Proskauer on International Litigation and Arbitration:
Managing, Resolving, and Avoiding Cross-Border Business or Regulatory Disputes
- Determining the law applicable to a dispute is a critical and strategic decision that affects how the case will be proven. Specifically, not all causes of action are recognized under each potentially applicable state’s laws, and the elements necessary to establish each cause of action may vary substantially. As a result, different kinds of evidence may have more or less significance in proving a case depending on what law ultimately applies. In turn, knowing what the evidence in fact is can play an important role in a party’s decision of what law to advocate.
- The timing of the choice of law decision is no less strategic than the substance of the decision. Ideally, a party would choose to advocate a particular state’s law once it knew the strength of the evidence in support of its case. For example, if discovery revealed insufficient evidence of any intent to commit fraud on the part of the defendant, then the plaintiff would want to advocate a state’s law that does not have this scienter element, or, may consider advocating a state’s law that bars its fraud claim but is advantageous to its other claims.
- On the other hand, it is difficult to argue dispositive motions without assuming a position on applicable law. For example, whether a party is bound by a contract, whether a claim is precluded, or whether the elements of a claim have been sufficiently stated, are matters proper for summary disposition but which depend on what law applies. Delaying the decision on what law applies may also increase the costs and burdens of litigation; research and briefing will continue to include multiple states’ laws and the varied outcomes under each.
- Yet another factor in the mix is the choice of law rules the court will employ. The analysis is different across the circuits, with greater and lesser degrees of predictability across the board. A party that has determined what substantive law is most advantageous must further assess the likelihood of the court selecting that law under the applicable choice of law rules.
- A party is thus well advised to familiarize itself early on with both the substance of the potentially applicable laws, and the court’s choice of law rules.
- Different choice of law rules are applied across the circuits. These are not all canvassed here. Instead, to understand the practical effects of choice of law issues, we will use as our “case study” a recent case we handled representing a French plaintiff bringing suit on breach of contract, fraud and tort claims in a U.S. court applying Ninth Circuit choice of law rules.
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