Property (conflict)
Encyclopedia
In the conflict of laws
, property law
follows the terminology of the civil law
systems which divides property into two types:
developed economically, the ownership of and control over land was the major mechanism for accumulating wealth and exercising power. In modern times, there are many new forms of property for people to own and there are many new profitable ways for people to exploit their rights over property. Hence, the declared function of Property Law is to govern how title to property is created and negotiated, and the means available to protect those rights against unjustified interference by non-title holders. The standard choice of law
rule is stated to be the application of the lex situs
. In England and Wales
, Australia
, Canada
, and the United States
this rule derives from British South Africa Co v. Companhia de Moçambique [1893] A.C. 602 in English law
, and in the U.S.: Massie v. Watts, 10 U.S. (6 Cranch.) 148 (1810); Clarke v. Clarke, 178 U.S. 186 (1900); and Fall v. Eastin, 215 U.S. 1 (1909) which hold that courts have no jurisdiction to hear any lawsuit
to determine the title to, the right to possession of, or the recovery of damages for trespass to any immovable property
located outside their territorial jurisdiction.
But this simple proposition requires considerable caution given that this topic is lacking modern development (all the major source cases are quite old) and there is substantial overlap with contracts
by which rights in or over property may be created and/or transferred, the various systems of Equity which, through the law of trusts
, control the extent to which non-title holders may have an interest in property, succession
which regulates inheritance, and tort
by which unlawful interferences with property may be defended. Hence, questions of jurisdiction
and the scope of remedies
available and capable of being enforced
have become confused.
s recognise the significance of some types of property and specify formal requirements for any dealings, provide title registration systems so that ownership can be verified, and impose minimum levels of status
and capacity
for enjoying the privileges of ownership.
with the fewest problems in gaining the enforcement of any judgment. Thus, in tort cases involving land, most lex loci delicti commissi
rules select the lex situs as the lex causae. Forum shopping
has been bringing major cases outside the forum of the situs, e.g. actions in the U.S. relating to the accident at the Union Carbide
plant at Bhopal, India
, and in Australia
relating to the pollution of the Fly River
system in Papua New Guinea
by the Broken Hill Proprietary Company Ltd. While the lex situs rule has prevailed, it is noted that the Compensation (Prohibition of Foreign Legal Proceedings) Act 1995 enacted in P.N.G. made it unlawful to make out-of-state claims for compensation. Although this was not a relevant factor in the Australian decision, it is indicative of a potential problem in the manipulation of situs laws by powerful multinational corporation
s. There may also be problems if states adopt policies of nationalization
or expropriation
with less than full compensation and seek to seize property belonging to "foreign" owners. As an aspect of sovereignty
, such laws would be effective within the territory of the legislating state, but see the case law in public policy
which empowers the forum courts to refuse extraterritorial effect to such laws.
In contractual or exchange-based relationships, a judgment cannot be made that would be inconsistent with the lex situs. But equitable issues are less clear since they are in personam
rather than in rem
, i.e. they affect the conscience of the parties and may therefore offer remedies that do not match the lex situs. For example, it may be alleged that a trustee
of land held in several states has breached his fiduciary duty to the beneficiaries. That any order of the forum court might not match the scope of remedies available under the lex situs cannot prevent the equitable jurisdiction from ordering the trustee to comply.
). By way of example:
Seeking to apply the lex situs at the time of acquisition may not be helpful. This could be fortuitous, e.g. the buyer happened to be there when the goods were identified or the best price among many was offered in this state. Further, not everyone considers their legal situation when acquiring even expensive assets so applying the initial lex situs may be artificial and ignore the relevance of other laws. Thus, in the first example, the relevant matrimonial property laws or lex domicilii
, lex patriae
or law of habitual residence of the new spouses might have an effect at the time of marriage to vary rights whether as vested rights or in subsequently acquired property. Or the lex fori
of the court in which the title to the property is subsequently litigated may be the situs at the time the proceedings were commenced.
In the second example, the law of incorporation
(the lex incorporationis) may affect the nature of the interest that the company might have in the property and impose limits on what might be done with assets, but the business decision to locate in this state might have been dictated by the friendliness of the taxation regime or aspects of their corporate governance
system, and its laws may have little relevance to the particular transactions in dispute. In this case, a rule referring to the law of the place of business at the time the transaction might be best so that those dealing with international business entities have an easily identified law by which to judge their rights.
rights are usually capable of being protected through some form of public registration system and therefore the law of the place of registration is an adequate rule for most purposes. In some states, copyright
comes into existence through the act of investing labor in the process of creation and registration is not a precondition to validity. If the relevant state has no registration system, the place of creation will be appropriate subject to the obvious problem of proving what was created. The whole purpose of this branch of the law is to create monopolies for the commercial exploitation of creativity. Hence, the situs state and its courts have a direct economic and public policy interest in protecting the local monopoly rights in the relevant ideas by refusing recognition to any other state's registered monopoly rights, i.e. the registration process creates territorial rights co-extensive with the boundaries of each state and, as with criminal law
s, there is no extraterritorial enforcement because this would breach sovereignty.
The situs of shares
will be either the lex incorporationis or the law of the place(s) where a share register is maintained which may vary if the company is traded on stock exchange
s in several different states. All other forms of chose will derive their existence from some form of contract and therefore the proper law
will apply in the usual way.
Conflict of laws
Conflict of laws is a set of procedural rules that determines which legal system and which jurisdiction's applies to a given dispute...
, property law
Property law
Property law is the area of law that governs the various forms of ownership in real property and in personal property, within the common law legal system. In the civil law system, there is a division between movable and immovable property...
follows the terminology of the civil law
Civil law (legal system)
Civil law is a legal system inspired by Roman law and whose primary feature is that laws are codified into collections, as compared to common law systems that gives great precedential weight to common law on the principle that it is unfair to treat similar facts differently on different...
systems which divides property into two types:
- Immovables is the equivalent of "real property" in common lawCommon lawCommon law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
systems, i.e. it is land or any permanent feature or structure above or below the surface (e.g. mineral rightsMineral rights- Mineral estate :Ownership of mineral rights is an estate in real property. Technically it is known as a mineral estate and often referred to as mineral rights...
).
- All other property is considered movables, i.e. the equivalent of personal property or personalty in common law systems, and this property is either tangible or intangible, i.e. it is either physical propertyPhysical propertyA physical property is any property that is measurable whose value describes a physical system's state. The changes in the physical properties of a system can be used to describe its transformations ....
that can be touched like a computer, or it is an enforceable right like a patentPatentA patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
, some other form of intellectual propertyIntellectual propertyIntellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
or a chose in actionChose (English law)Chose , is a term used in common law tradition in different senses. Chose local is a thing annexed to a place, such as a mill. A chose transitory is something movable, that can be carried from place to place...
.
Choice of law
As societiesSociety
A society, or a human society, is a group of people related to each other through persistent relations, or a large social grouping sharing the same geographical or virtual territory, subject to the same political authority and dominant cultural expectations...
developed economically, the ownership of and control over land was the major mechanism for accumulating wealth and exercising power. In modern times, there are many new forms of property for people to own and there are many new profitable ways for people to exploit their rights over property. Hence, the declared function of Property Law is to govern how title to property is created and negotiated, and the means available to protect those rights against unjustified interference by non-title holders. The standard choice of law
Choice of law
Choice of law is a procedural stage in the litigation of a case involving the conflict of laws when it is necessary to reconcile the differences between the laws of different legal jurisdictions, such as sovereign states, federated states , or provinces...
rule is stated to be the application of the lex situs
Lex situs
The term lex situs refers to the law of the place in which property is situated for the purposes of the conflict of laws. For example, property may subject to tax pursuant to the law of the place of the property or by virtue of the domicile of its owner...
. In England and Wales
England and Wales
England and Wales is a jurisdiction within the United Kingdom. It consists of England and Wales, two of the four countries of the United Kingdom...
, Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
, Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
this rule derives from British South Africa Co v. Companhia de Moçambique [1893] A.C. 602 in English law
English law
English law is the legal system of England and Wales, and is the basis of common law legal systems used in most Commonwealth countries and the United States except Louisiana...
, and in the U.S.: Massie v. Watts, 10 U.S. (6 Cranch.) 148 (1810); Clarke v. Clarke, 178 U.S. 186 (1900); and Fall v. Eastin, 215 U.S. 1 (1909) which hold that courts have no jurisdiction to hear any lawsuit
Lawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...
to determine the title to, the right to possession of, or the recovery of damages for trespass to any immovable property
Immovable property
Immovable property is an immovable object, an item of property that cannot be moved without destroying or altering it - property that is fixed to the Earth, such as land or a house. In the United States it is also commercially and legally known as real estate and in Britain as property...
located outside their territorial jurisdiction.
But this simple proposition requires considerable caution given that this topic is lacking modern development (all the major source cases are quite old) and there is substantial overlap with contracts
Contract (conflict)
In the conflict of laws, the validity of a contract with one or more foreign law elements will be decided by reference to the so-called "proper law" of the contract.-History:...
by which rights in or over property may be created and/or transferred, the various systems of Equity which, through the law of trusts
Trust law
In common law legal systems, a trust is a relationship whereby property is held by one party for the benefit of another...
, control the extent to which non-title holders may have an interest in property, succession
Succession (conflict)
In the conflict of laws, the subject of succession deals with all procedural matters relevant to estates containing a "foreign element" whether that element consists of the identity of the deceased, those who may inherit or the location of property...
which regulates inheritance, and tort
Tort (conflict)
In conflict of laws, the choice of law rules for tort are intended to select the lex causae by which to determine the nature and scope of the judicial remedy to claim damages for loss or damage suffered.-History:...
by which unlawful interferences with property may be defended. Hence, questions of jurisdiction
Jurisdiction
Jurisdiction is the practical authority granted to a formally constituted legal body or to a political leader to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility...
and the scope of remedies
Legal remedy
A legal remedy is the means with which a court of law, usually in the exercise of civil law jurisdiction, enforces a right, imposes a penalty, or makes some other court order to impose its will....
available and capable of being enforced
Enforcement of foreign judgments
In law, the enforcement of foreign judgments is the recognition and enforcement in one jurisdiction of judgments rendered in another jurisdiction...
have become confused.
The problems in determining the relevant rules
All developed stateState (polity)
A state is an organized political community, living under a government. States may be sovereign and may enjoy a monopoly on the legal initiation of force and are not dependent on, or subject to any other power or state. Many states are federated states which participate in a federal union...
s recognise the significance of some types of property and specify formal requirements for any dealings, provide title registration systems so that ownership can be verified, and impose minimum levels of status
Status (law)
A person's status is a set of social conditions or relationships created and vested in an individual by an act of law rather than by the consensual acts of the parties, and it is in rem, i.e. these conditions must be recognised by the world. It is the qualities of universality and permanence that...
and capacity
Capacity (law)
The capacity of both natural and legal persons determines whether they may make binding amendments to their rights, duties and obligations, such as getting married or merging, entering into contracts, making gifts, or writing a valid will...
for enjoying the privileges of ownership.
Land
In the case of land, the lex situs provides the regulatory system for all transactions affecting land within state boundaries and the application of this rule has the virtue of easy application and predictability of outcome. It is also most likely to be the forum conveniensForum non conveniens
Forum non conveniens is a common law legal doctrine whereby courts may refuse to take jurisdiction over matters where there is a more appropriate forum available to the parties...
with the fewest problems in gaining the enforcement of any judgment. Thus, in tort cases involving land, most lex loci delicti commissi
Lex loci delicti commissi
The lex loci delicti commissi is the Latin term for "law of the place where the delict [tort] was committed" in the conflict of laws. Conflict of laws is the branch of law regulating all lawsuits involving a "foreign" law element where a difference in result will occur depending on which laws are...
rules select the lex situs as the lex causae. Forum shopping
Forum shopping
Forum shopping is the informal name given to the practice adopted by some litigants to get their legal case heard in the court thought most likely to provide a favorable judgment...
has been bringing major cases outside the forum of the situs, e.g. actions in the U.S. relating to the accident at the Union Carbide
Union Carbide
Union Carbide Corporation is a wholly owned subsidiary of The Dow Chemical Company. It currently employs more than 2,400 people. Union Carbide primarily produces chemicals and polymers that undergo one or more further conversions by customers before reaching consumers. Some are high-volume...
plant at Bhopal, India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
, and in Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
relating to the pollution of the Fly River
Fly River
The Fly at , is the second longest river, after the Sepik, in Papua New Guinea. The Fly is the largest river in Oceania, the largest in the world without a single dam in its catchment, and overall ranks as the twenty-fifth largest river in the world by volume of discharge...
system in Papua New Guinea
Papua New Guinea
Papua New Guinea , officially the Independent State of Papua New Guinea, is a country in Oceania, occupying the eastern half of the island of New Guinea and numerous offshore islands...
by the Broken Hill Proprietary Company Ltd. While the lex situs rule has prevailed, it is noted that the Compensation (Prohibition of Foreign Legal Proceedings) Act 1995 enacted in P.N.G. made it unlawful to make out-of-state claims for compensation. Although this was not a relevant factor in the Australian decision, it is indicative of a potential problem in the manipulation of situs laws by powerful multinational corporation
Multinational corporation
A multi national corporation or enterprise , is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation...
s. There may also be problems if states adopt policies of nationalization
Nationalization
Nationalisation, also spelled nationalization, is the process of taking an industry or assets into government ownership by a national government or state. Nationalization usually refers to private assets, but may also mean assets owned by lower levels of government, such as municipalities, being...
or expropriation
Confiscation
Confiscation, from the Latin confiscatio 'joining to the fiscus, i.e. transfer to the treasury' is a legal seizure without compensation by a government or other public authority...
with less than full compensation and seek to seize property belonging to "foreign" owners. As an aspect of sovereignty
Sovereignty
Sovereignty is the quality of having supreme, independent authority over a geographic area, such as a territory. It can be found in a power to rule and make law that rests on a political fact for which no purely legal explanation can be provided...
, such laws would be effective within the territory of the legislating state, but see the case law in public policy
Public policy (law)
In private international law, the public policy doctrine or ordre public concerns the body of principles that underpin the operation of legal systems in each state. This addresses the social, moral and economic values that tie a society together: values that vary in different cultures and change...
which empowers the forum courts to refuse extraterritorial effect to such laws.
In contractual or exchange-based relationships, a judgment cannot be made that would be inconsistent with the lex situs. But equitable issues are less clear since they are in personam
In personam
In personam is a Latin phrase meaning "directed toward a particular person". In a lawsuit in which the case is against a specific individual, that person must be served with a summons and complaint to give the court jurisdiction to try the case, and the judgment applies to that person and is called...
rather than in rem
In rem
In rem is Latin for "against a thing." In a lawsuit, an action in rem is directed towards a piece of property rather than against a person . The action disputes or seeks to transfer title to property. When title to real estate In rem is Latin for "against a thing." In a lawsuit, an action in rem...
, i.e. they affect the conscience of the parties and may therefore offer remedies that do not match the lex situs. For example, it may be alleged that a trustee
Trustee
Trustee is a legal term which, in its broadest sense, can refer to any person who holds property, authority, or a position of trust or responsibility for the benefit of another...
of land held in several states has breached his fiduciary duty to the beneficiaries. That any order of the forum court might not match the scope of remedies available under the lex situs cannot prevent the equitable jurisdiction from ordering the trustee to comply.
Tangible movables
In the case of tangible movable property, the choice of a rule is less clear cut because the situs may change and so may be subject to manipulation by the interested parties (see the potential problem of evasionEvasion (law)
In law, the Doctrine of Evasion is a fundamental public policy. Whereas a person may legitimately plan his or her affairs so as to avoid the incidence of obligations or liabilities imposed by the law, no-one is allowed to evade the operation of otherwise mandatory provisions once duties and...
). By way of example:
- a husband wishes to evade the operation of community propertyCommunity propertyCommunity property is a marital property regime that originated in civil law jurisdictions and is now also found in some common law jurisdictions...
rules. A wide range of property has been acquired from many different states both before and during the marriage. The husband moves all portable objects to, and establishes a habitual residenceHabitual residenceIn conflict of laws, habitual residence is the standard used to determine the law which should be applied to determine a given legal dispute. It can be contrasted with the law on domicile, traditionally used in common law jurisdictions to do the same thing....
in, a jurisdiction that does not enforce community property rules; or - a company owns an aircraft which routinely flies between several states. It is maintained in different locations and may be stored wherever the company directs when not in use.
Seeking to apply the lex situs at the time of acquisition may not be helpful. This could be fortuitous, e.g. the buyer happened to be there when the goods were identified or the best price among many was offered in this state. Further, not everyone considers their legal situation when acquiring even expensive assets so applying the initial lex situs may be artificial and ignore the relevance of other laws. Thus, in the first example, the relevant matrimonial property laws or lex domicilii
Lex domicilii
The lex domicilii is the Latin term for "law of the domicile" in the conflict of laws. Conflict is the branch of public law regulating all lawsuits involving a "foreign" law element where a difference in result will occur depending on which laws are applied....
, lex patriae
Lex patriae
The term lex patriae is Latin for the law of nationality in the conflict of laws which is the system of public law applied to any lawsuit where there is a choice to be made between several possibly relevant laws and a different result will be achieved depending on which law is...
or law of habitual residence of the new spouses might have an effect at the time of marriage to vary rights whether as vested rights or in subsequently acquired property. Or the lex fori
Lex fori
Lex fori is a legal term used in the conflict of laws used to refer to the laws of the jurisdiction in which a legal action is brought...
of the court in which the title to the property is subsequently litigated may be the situs at the time the proceedings were commenced.
In the second example, the law of incorporation
Incorporation (business)
Incorporation is the forming of a new corporation . The corporation may be a business, a non-profit organisation, sports club, or a government of a new city or town...
(the lex incorporationis) may affect the nature of the interest that the company might have in the property and impose limits on what might be done with assets, but the business decision to locate in this state might have been dictated by the friendliness of the taxation regime or aspects of their corporate governance
Corporate governance
Corporate governance is a number of processes, customs, policies, laws, and institutions which have impact on the way a company is controlled...
system, and its laws may have little relevance to the particular transactions in dispute. In this case, a rule referring to the law of the place of business at the time the transaction might be best so that those dealing with international business entities have an easily identified law by which to judge their rights.
Choses in action
Intellectual propertyIntellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
rights are usually capable of being protected through some form of public registration system and therefore the law of the place of registration is an adequate rule for most purposes. In some states, copyright
Copyright
Copyright is a legal concept, enacted by most governments, giving the creator of an original work exclusive rights to it, usually for a limited time...
comes into existence through the act of investing labor in the process of creation and registration is not a precondition to validity. If the relevant state has no registration system, the place of creation will be appropriate subject to the obvious problem of proving what was created. The whole purpose of this branch of the law is to create monopolies for the commercial exploitation of creativity. Hence, the situs state and its courts have a direct economic and public policy interest in protecting the local monopoly rights in the relevant ideas by refusing recognition to any other state's registered monopoly rights, i.e. the registration process creates territorial rights co-extensive with the boundaries of each state and, as with criminal law
Criminal law
Criminal law, is the body of law that relates to crime. It might be defined as the body of rules that defines conduct that is not allowed because it is held to threaten, harm or endanger the safety and welfare of people, and that sets out the punishment to be imposed on people who do not obey...
s, there is no extraterritorial enforcement because this would breach sovereignty.
The situs of shares
Share (finance)
A joint stock company divides its capital into units of equal denomination. Each unit is called a share. These units are offered for sale to raise capital. This is termed as issuing shares. A person who buys share/shares of the company is called a shareholder, and by acquiring share or shares in...
will be either the lex incorporationis or the law of the place(s) where a share register is maintained which may vary if the company is traded on stock exchange
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
s in several different states. All other forms of chose will derive their existence from some form of contract and therefore the proper law
Proper law
The Doctrine of the Proper Law is applied in the choice of law stage of a lawsuit involving the conflict of laws.-Explanation:In a conflicts lawsuit, one or more state laws will be relevant to the decision-making process. If the laws are the same, this will cause no problems, but if there are...
will apply in the usual way.