on the
place where it is to be performed. but on the place with which it has the most substantial
connection. He observed that where intention is not expressed, it is a matter of inference and the
search should be of the legal system with which the contract has closest links In the Assunzione
[(1954) P 150] the Court of Appeal clearly adopted the more realistic and objective test of the
reasonable man.
Singleton L.J. held that "the Court has to determine for the parties what is the proper law which, as
just and reasonable persons they ought to have intended if they had thought about the question
when they made the contract. That I believe, is the duty upon us, and in seeking to determine the
question we must have regard to the terms of the contract, the situation of the parties, and
generally all the surrounding facts". In other words, where it has not been expressly chosen, the
proper law depends upon the localization of the contract. The court inputs to the parties an
intention to stand by the legal system which having regard to the incidence of the connecting factors
and of the circumstances generally, the contract appears most properly to belong.

Stronger and more direct judicial support exists for the subjective view of the proper law, though it
should be observed that parties to a contract will normally be bound by the choice (if any) of the
governing law embodied in the written terms, whatever their true intension may be. The subjective
view may be found embodied in the provisions of Order XI. Rule Hekil) of the Rules of the Supreme
Court, conferring jurisdiction to order service abroad of a writ where a contract is "by its terms or by
implication to be governed by English Law.

In Vita Food Products Inc. v. Unus Shipping Co. [(1999) AC 2771, the decision of the Privy Council has
cast doubts on the proposition that parties are not free to submit the validity of their contract to any
law of their own choosing. The facts were these: A Newfoundland statute provided that the Hague
Rules should govern any contract of carriage from that country and that every bill of lading in
respect of such carriage should contain an express clause making the Rules applicable. A
Newfoundland Shipping Company having agreed to carry goods from thereto New York, signed bills
omitted the express clause. The bills expressly provided that the contract should be governed by
English Law. Both the Rules and the bills themselves exerted the company from liability for the
negligence of the master. Newfoundland was admitted the country with which the contract had the
most substantial connection. There was no factual connection with England whatsoever. The Cargo
was damaged owing to the negligent navigation of the master, and the question was whether the
company was liable.

All the three courts which heard the case gave judgment for the company but on different grounds.
The Privy Council, dissenting from. The Term. Preferred the following reason in their opinion the
immunity of the company rested upon the exemption clause in the contract not upon the Rules. It
could not be rested upon the Rule, for the selection of English law to govern the contract was
effective, despite the absence of any connecting factor with England, and by English law the rules
apply only to an outward shipment from England, not to a shipment from any other country

The significant and surprising implication of this reasoning is that had the Rules imposed liability for
negligence, the Privy Council would have disregarded them and in reliance on the exemption clause
would have found the ship owners in culpable. In other words where the parties clearly express
their intention, there being no vitiating factor such as illegality, by the Lex fori or contrary to public
policy, such expression will be decisive Lord Wright remarked: “But where the English rule the
intention is the lest applied, and where there is an express statement by the parties of their
intention to select the law of the contract, it is difficult to see what qualifications are possible.

In India, the courts followed English Law. In Rabindra v. LIC (1964 Cal. 1411, the court said that
where parties have not expressly chosen the proper law of the contract, then proper law of the
contract will be that system of low with which the transaction has its closest and most real
connection.
In determining the proper law of a contract containing no express choice of law, the task of the court
is to ascertain the intention of the parties from the terms and the nature of the contract and the
general circumstances of the case and, if no intention can be inferred, to identify the system of law
with which the transaction has its closest and most real connection. Obviously, where parties have
expressed a choice of law, ordinarily that is the proper law of contract.

(1) The Lex loci contractus

The initial presumption, based on the normal character of a contract containing no foreign element,
is in favour of the law of the place where the contract is made.

In Jacobs v. Gredit Lyonnais, [(1884) 12 QBD 589], two London merchants had contracted in London
for the carriage of a Cargo of Esparto from Alegeria. In consequence of the outbreak of rebellion in
Alegria certain deliveries could not be made. By French Law in force there the rising constituted
force Majeure which would have been a defence to an action for non-delivery if French Law applied
to the contract. The court held that English law applied. and the defendants were liable in damages
for non-delivery. The principle was stated as under: "The broad rule is that the law of a country
where a contract is made presumably governs the nature, the obligation and the interpretation of it,
unless the contrary appears to be the express intention of the parties. "The contrary intention may
indeed be express in the sense of being clearly apparent from the circumstances of the contract; but
it need not be expressed in so many words in the contract itself. The presumption in favour of the
lex loci contractus may be rebutted by other factual circumstances in the performance of the
contract, it has been held in the above decision.

A modern instance of the application of this presumption is to be founded Keiner v Keiner [(1952) 1
AILER. 1643]. Here, a contract executed in New Jersey 'H' undertook to pay to his former wife 'W'
certain amounts in dollars. The contract incorporated provisions of the laws of New Jersey and of
New York with regard to the investment of certain funds, and provides for rights of inspection to be
exercised in America. Although at the time of the contract 'H' was ordinarily resident in England and
although he had no assets in the United States, the presumption in favour of the lex loci contractus
was not reputed and the law of New Jersey was the proper law of the contract.

(2) The Lex loci solutionis

Although equally as strong as the presumption in favour of the law of the place of contracting is that
in favour of the law of the place of performance. The principal authority on which his presumption
rests is the famous judgment of Lord Esher, M.R. in Chatenay Brazillian Submarine Telegraph Co.
[1891) TOB 82]. "The business sense of all businessmen has come to this conclusion, that, if a
contract is made in one country to be carried out between the parties in another country, either in
whole or in part, unless there appears to be something to the contrary, it is to be concluded that the
parties must have intended that it should be carried out according to the law of that other country.
Therefore, the law has said that, if the contract is to be carried out in whole in another country, it is
to be carried out wholly according to the law of that other country, and that must have been the
meaning of the parties. But if it is to be carried out partly in another country than that in which it is
made, that part of it which is to be carried out in that other country, unless something appears to
the Contrary, is taken to have been intended to be carried out according to the laws of that
country." Great weight will thus be attached to the law of the place of performance as being the
proper law of the contract, especially where the contract is made in Other country but to be wholly
performed in another. The important decision of the court in the Assunzione (11854) P 1501 shows
that where both parties have to perform in a country other than that in which the contract was
made, the presumption in favour of the lex Loci solutions is very much stronger than that in favour
of the lex contractus because the contract is almost certain to be far more closely connected with
the place of performance than with the place of contracting.

(3) The lex situs of immovables

Where immovables are the subject matter of a contract, a presumption exists that the proper law of
the contract is the lex situs of the immovables. This, however, is no more than a presumption and
should be distinguished from the law which governs the conveyance of immovables, which is always
la situs.

(4) Law of the Flag

The presumption that the proper law is that of the flag operates in the case of all maritime contracts.
The presumption is particularly strong in the case of contracts made during the course of the voyage,
such as bottomry bonds. The majority of maritime contracts, however such as charter parties and bill
of landing, are made on land prior to the sailing of the ship, and in such cases the presumption in
favour of the law of the flag could be more easily displaced.

At the time when English law adhered to the test of 'inherred intention' of parties, the court
developed certain presumption which helped them in inferring the intention of the parties from the
terms and nature of the contract. The modern English law has virtually abandoned the test of
'inferred intention and replaced it with the closest and most real connection test the presumption
are hardly of any utility. The judicial tendency of not giving much weight to presumptions became
evidence from the decision of the Assunzione [(1954)

This trend continues, and it may be now taken that the courts have abandoned the approach of
presumptions. Thus, the position that emerges is that the lex loci contractus lex loci solutionis or the
law of the flag are no longer regarded as presumption, but they are, like any other facts to the
proper law of the contract and should be looked upon as such.

5. CAPACITY TO CONTRACT

Capacity to contract means competence or eligibility or qualification in the eyes of law to enter into
an agreement or contract. When a person wants to enter into a contract, must possess the
qualities/requirements prescribed by law to contract. Such requirements generally as to age limit,
sanity or soundness of mind and free from certain disqualifications under the law of the land, viz,
alien enemy, convict, insolvent/bankrupt etc.

In India, Sections 11 and 12 of the Indian Contract Act, 1872 lay down the provisions relating to
capacity of parties to enter into a contract. What law governs capacity to enter into a mercantile
contract is not settled in England. There is no clear decision and the dicta are not helpful.

There are three different tests governing capacity to enter into a contract.

They are namely

1) lex domicilii

ii) lex loci contractus and

iii) proper law.

 There was some judicial dicta existed in favour of lex loci too, but there are no modern advocates of
this principle.

Sottomayor v. De Barros [(1877) LR 3 PD 1]: In this case, it was stated by the court that the general
and well-recognized rule for all contracts is that the personal capacity to enter into any contract is to
be decided by the law of domicile. As the court in this case was dealing only with capacity to marry,
this statement, if no more than a general and Gratuitous dicum.

Whatever judicial authority exists in favour of lex domicilii, it is in the cases of status - particularly
matrimonial status and it is from them that by analogy it has been applied to commercial contracts.
Now it is almost universally accepted that the lex domicilii as a test of capacity in commercial
contracts is wholly unsatisfactory.

is recognized in the continental countries such as France and The lex loci contractus as a test of
capacity to contract.

Germany. In England the lex loci contractus has been advocated by some authors and, obiter, in
some judicial decisions. The lex loci contractus as test exclusively governing capacity has been
considered unsatisfactory for various reasons, the prominent of which are: first, it will enable a party
to evade his incapacity by the simple device of choosing that forum for his contract where he has
capacity. Secondly, in those cases where the place of contract happens to be transitory or fleeting,
there is no justification on principle to apply the lex loci contractus.

The first two tests thus ruled out, the choice veers round the third test: the capacity of a party to
enter into contract is governed by the proper law of the contract, that is to say the law of the
country with which the contract has the closest and most real connection. Here the subjective test of
the proper law is not to be applied, for the simple reason that a party cannot be permitted to confer
upon himself capacity by choosing a law which is favorable to him. This would provide, E.g. for the
case of a contract entered into in one country where the person contracting had no capacity but to
be carried out in another country where he had such capacity. It would make it possible to apply the
lex situs where it is the proper law of the contract concerning land, and to resort to the loci
contractus wherever it is the system of law which has the most substantial connection with the
contract. It is submitted that this formulation is correct on principle and Would be in accordance
with justice and convenience.

6. FORMAL VALIDITY

Earlier, the formal validity of contract was determined by lex contractus. Even now, the juristic
opinion subscribes to the view that compliance with the lex loci contractus is sufficient for the formal
valid of a contract. If a contract is formally valid by the proper law of the contract, it will be accepted
as valid, even if it is not valid by the lex loci contractus.

A contract is said to be valid, if it complies with the form prescribed either at the lex loci contractus
or at the proper law of the contract. The utility of this alternative test of the formal validity of the
contract can be illustrated from several types of contract. The most cogent illustrations are provided
by contracts for the transfer of property. Most of the matters relating to the transfer of immovable
property are governed by the lex situs, which may be termed as proper law. It is an established rule
that the conveyance of the immovable property must comply with the form prescribed at the lex
situs. But, the contract for the transfer of the immovable property need not comply with the form
laid down by the lex situs. If it complies with the lex loci contractus, the contract will be valid. More
or less the same situation operates in respect of transfer of movables, both tangible and intangible.
7. MATERIAL VALIDITY

An agreement entered into by two competent parties on fulfilment of other conditions under the
law of the land is enforceable as a valid agreement/contract. Thus, in English and Indian law, a
contract to commit an illegal act (crime/offence), opposed to public policy (viz. in restraint of trade,
judicial proceedings, wagering contract etc.) are void and unenforceable. These matters related to
material or essential validity of the contract. The material validity of contract is governed by the
proper law of contract.

The difficulty here as elsewhere arises because laws of different countries differ as to factors which
render contract materially invalid. For instance, both under the Indian law and English law, wagering
contracts are unenforceable and they create no obligations whatsoever. But in some countries such
transactions are valid. Similarly, a contract by a lawyer with his client under which it is stipulated
that he would have a share in the damages recovered in the action is illegal under the English and
Indian law, but perfectly valid some countries. question is law governs the matter?

The House of Lords in Kahler v Midlnd Bank [(1950) AC 24], held in the performance of a contract by
proper performance is illegal. It further held that wagering contract not be enforceable proper law
English law, even though is recoverable in some other country with which has contact.

In role of lex loci contractus has totally contract which is materially void by its proper law will not
enforcing by English Courts even if it valid under lex contractus. contract which is materially valid by
its proper will in England, even if materially invalid by loci contractus.

Some authors agree that the material validity of a contract can be tested by the lex loci solutionis.
Some authors agree that if the contract is valid by its proper law, then it will be enforced in England,
even if it is invalid by the lex loci solutionis. The material validity should exclusively be determined by
the proper law of the contract, and neither the lex loci contractus nor the lex loci solutionis should
be allowed to have a say in the matter.

The lex loci solutionis is relevant only in one case i.e. when the performance of a contract is unlawful
under it, then such a contract will not be enforced even if it is valid by its proper law.

In Ralli Bros. v. Cia Naviera Sota of Azar [(1920) 2 KB 287], Scruttan LJ observed ‘where a contract
requires an act to be done in a foreign country, it is, in the absence of very special circumstances, an
implied term of the continuing validity of such

a provision that the act to be done in the foreign country shall not be illegal by the law of that
country.'

The Courts in England and India would not enforce a contract which is illegal by its proper law, even
if it is legal by the lex loci contractus or by the lex loci solutionis or by the lex fori. A contract which is
lawful by the proper law will be given effect to even if it is unlawful by the lex loci solutionis or the
lex loci contracts. But it would appear that a contract which is valid by its proper law may not be
enforced if its enforcement would violate any rule of public policy of the forum or if its enforcement
will be illegal by the law of the forum.

8. DISCHARGE OF CONTRACT
The very purpose of entering into a contract is to perform a particular thing. Then both the
parties to the contract are under the contractual obligation. For instance, in a contract of sale
both the buyer and seller have contractual obligation to pay price and deliver/register the
house respectively. If both of them have met the respective obligations, the contract is said to
be performed. In other words, the contract is discharged by performance. In case, either buyer
or seller fails his respective obligation, it is said to be a breach of contract. In other words, the
contract is discharged by breach. In addition to performance and breach, there are some other
modes/ways by which a contract gets discharged. They are, i) impossibility of performance or
the doctrine of frustration, by Novation, by outbreak of war, Lapse of Time, operation of
Law/ Legislation etc. By whatever manner/mode/means, the discharge of contract may take
place, is as a general rule, and is governed by the proper law of the contract.
1) Discharge by Performance: If the parties to a contract fulfill their respective contractual
obligations, the contract is said to be discharged by performance. The starting point of the
performance of a contract is called "Tender or Offer of Performance'. An offer made by the
promisor (offeror) to promisee (offeree) expressing his willingness to perform his part of the
obligation under the contract. It is also known as 'attempted performance'. According to
Article 10(1)(b) of the Rome Convention, the obligation of contract must be performed. The
Giuliano and Lagarde Report gives helpful examples of issues coming within Article 10:
"The diligence with which the obligation must be performed: conditions relating to the place
and time of performance, the extent to which the obligation can be performed by a person
other than the party liable: the conditions as to performance of the obligation both in general
and in relation to certain categories of obligation joint and several obligations, alternative
obligations, divisible and indivisible obligations, pecuniary obligations); where performance
consists of the payment of a sum of money, the conditions relating to the discharge of the
debtor who has made the payment, the appropriation of the payment; the receipt: etc."
Regarding the manner of performance, Article 10(2) of the Rome Convention provides that
'In relation to the manner of performance and the steps to be taken in the event of defective
performance regard shall be had to the law of the country in which performance takes place.
This provision deals with the situation where the law of the country of the place of
performance is different from the law of the country whose law is applicable under Article 3
to 6 and 12 of th convention.
2) Discharge by Novation: Novation is one of the modes of the discharge of a contract by
performance. It is a process by which a contract is discharged by performance by entering
into subsequent agreements.
The expression "Novation' means substitution of a new contract in the place of an existing
contract. With the creation of the new contract, the existing contract stands
extinguished/terminated. The new contract or novation may take place:
a) Between the same parties with the same terms and conditions; or
b) Between the same parties with altered terms and conditions, orc
c) With the change of parties with the same old terms and conditions: or
d) With the change of parties and with altered terms and conditions.
The new contract in the above cases must be supported by a lawful consideration. The mutual
discharge of the old contract may be treated as a consideration for the new contract.
Novation consists of two elements:
a) Discharge of original debtor, and
b) His substitution by another.
Novation does not in any sense means transfer of property. The discharge of the original
debtor by novation is governed by the proper law, whether the substitution is by legislation or
by a voluntary act Novation is a substitution of one debtor in the place of another debtors.
Therefore, it is different from the replacement of one creditor by another. The governing law
in the case of the voluntary assignment is the proper law of the debt and in the case of
involuntary assignment in the lex situs of the debt. The assignment of debt is different from
discharge of debt, and it is well established that by the operation of the lex situs of the debt
the contractual obligation cannot be discharged.

3)By Impossibility of Performance or the Doctrine of Frustration: A contractual

obligation has been extinguished by impossibility of performance is governed exclusively by
the proper law of the contract.

One of the essential elements of a contract is Possibility of Performance. If the performance

of a contract is impossible, it is void. In other words, impossibility of performance renders the
contract void. Thus Section 56 of the Indian Contract Act lays down the provisions relating to
the impossibility of performance, which runs as follows
*An agreement to do an act impossible in itself - Is void
Contract to do act afterwards becoming impossible or unlawful: A contract to do an act
which. After the contract is made, becomes impossible, or, by reason of some event which
the promisor could not prevent, unlawful, becomes void when the act becomes impossible or
unlawful.
Compensation for loss through non-performance of act known to be impossible of unlawful:
Where one person has promised to do something which he knew, or with reasonable
diligence, might have Known, and which the promise did not know to be impossible or
unlawful, such promisor must make compensation to such promise for any loss which such
promise sustains through the non-performance of the promise.
In English Law, impossibility of performance is known as “The Doctrine of Frustration”. It is
based on the following two maxims namely:
a) Lex non cogit and impossibilia. It means ‘Law does not recognize, what is
impossible; and b) Impossibilium mulla obligation est. It means ‘what is

Impossible does not create an obligation”.

A contractual obligation has been extinguished by impossibility of performance is governed

exclusively by the proper law of the contract.
Jacob v. Credit Lyonnais [(1884) 12 QBD 589]: The question arose in this case was whether
the contract was discharged by impossibility of performance. The proper law of the contract
was English law and the lex loci solutionis was French law. The court held that this matter is
governed by English law.
Mount Albert Australasian etc. Assurance Society Ltd (1938) AC 224 (PC): In the instant
case, the contract was governed by the law of New Zealand. While the debt was payable in
the State of Victoria. By a Victorian law the rate of interest was reduced. It was held that the
proper law being that of New Zealand, the obligation was not discharged under the law of
Victoria. It should be noted that ex sites of the debt has nothing to do with the discharge of
the debt which is governed by the proper law of the contract under which it arises.

4)By outbreak of War: The outbreak of war affects certain type of contracts. It either
abrogates or suspends the contractual obligations and liabilities between the parties arising
under the contract. Whether or not a contract has been abrogated or suspended by the
outbreak of the war does not depend upon the sius of the debt, but, it seems, upon the proper
law of the contract.

5) Discharge by legislation: The Limitation Act, 1963, imposed an obligation on the parties
in respect of certain contracts to perform within a specified period. E.g.: 'A' lends 'B'
Rs.10,000/- against promissory note. If 'B' fails to repay. A has to enforce within 3 years i.e.
within the period of limitation. If A sues 'B' after 3 years, it is not enforceable.

6)Discharge by Operation of Law: A contract may be discharged by operation of law in

case of death or insolvency, unauthorized alteration of terms of the contract etc. Following
are the notable forms of discharge -

a) Merger.

b) Judgment of Court.

c) Alteration or cancellation of the written instrument,

and

d) Insolvency/Bankruptcy.

Module 6 - TORT
i) Meaning:
The expression Tort' is of French Origin. It is derived from the Latin word "Tortum', which
means "twisted of a 'crooked of contract. In Common Law Procedure Act, 1852 (of
England), 'tort' has been described as a wrong independent of contract.
2. THE LAW OF FOREIGN TORTS
i) Foreign Tort: Meaning
A foreign tort is a civil wrong, which is committed outside the territorial limits of the country
i.e. abroad. In other words, it is a civil wrong committed in a foreign country causing injury
or damage to a person or property against which an action can be instituted in a civil court,
having jurisdiction to try. Where a foreign tort is committed, the cause of action arises in the
foreign country and the aggrieved can institute an action (file a suit) against the wrong doer
(tort feasor ) in an appropriate civil Court. For example, A' an Indian commits a tort in
Srilanka, a foreign country for India. The Indian Court has no competent authority to try.
Srilanka alone is competent to try such a case. If 'B' a citizen of Srilanka, publishes a
defamatory matter against 'C', an Indian citizen, residing in Chennai, C can sue 'B' in the
Chennai Court.
When a tort is committed, against an immovable property by an Indian resident in a foreign
country, no action can be instituted in India though the wrongdoer is an Indian resident.
because of Section 16 of the Code of Civil Procedure, 1908. Where, however, a tort is
committed against a movable property or against the person of the plaintiff, an action for tort
is maintainable it
a) The act complained of is unlawful in the place where it was committed No action will
lie in respect of an act which, though tortuous if committed in India, is lawful in the
country where it was committed, and
The act complained of is actionable if comm
Machado v Forests [(1897) 2 QB 2311]: In the instant case, the plaintiff was a Britisher, and
the dependent was a Brazilian. The defendant published a defamatory matter in his paper
published from Brazil against the plaintiff. The plaintiff sued the defendant claiming the
damages under the law of torts in English Court. The defendant contended that the
defamation would be considered as a criminal wrong, but not as a civil wrong or tort in
Brazil, thus the plaintiff had no right to sue him for compensation as a civil wrong. The court
gave judgment in favour of the plaintiff.
ii) Kinds of Foreign Torts
Foreign Torts are of two types: namely
i) Torts to reality, and
i) Personal Tort.
i) Torts to reality: When a tort is committed with respect to immovable property in a foreign
country no action can be maintained in England, though the wrong-doer is a British subject
resident in Britain. The same rule applies to India. It is in the nature of an injury to land
situated outside the country. An action of trespass or other injury to land outside India cannot
be brought in India as would be clear from Section 16 of the C.P.C. But in the case of other
torts committed abroad an action will lie in India if the defendant resides in India.
ii) Personal Tort: It is in the nature of an injury to person or movable property. Where,
however, the tort is once committed with respect to movable property or against the person of
the plaintiff, an action of tort is maintainable provided that the following two conditions are
fulfilled.
a) The act complained of must be unlawful in the place where it was committed. No action
will lie in respect of an act which, though tortuous if committed in England, is lawful in the
country of its commission.
Philips Vs. Eyre [(1870) LP 6 ORI): In the case. A filed a suit against the Governor of
Jamaica for false imprisonment The Governor pleaded that the arrest was made in connection
with the suppression of a rebellion and that he was so authorized by an Act of the Jamaica
Legislature. It was held that the plaintiff could not succeed. The court observed that it appears
to us clear that where, by the law of another country an act complained of is lawful, such act,
though it would have been wrongful by our law if committed here, cannot be made the
ground of an action in an English Court."
But if the cause of action is not of a merely local nature, a suit will lie in English Court for a
tort committed abroad.
In Mostyn v Fabrigas [(1774) Cowp 161], Fabrigas, having rendered himself obnoxious to
Mostyn, the Governor of Minorca, the latter without any lawful excuse, locked him up while
in Minorca for a few days. Fabrigas sued the Governor of Minorca in England. The Court
held that the suit was maintainable in EnglishCourt as the cause of action was not of a merely
local nature. b) The act complained of must be of such a character that it would have been
actionable if committed in England.
The reason for this is obvious. If the wrong complained of is not actionable according to the
English Law, to permit a civil action because it is actionable according to the law of the place
in which it is committed, will be to administer, not the English law but the foreign law. And,
therefore, the English Courts do not countenance the idea of enforcing liability for a wrong
not recognized as reprehensible to the English Law.
In Maritime case of The Hallay (1868) LR 2 PC 193] an English steamer plying in Belgian
waters, with a compulsory pilot on board, ran down a Norwegian Braque. Under the Belgian
Law, the English steamer was liable but not under the English Law, where the defence of
compulsory pilotage was open. It was held that the action was not maintainable in English
Court.
The modern rule with regard to foreign torts deducted from leading cases can be stated thus:
As a general rule, an act done in a foreign country is a tort and actionable as such in the
mother State only if it is a
Tort in both the countries:
a) Actionable as a tort according to the law of a mother
State or in other words, is an act which if done in the mother State would be a tort, and
b)Actionable according to the law of the foreign country where it was done.
But a particular issue between the parties may be governed by the law of the country which,
with respect to that issue, has the most significant or even dominant relationship with the
occurrence and the parties.

iii) Tort in Private International Law

It is significant to note that, a tort in private international law that a tortuous act is committed
entirely locally and the law of lex loci delicti governs it, irrespective of the fact that, whether
a foreign element has or has not involved, or both the parties (tort feasor and aggrieved) or
either of the parties are is the residents abroad or nationals of the foreign country. However,
in certain exceptional cases, foreign law is relevant. The English law relating to foreign torts
is followed in India.

There are three theories propagated in this context.

A) THEORIES
There are three theories relating to application of law to Foreign Torts, namely

i) The lex fori theory.

ii) The lex loci commissi theory, and

iii) The proper law or social Environment Theory

A) The Lex Fori theory: The prominent proponent of this theory was Savigny. According to
him delictual liability was either akin to criminal liability or else closely connected with the
fundamental principles of public policy applicable in the country of the forum. Therefore, it
should be governed entirely by the lex for. The English Courts have never followed this
theory as this doctrine would lead to the most inconvenient consequences.

B) The Lex Loci Commissi theory: According to Willis, J in the leading case Phillips v.
Eire [(1870) L.R. 6 Q.B at 28] observed that “The civil liability arising out of a wrong
 derives its birth from the law of the place, and its character is determined by that law.
Lord Haldane said that if the lex loci delicti did not confer any right to sue, then the
common law action for damages for tort cannot be maintained, even if it is a tort
under the lex for. This theory prevails in the United States. The difficulty of
application of this theory arises in those cases, where the facts constituting tortuous
act take place in more than one country. There is hardly any English decision on this
aspect of the choice of law.

C) Proper Law or Social Environment Theory: This theory was expounded by Lord
Denning. M.R. thus: “After considering the authorities. I am of the opinion that we
should apply the proper law of the tort, that is, the law of the country with which the
parties and the act done have the most significant connection. And once we have
decided which is the correct law to apply think that law should be applied, not only to
ascertain whether there is a case of action, but also to ascertain the heads of damages
that are recoverable and also the measure of damages for these are matters of
substantive law. They are quite distinct from the mere qualification of damages,
which is a matter of procedure for the lex fort.”

Marris opined that If we adopt the proper law of a tort. We can at least choose the law having
connection with the chain of facts and circumstances in a particular situation before us." The
proper law theory has been judicially accepted in America (U.S.A.) and England (U.K.). This
theory has been criticised on the ground that it leads to uncertainty.

B) MODERN ENGLISH LAW RELATING TO FOREIGN TORTS

i) Jurisdiction: An action in tort is an action in personam. The English Courts acquire

jurisdiction by mere presence of the defendant under Order 11, Rule 1(h) of the Supreme
Court Rules under which leave to serve process out of jurisdiction may be given by the court,
if action begun by the writ is founded on a tort committed within the jurisdiction.

Cause of action and Locus dilicti: The Locus delicti of tort has been discussed in some
decisions in the jurisdictional situation contemplate under Order 11. Rule 1th)1. Supreme
Court Rules under which leave to serve process out of jurisdiction may be given by the court
if action begun by the writ is founded on a tort committed within the jurisdiction
As a matter of fact, three different tests have been advanced by jurists to ascertain the place
of commission of an unjustifiable act. They are as under:
a) First, the place where the defendant committed the act from which the harm ensues
constitutes the focus delict There are many who leave in favor of this.
b) The second test prefers the country in which the harm issues. This represents the American
doctrine which says, the place of wrong is the place where the person or thing harmful is
situated at the time of the wrong.
The restatement states it in a more accurate language. “The place of wrong is in the State
where the last event necessary to make an act or liable for an alleged tort takes place.”
b) According to the third test, advocated by Cook and adopted by the German Supreme
Court, the place of wrong is the place in which the law is most favorable to the person
wronged. The plaintiff can, at will, fix the locus delicti in any country in which any of
the operative acts occurred.
It cannot be gainsaid that a great weight of authority is in favour of the second test according
to which the law of the place where the wrong is completed is the lex loci delicti commissi
This question is of particular moment in the tort of defamation. Whether by broadcasting or
the international distribution of books and papers.
The attitude of the English Court to this general question Was expressed by the Court of
Appeal. George Monro Ltd. The American Cyanamil and Chemical Corporation ((1944) KB
432): The facts of the case were as follow The defendants, who carried on business in
America. Manufactured a product for destroying vermin. The plaintiffs were The English
distributors of this product. As a result of its use by question before the court was whether
leave should be granted Farmer damages was caused to his land, and he brought a successful
action against the plaintiff, the English distributors. The To serve notice of a writ on the
American Corporation. Under the Rule of Courts [Rules of Supreme court, Order 11, Rule
1(ee)].
The court held that the alleged tort, which was the sale of a dangerous article without giving
warning as to its nature, was committed in United States, and that service of a writ out of the
jurisdiction could not be allowed.
Distillers Co. (Bio-chemicals) Ltd. v. Thompson [(1971) 1 All ER 694]: The act complained
in the instant case was the omission of the defendant to give warning that the article was
dangerous if taken by an expectant mother in the first three months of pregnancy. Since this
warning was not communicated in New South Wales, the omission took place there where
the plaintiff is mother purchased the any. It was held that what was necessary was the act, or
omission, on the part of the defendant, which gave the plaintiff his cause of complaint, should
have been performed within the jurisdiction. These cases lay down that if act or omission
constituting the wrongful act is committed within the jurisdiction then that is the locus delicti,
even if the damage was ensued at another place.
ii) Choice of Law: The foundation of the English rule of the choice of law is still the
following passage in the decision of the Court of Exchequer Chamber in Phillips Eire
[1870)LR 6 QB ]. In this case, Wills J. stated that ”As a general rule, in order to found a suit
in England, for a wrong alleged to have been committed abroad, two conditions must be
fulfilled. First, the wrong must be of such a character that it would have been actionable if
committed in England. Secondly, the act must not have been justifiable by the law of the
place where it was done. “English Courts exercise jurisdiction to determine tortuous liability,
but will only deal with foreign wrong tort to grant remedy. if the conditions are satisfied so as
to make the foreign wrong actionable.
Module 09 Foreign Judgments
Under Section 13(f) of CPC, the following proposition may be laid
A judgment passed by a foreign court, which breaches any law in force in India may not be
enforceable, except where it is based on a contract having a different “proper law of the
contract”.
Enforcement of Foreign Judgments
A foreign Judgment which is conclusive and does not fall within section 13 (a) to (f), may be
enforced in India in either of the following ways.
By instituting execution proceedings
A foreign Judgment may be enforced by proceedings in execution in certain specified cases
mentioned in Section 44-A of the CPC.
Section 44A – Execution of decrees passed by Courts in reciprocating territory [20].-(1)
Where a
certified copy of a decree of any of the superior courts of any reciprocating territory has been
filed in a District Court, the decree may be executed in India as if it had been passed by the
District Court.
(2) Together with the certified copy of the decree shall be filed a certificate from such
superior court
stating the extent, if any, to which the decree has been satisfied or adjusted and such
certificate shall, for the purposes of proceedings under this section, be conclusive proof of the
extent of such satisfaction or adjustment.
(3) The provisions of section 47 shall as from the filing of the certified copy of the decree
apply to the proceedings of a District Court executing a decree under this section, and the
District Court shall refuse execution of any such decree, if it is shown to the satisfaction of
the Court that the decree falls within any of the exceptions specified in clauses (a) to (f) of
section 13.
Explanation I: “Reciprocating territory” means any country or territory outside India which
the Central
Government may, by notification in the Official Gazette, declare to be a reciprocating
territory for the purposes of this section, and “Superior Courts”, with reference to any such
territory, means such courts as may be specified in the said notification.
Explanation II: “Decree” with reference to a superior Court means any decree or judgment of
such
court under which a sum of money is payable, not being a sum payable in respect of taxes or
other
charges of a like nature or in respect of a fine or other penalty, but shall in no case include an
arbitration award, even if such an award is enforceable as a decree or judgment.
The List of the Reciprocating Territories as per the Provisions of Section 44 A of the Code of
Civil
Procedure, 1908
1.United Kingdom
2.Singapore
3.Bangladesh
4.UAE
5.Malaysia
6.Trinidad & Tobago
7.New Zealand
8.The Cook Islands (including Niue) and The Trust Territories of Western Samoa
9.Hong Kong
10. Papua and New Guinea
11. Fiji
12. Aden.
Moloji Nar Singh Rao vs Shankar Saran [21] Supreme Court held that a foreign judgment
which
does not arise from the order of a superior court of a reciprocating territory cannot be
executed in
India. It ruled that a fresh suit will have to be filed in India on the basis of the foreign
judgment.”
Therefore, Under Section 44A of the CPC, a decree or judgment of any of the Superior
Courts of any
reciprocating territory are executable as a decree or judgment passed by the domestic Court.
The
judgment, once declared, will be executed in accordance with section 51 of the Code.
Thereafter, the court may order measures such as attachment and sale of property or
attachment without sale, and in some cases arrest (if needed) in enforcement of a decree. This
is done by the methods discussed below. By instituting a suit on such foreign judgment,
Where a judgment or decree is not of a superior court of a reciprocating territory, a suit has to
be filed in a court of competent jurisdiction in India on such foreign judgment. The general
principle of law is that any decision of a foreign court, tribunal or any other quasi-judicial
authority is not enforceable in a country unless such decision is embodied in a decree of a
court of that country. In such a suit, the court cannot
go into the merits of the original claim and it shall be conclusive as to any matter thereby
directly adjudicated between the same parties. Such a suit must be filed within a period of 3
years from the date of judgment [23].
In Marine Geotechnics LLC v/s Coastal Marine Construction & Engineering Ltd.[24],
the Bombay High Court observed that in case of a decree from a non-reciprocating foreign
territory, the decree- holder should file, in a domestic Indian court of competent jurisdiction,
a suit on that foreign decree or on the original, underlying cause of action, or both.
However, in both the cases, the decree has to pass the test of Section 13 CPC which specifies
certain exceptions under which the foreign judgment becomes inconclusive and is therefore
not executable or enforceable in India.
Foreign Award
An award passed by foreign arbitrator is enforceable in a country where it was made and can
also be enforced in India. Courts may refer to CPC or any other statute while considering the
procedure to be followed for enforcement of foreign awards under Foreign Awards
(Recognition and Enforcement) Act (45 of 1961)
Effect of Foreign Judgment
A foreign judgment is conclusive for any matter adjudicated between the parties. Such
judgment is
conclusive and would create Res judicata between the same parties or between parties under
whom they or any of the claims.
Limitation period for Enforcement of Foreign Judgments
As per the provisions of the Code, foreign judgments from reciprocating territories are
enforceable in India in the same manner as the decrees passed by Indian courts. The
Limitation Act, 1963 prescribes the time limit for execution of a foreign decree and for filing
of a suit in the case of judgment passed by foreign court.
• Three years, commencing from the date of the decree or where a date is fixed for
performance; in case of a decree granting a mandatory injunction; and
• Twelve years for execution of any other decree commencing from the date when the decree
becomes enforceable or where the decree directs any payment of money or the delivery of
any property to be made at a certain date, when default in making the payment or delivery in
respect of which execution is sought, takes place.
A judgment obtained from a non-reciprocating territory can be enforced by filing a new suit
in an Indian court for which a limitation period of 3 years has been specified under the
Limitation Act, 1963 commencing from the date of the said judgment passed by foreign
court.
Foreign currency conversion rate
In a decree passed by foreign court, the amount awarded is generally in a foreign currency.
Therefore, while enforcing the foreign decree in India, the amount has to be converted into
Indian currency.
In Forasol vs. ONGC [25] it was held that the date of the decree should be used for the
calculation.
Conflict between Domestic Judgment & Foreign Judgment
The principle of res judicata embodied in the Code prohibits a court of competent jurisdiction
from trying a suit on a matter that has been substantially decided in a prior suit between the
same parties. Therefore, a decree or judgment passed by a superior court of a foreign country
cannot be enforced in India if it contradicts an earlier conclusive judgment passed by a
competent court in a suit between the same parties.
A foreign judgment passed by a court of a non-reciprocating country can only be enforced by
filing a new suit in India where the foreign decree is merely a piece of evidence with
persuasive value. Therefore, the judgment debtor can raise the claim of res judicata and stay
the suit at the preliminary stage.
Enforcement of Foreign Judgments
A foreign judgment, which is conclusive under Section 13 of the Code, can be enforced in
India in the
following ways:
1. By instituting a suit on such foreign judgment
A foreign judgment may be enforced by instituting a suit on such foreign judgment. The
general principle of law is that any decision by a foreign court, tribunal or quasi-judicial
authority is not enforceable in a country unless such decision is embodied in a decree of a
court of that country. In such a suit, the court cannot go into the merits of the original claim
and it shall be conclusive as to any mater thereby directly adjudicated upon between the same
parties. Such a suit must be filed within a period of three years from the date of the judgment.
2. Execution Proceedings
A foreign judgment may also be enforced by proceedings in execution in certain specified
cases
mentioned in Section 44-A of the Code. The said section provides that where a certified copy
of a decree if any of the superior courts of any reciprocating territory has been filed in a
District Court, the decree may be executed in India as if it had been passed by the District
Court. When a foreign judgment is sought to be executed under Section 44-A, it will be open
to the judgment-debtor to rake all objections, which would have been open to him under
Section 13 if a suit had been filed on such judgment. The fact that out of six exceptions there
has been due compliance with some of the exceptions is of no avail. The decree can be
executed under Section 44-A only if all the conditions of Section 13 (a) to (f) are satisfied.
Foreign Awards
Principles laid down in the section do not apply- It is not open to the party, who is party to
the award, to contend that the award was not given on merits of the case. Say that if the
award was given against the rules of natural justice or it was fraudulently obtained, the party
may not be prevented from putting forward those contentions. But it is difficult to accept the
view that because on a foreign judgment it is open to a party to contend that it was not given
on the merits of the case, it is equally open to a party who is resisting the suit on the award to
contend that the award was not given on the merits of the case. Only if the award given in a
foreign country is reinforced by a decree of the Court of that country the courts will be bound
to take notice of it but without such a decree reinforcing such award, the award must be
deemed to be non-existent.