Proskauer Rose International Practice Guide Proskauer Rose LLP |
      Proskauer on International Litigation and Arbitration:
       Managing, Resolving, and Avoiding Cross-Border Business or Regulatory Disputes
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  1. Generally speaking, federal courts will apply the forum’s procedural law. Hanna v. Plumer, 380 U.S. 460, 465 (1965); Second Restatement § 122. In matters of judicial administration, it would be burdensome and even disruptive for the court to have to determine and apply the laws of a non-U.S. state. Also, the forum is more concerned than the non-U.S. state in how its courts are administered and function. See Second Restatement § 122 cmt. a.
  2. The Second Restatement, which rejects the substance/procedure dichotomy and instead opts to answer the broad question of whether the forum’s rule should be applied to the issues of how the litigation should proceed, identifies several relevant factors: (a) whether the issue is one to which the parties are likely to have given thought when entering the transaction, placing reliance upon the applicability of a particular state’s laws, (b) whether the issue is one whose resolution will likely affect the outcome of the case, (c) whether case law has identified the issue as procedural or substantive. Id.
  3. Subjects that are typically considered procedural and governed by local law are: service, pleadings, motion practice, burden of proof, presumptions, methods used in enforcing judgments, requirements concerning proof of foreign law, and most evidentiary matters (except questions of privilege, parol evidence rules, and the Statute of Frauds).
  4. Statute of limitations have typically been considered, in the substance/procedure dichotomy, to be procedural. However, most state legislatures apply a “borrowing” statute under which the shorter of the forum or the foreign state’s limitation period apply, but some of these statutes do not apply when the plaintiff is a resident of the forum. See, e.g., NY CPLR § 202 and Cal. Civ. Pro. 361.
  5. The Uniform Conflict of Laws Limitation Act, adopted in few states (e.g. Colorado, Washington, North Dakota, Arkansas, Oregon), provides that the limitations period should be set by the state whose substantive law will apply, except where it is “unfair” to do so. 12 U.L.L.A. 61 (Supp. 1992).
  6. The Second Restatement was amended in 1988 in Section 142: a court will choose the limitations period by applying the “substantial relationship” principles of Section 6. In general, unless exceptional circumstances make the results unreasonable:
    1. The forum will apply its own statute of limitations barring the claim;
    2. The forum will apply its own statute of limitations permitting the claim unless:
      1. Maintaining the claim does not serve any substantial interest of the forum; or
      2. The claim would be barred by the statute of limitations of a state having a more significant relationship to the parties and occurrence.
  7. States applying the governmental interest analysis will apply it to the statute of limitations question. See, e.g., Ledesma v. Jack Stewart Produce, Inc., 816 F.2d 482, 484-485 (9th Cir. 1987) (forum’s interest is weak where defendant is not a resident and alleged injury occurred in non-U.S. state; government interest in protecting citizens from defending in stale cases is not implicated).

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