Most Significant Relationship Rule

The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which has the most significant relationship to the occurrence and the parties[i].

Under the most significant relationship rule, the most significant factors are the parties’ domicile and the location of the tort[ii].  A parties’ forum selection clause in any applicable agreement is also a factor a court will consider.

In Bates v. Superior Court, 156 Ariz. 46 (Ariz. 1988), the court held that the inquiry to determine which state has the significant relationship is qualitative and not quantitative.

Thus, in a tort action, the local law of the state where the injury occurred determines the rights and liabilities of the parties, unless some other state has a more significant relationship with the occurrence and the parties as to the particular issue involved, in which event the local law of the latter state will govern[iii].

The state where the conduct occurred is most likely to be the state of most significant relationship when in addition to the injured person being domiciled or residing or doing business in the state, the injury occurred in the course of an activity or of a relationship, which is centered there.

In Murphy v. Colorado Aviation, Inc., 41 Colo. App. 237 (Colo. Ct. App. 1978), the court held that the choice of law rule applicable to multistate tort controversies is the significant contacts approach.

The general principles, which the forum should consider in determining which state has the most significant relationship with the cause of action, are as follows[iv]:

  • the rights and liabilities of the parties with respect to an issue in tort; and
  • contacts to be taken into account in applying the principles of a particular section to determine the law applicable to an issue.

The rights and liabilities of the parties with respect to an issue in tort are determined under the following principles[v]:

  • the needs of the interstate and international systems,
  • the relevant policies of the forum,
  • the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,
  • the protection of justified expectations,
  • the basic policies underlying the particular field of law,
  • certainty, predictability and uniformity of result, and
  • ease in the determination and application of the law to be applied.

The specific contacts to be taken into account when assessing which state has the most significant relationship to a tort claim include[vi]:

  • 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, if any, between the parties is centered.

Another significant rule is doctrine of depecage–whereby the contacts are evaluated according to their importance with respect to particular issues[vii].  Therefore, the court conducts a separate choice-of-law analysis for each issue in a case, attempting to determine which state has the most significant contacts with that issue.

In determining the most-significant relationship under a choice of law issue, the mere counting of contacts should not be determinative of the law to be applied[viii].  It is rather the relevancy of the contact in the terms of policy considerations important to the forum, vis-a-vis, other contact states.

Courts start with the premise that if the forum state is concerned it will not favor the application of a rule of law repugnant to its own policies, and that the law of the forum presumptively apply unless it becomes clear that non-forum contacts are of the greater significance.

In order to determine the most-significant relationship under a choice of law issue, consideration is given to the policies and interests of the forum state, the tort state, and of other states that may have an interest by virtue of the domicile of the parties or other relevant factors[ix].

In Wilcox v. Wilcox, 26 Wis. 2d 617 (Wis. 1965), the court observed that it is obvious that one state may have a legitimate concern with one facet or issue of the case, but not with another, and hence it is not necessary in each case to apply only the law of a single state to all phases of the lawsuit may well involve the application of the rules of the road of the tort state since it is that state that is primarily concerned with safety on its highways.

However, the degree of negligence necessary to ensure recovery may be unrelated to the policies of the tort state, but highly relevant to the policy of the forum state and as to that issue the law of the forum would govern.

Further, adoption of the most significant relationship test does not require a court to disregard a foreign jurisdiction’s law in all torts cases[x].  The flexibility of most significant relationship doctrine requires that each case be decided on its own facts.

[i] Pust v. Union Supply Co., 38 Colo. App. 435 (Colo. Ct. App. 1976)

[ii] Enron Wind Energy Sys., LLC v. Marathon Elec. Mfg. Corp. (In Enron Corp.)., 367 B.R. 384 (Bankr. S.D.N.Y. 2007)

[iii] Casey v. Manson Constr. & Engineering Co., 247 Ore. 274 (Or. 1967)

[iv] Melton v. Borg-Warner Corp., 467 F. Supp. 983 (W.D. Tex. 1979)

[v] Martinez v. Smithway Motor Xpress, Inc., 2000 U.S. Dist. LEXIS 17145 (N.D. Ill. Nov. 22, 2000)

[vi] Bates v. Superior Court, 156 Ariz. 46 (Ariz. 1988)

[vii] Martinez v. Smithway Motor Xpress, Inc., 2000 U.S. Dist. LEXIS 17145 (N.D. Ill. Nov. 22, 2000)

[viii] Wilcox v. Wilcox, 26 Wis. 2d 617 (Wis. 1965)

[ix] Wilcox v. Wilcox, 26 Wis. 2d 617 (Wis. 1965)

[x] Travelers Indem. Co. v. Lake, 594 A.2d 38 (Del. 1991)


Inside Most Significant Relationship Rule