In determining which jurisdiction’s law to apply in a tort case, t courts use the governmental interests approach[i]. Governmental interest approach requires application of the law of the state with the greatest interest in resolving the particular issue that is raised in the underlying litigation[ii].
Under the governmental interests approach, courts evaluate the governmental policies underlying the applicable laws and determine which jurisdiction’s policy would be more advanced by the application of its law to the facts of the case under review[iii].
As part of this approach, there are four factors to consider[iv]:
- the place where the injury occurred;
- the place where the conduct causing the injury occurred;
- the domicile, residence, nationality, place of incorporation and place of business of the parties; and
- the place where the relationship is centered.
The governmental interests analysis consists of three steps[v]:
- the court examines the substantive law of each jurisdiction to determine whether the laws differ as applied to the relevant transaction.
- if the laws do differ, the court determines whether a true conflict exists in that each of the relevant jurisdictions has an interest in having its law applied. If only one jurisdiction has a legitimate interest in the application of its rule of decision, there is a false conflict and the law of the interested jurisdiction is applied. On the other hand, if more than one jurisdiction has a legitimate interest, the courts move to the third stage of the analysis
- the third stage focuses on the comparative impairment of the interested jurisdictions. At this stage, the court seeks to identify and apply the law of the state whose interest would be the more impaired if its law were not applied.
Using the governmental interests test to determine choice of law, the court first looks at each jurisdiction’s policy to see what interests the policy is meant to protect, and then considers which jurisdiction’s policy would be most advanced by applying the law of that jurisdiction[vi].
When under the governmental interest approach, a preliminary analysis reveals an apparent conflict of interest upon the forum’s assertion of its own rule of decision, the forum reexamines its policy to determine if a more restrained interpretation of it is more appropriate. This process of reexamination requires identification of a real interest, as opposed to a hypothetical interest, on the part of the forum and can be approached under principles of comparative impairment[vii].
[i] District of Columbia v. Coleman, 667 A.2d 811 (D.C. 1995)
[ii] Gantes v. Kason Corp., 145 N.J. 478 (N.J. 1996)
[iii] District of Columbia v. Coleman, 667 A.2d 811 (D.C. 1995)
[v] CRS Recovery, Inc. v. Laxton, 2010 U.S. App. LEXIS 7050 (9th Cir. Cal. Apr. 6, 2010)
[vi] District of Columbia v. Coleman, 667 A.2d 811 (D.C. 1995)
[vii] Cable v. Sahara Tahoe Corp., 93 Cal. App. 3d 384 (Cal. App. 2d Dist. 1979)