“Without Regard to Principles of Conflict of Laws”

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The phrase “without regard to principles of conflict of laws” appears at the end of many choice-of-law clauses:

This Agreement shall be governed by the laws of the United Kingdom without regard to its principles of conflict of law.

This Agreement shall be construed in accordance with the laws of Ontario without regard to its conflict of law provisions.

This Agreement shall be governed by the laws of the Republic of China, without regard to its principles concerning conflicts of laws.

This post first discusses the origins of this phrase. It then discusses several cases where U.S. judges have badly misinterpreted it.

History

The origins of the phrase “without regard to principles of conflict of laws” lie in decisions such as Duskin v. Pennsylvania-Central Airlines Corporation. In that case, decided in 1948, the Sixth Circuit interpreted a choice-of-law clause stating that the agreement would be governed by the “laws” of the state of Pennsylvania to select the whole law of Pennsylvania (including its conflicts rules) as opposed to the internal law of Pennsylvania (excluding its conflicts rules). The court then applied the conflict-of-laws rules of Pennsylvania to conclude that the plaintiff’s claims were, in fact, governed by the tort law of Alabama.

It is highly unlikely that this was the outcome that the parties intended. Who writes a Pennsylvania choice-of-law clause into a contract expecting to get Alabama law? In the court’s defense, however, the clause did not specify whether it was selecting the whole law of Pennsylvania (including its conflicts rules) or the internal law of Pennsylvania (excluding its conflicts rules).

The Restatement (Second) of Conflict of Laws, published in 1971, urged courts to adopt a different approach to resolving this ambiguity. Section 187(3) stated that the word “laws” in a choice-of-law clause should be construed to mean the internal law of the chosen jurisdiction rather than its whole law:

In the absence of a contrary indication of intention, the reference is to the local [internal] law of the state of the chosen law.

Section 187(3) prompted contract drafters across the United States to think seriously about this interpretive issue for the first time. They agreed with the drafters of the Restatement (Second) that the Duskin court had gotten it wrong. Instead of simply relying on the rule laid down in Section 187(3), however, they decided to redraft their choice-of-law clauses to make their intentions clear. This collective decision is why so many clauses today contain the phrase “without regard to principles of conflict of laws.”

Interestingly, this shift in drafting practice was prompted by the publication of the Restatement (Second) in 1971 rather than the Duskin decision in 1948. So far as I have been able to determine, the phrase “without regard to principles of conflict of laws” does not appear in any choice-of-law clause drafted before the late 1960s. In the decades that followed, however, this phrase became a standard feature. Its intended purpose, again, is to make clear that the contracting parties do not want courts to apply the conflicts rules of the chosen jurisdiction.

Unfortunately, courts do not always understand or appreciate this purpose. The ironic result is that language intended to clarify the parties’ intent is today the source of more confusion.

Misinterpretation

Conflict-of-laws doctrine distinguishes between substantive rules and procedural rules. When a rule is classified as substantive, the court must perform a choice-of-law analysis to determine the governing law. When a rule is classified as procedural, this analysis is not required. The court will always apply the procedural rules of the forum.

The states do not always agree, however, as to whether a particular issue should be classified as substantive or procedural. Half the states view statutes of limitations as procedural. The other half view them as substantive. This lack of consistency means that it can be difficult to determine whether a choice-of-law clause selects the statute of limitations of the chosen jurisdiction. When the parties write a choice-of-law clause into their contract choosing the law of Florida, for example, does that clause select Florida’s statute of limitations? If that issue is classified as substantive, then the answer is yes. If the issue is classified as procedural, then the answer is no.

In some cases, the choice-of-law clause will specifically address this distinction. It may choose the “substantive and procedural law” of Florida. Or it may select “the laws of Florida, including its statutes of limitations.” When the clause is silent, however, the courts must interpret it.

A surprising number of these interpretative forays have gone awry in recent years. In particular, some courts have interpreted the phrase “without regard to principles of conflict of laws” to mean that the parties intended to select the procedural law of the chosen jurisdiction as well as its substantive law. This interpretation is objectively incorrect. The plain text of this phrase—which makes no reference to either substance or procedure—does not purport to address this issue. And the history recounted above makes clear that the intended purpose of the clause is to select the internal law of the chosen jurisdiction instead of its whole law. Nevertheless, there are a number of decisions in which the courts have failed to appreciate this distinction.

In OrbusNeich Medical Co. Ltd., BVI v. Boston Scientific Corporation (2010), a federal district court had to determine whether a Massachusetts choice-of-law clause selected that state’s statute of limitations. It concluded that it did because the clause chose Massachusetts law “without regard for the conflicts of law provisions.” The court stated that this language “indicates to this court that the parties have selected Massachusetts law to govern all aspects of their dispute, without regard to their substantive or procedural nature.”

In Brill v. Regent Communications, Inc. (2014), the Indiana Court of Appeals concluded that the “without regard to conflict of law” language “mandate[d] the application of Virginia law to both substantive and procedural matters.” In so holding, it overruled the (correct) ruling by the trial court that the purpose of this language was to make clear that the parties did not want the court to apply the conflicts rules of the chosen jurisdiction.

In Rispens Seeds, Inc. v. Bailey Farms, Inc. (2020), the Michigan Court of Appeals held that the phrase “without regard to any conflict of law provision” was the functional equivalent of a choice-of-law clause expressly stating that Illinois law would govern any “procedural issues” arising out of the contract.

And in Leblanc v. Delta Airlines (2021), a federal district court held that held that the phrase “without regard to conflict of laws principles” clearly evidenced “an unequivocal intention to apply Georgia law to all aspects of litigation of the agreement, not just substantive issues.”

All of these decisions are wrong. The phrase “without regard to conflict of laws” does not select the procedural law of the chosen jurisdiction. It selects the internal law of the chosen jurisdiction. These things are not the same. And yet each of the courts referenced above treated them as though they were.

Conclusion

Edward Murrow always ended his broadcasts with: “Good night, and good luck.” Bob Barker, the longtime host of The Price Is Right, urged viewers to “Help control the pet population. Have your pets spayed or neutered.” The phrase “without regard to principles of conflict of laws” is, in its own way, just as famous a sign-off. It appears at the end of millions of choice-of-law clauses. It is, however, often misunderstood. Going forward, I would urge U.S. judges to resist the temptation to interpret this provision as having something to do with the distinction between substance and procedure.