Nationality, Identity and Collaboration

Can the erosion of trust between countries and the rise of nationalism lessen the compensation you receive for damages caused to you or change the terms of a private contract you signed? Surprisingly, it might.

Imagine a football game between Liverpool and Bayern München becomes so heated that two fans get into a fight. Guards hurry to break the fight up, but not all is well since one fan broke the other’s eyeglasses and hurt his face during the fight. If the game was played in the Allianz Arena and both fans were Germans, the case would likely be heard in a German court, and German law would apply.

But if the game was played in Anfield and one of the fans was Brazilian or Chinese, as sometimes happens in football, neither the jurisdiction nor the applicable law would be obvious. The field of Private International Law (PIL, also known as Conflict of Laws), is designated to solve such situations. Interestingly, even if the case is heard in Brazil, the case might be subject to another law, so the Brazilian court might have to apply English law. In this sense, PIL, and specifically the part that deals with the choice of law, is the arena where nation-states have to give way and allow foreign laws to be applied in their courts.

The Brazilian court’s ability and willingness to apply English law is anything but obvious. This is not only because it is complicated and costly (because judges and lawyers in Brazil are likely most comfortable with Brazilian law), but also because of national preferences and pride. After all, a country’s law is not just a set of rules; it is part of its national identity. It reflects value judgments and local preferences, and its modus operandi and application are a matter of sovereignty. Nonetheless, through the rules of PIL, countries around the world have, for centuries, taken a step back and allowed the application of foreign laws in their courts. They have done so only in matters of private law (e.g. torts, contracts, family law, corporate law), where the main interest is private rather than national, and according to national rules which they themselves created. This as a matter of comity between nations and protection of the rights vested in the individual claimant or defendant.

My project generally traces new trends in PIL that suggest a dwindling openness to global cooperation. One part of it examines real-life cases in several jurisdictions and demonstrates the real-life decline in the application of foreign law. During my visit at CAS I focused on the part that examines national and regional (e.g. EU) legislation in the field and demonstrates methodological changes that lead to the same outcome. The project argues that this decline is not accidental or isolated. Though PIL only deals with private law, it reflects the willingness of legislators, judges and parties to respect the authority of other countries and work together. Therefore, the project argues that the changes in PIL should be seen together with the outcomes of recent elections in Europe and beyond and with various economic and actual proxy wars worldwide. While PIL is usually not seen as relevant to global diplomacy and international relations, it may be time to reconsider the field through these lenses and call for more caution when limiting the application of foreign law – not just because it skews the outcomes of the specific case, but also because it erodes global cooperation. This erosion might have significant effects beyond the specific case or even private law in general.

Going back to the football example, the assaulted fan might choose to sue in her home country of Brazil, and under certain circumstances, she might be entitled to do so. Even without going into the details of Brazilian law, it is likely that Brazil, like many other countries in the world, would find the law applicable to the case to be that of the UK since it is where the fight occurred and the damage was caused. The Brazilian court might nonetheless decide to apply its own law, as many other courts do, for various reasons. For example, there may be an overriding mandatory provision mandating the application of local law in cases involving certain types of torts. Indeed, more and more countries use such rules. The court might also wrongly interpret the UK law or decide to avoid applying it for convenience. In any event, the case will likely change because the laws would differ, setting different grounds for the suit, treating the claimant’s participation and partial culpability differently, or allowing for different compensation amounts and schemes. Hence, when the choice of law rules are overridden, misinterpreted or disregarded, a different law is applied, and one party benefits and the other loses.

I have not yet completed the research needed to fully substantiate the claim that this is a global, broad-reaching phenomenon rather than a string of local accidents. The full theoretical and comparative survey will take a long while, both because the extent of data to collect is vast (including a comparative survey of legislation and empirical analysis of arguments and decisions in courts in several jurisdictions) and because its interpretation is complicated. But if my intuition and initial findings are correct, this issue goes beyond the parties and grows in importance and urgency. When a country decides not to apply foreign law that would have otherwise been applicable through choice of law rules, it also sends a message regarding its respect for foreign law and the international equilibrium of mutual respect between countries. When a country creates an overriding mandatory provision, this sends a message that that country’s position is the only legitimate position in the matter in the eyes of the country. Thus, a country’s decision to make this or that choice of law rule and apply this or that law is a legitimate application of its sovereign discretion that has mostly private-law effects on the parties. But, a country’s decision to make a rule that only applies local law or to systematically disregard or misinterpret the choice of law rule so that local law applies goes beyond the parties. It makes a statement regarding that country’s willingness to participate in a global game of collaboration and respect.

That is not to say that war might erupt tomorrow or that international commerce might come to a standstill because the choice of law system is malfunctioning or even derailed. But it is nonetheless a step in a dangerous process. PIL, as its name reveals, is focused on private law. Its effect is usually measured as a question of legal science dealing with the nature of the legal issue at hand (e.g., promoting autonomy in contract law; compensation and the prevention of harm in torts). It usually shies away from politics and limits its pretensions when it comes to the global order and world peace. But when nationalism and trade wars rise, the once private arena gains public meanings that should be identified, monitored and considered.

The European Coal and Steel Community, an early incarnation of the EU, was created following the Second World War so that solidarity in producing the building blocks of war would ensure future peace. By the same token, choice of law rules should be coordinated and maintained so that the legal framework maintains global interactions in commerce, employment, family and the like and helps them thrive. This is not just for a football fan who was harmed but also for countries to continue to engage peacefully.