Property (conflict)

In Conflict of Laws, the subject of Property Law follows the terminology of the civil law systems out of Comity. Hence, there are two types of property:
*"Immovables" is the equivalent of "real property" in common law systems, i.e. it is land or any permanent feature or structure above or below the surface (e.g. mineral rights).
*All other property is considered "movables", i.e. the equivalent of "personal property" or "personalty" in common law systems, and this property is either "tangible" or "intangible", i.e. it is either physical property that can be touched like a computer, or it is an enforceable right like a patent, some other form of intellectual property or a chose in action.

Choice of law

As societies but sex, the ownership of and control over land was the major mechanism for accumulating wealth and exercising power. In modern times, there are many new forms of property for people to own and there are many new profitable ways for people to exploit their rights over property. Hence, the declared function of Property Law is to govern how title to property is created and negotiated, and the means available to protect those rights against unjustified interference by non-title holders. The standard choice of law rule is stated to be the application of the "lex situs". In England and Wales, Australia, Canada, and the United States this rule derives from "British South Africa Co v. Companhia de Moçambique" [1893] A.C. 602 in English law, and in the U.S.: "Massie v. Watts", 10 U.S. (6 Cranch.) 148 (1810); "Clarke v. Clarke", 178 U.S. 186 (1900); and "Fall v. Eastin", 215 U.S. 1 (1909) which hold that courts have no jurisdiction to hear any lawsuit to determine the title to, the right to possession of, or the recovery of damages for trespass to any immovable property located outside their territorial jurisdiction.

But this simple proposition requires considerable caution given that this topic is lacking modern development (all the major source cases are quite old) and there is substantial overlap with contracts by which rights in or over property may be created and/or transferred, the various systems of Equity which, through the law of trusts, control the extent to which non-title holders may have an interest in property, succession which regulates inheritance, and tort by which unlawful interferences with property may be defended. Hence, questions of jurisdiction and the scope of remedies available and capable of being enforced have become confused.

The problems in determining the relevant rules

All developed states recognise the significance of some types of property and specify formal requirements for any dealings, provide title registration systems so that ownership can be verified, and impose minimum levels of status and capacity for enjoying the privileges of ownership.

Land

In the case of land, the "lex situs" provides the regulatory system for all transactions affecting land within state boundaries and the application of this rule has the virtue of easy application and predictability of outcome. It is also most likely to be the forum conveniens with the fewest problems in gaining the enforcement of any judgment. Thus, in tort cases involving land, most "lex loci delicti commissi" rules select the "lex situs" as the "lex causae". Forum shopping has been bringing major cases outside the forum of the "situs", e.g. actions in the U.S. relating to the accident at the Union Carbide plant at Bhopal, India, and in Australia relating to the pollution of the Fly River system in Papua New Guinea by the Broken Hill Proprietary Company Ltd. While the "lex situs" rule has prevailed, it is noted that the Compensation (Prohibition of Foreign Legal Proceedings) Act 1995 enacted in P.N.G. made it unlawful to make out-of-state claims for compensation. Although this was not a relevant factor in the Australian decision, it is indicative of a potential problem in the manipulation of "situs" laws by powerful multinational corporations. There may also be problems if states adopt policies of nationalization or expropriation with less than full compensation and seek to seize property belonging to "foreign" owners. As an aspect of sovereignty, such laws would be effective within the territory of the legislating state, but see the case law in public policy which empowers the forum courts to refuse extraterritorial effect to such laws.

In contractual or exchange-based relationships, a judgment cannot be made that would be inconsistent with the "lex situs". But equitable issues are less clear since they are "in personam" rather than "in rem", i.e. they affect the conscience of the parties and may therefore offer remedies that do not match the "lex situs". For example, it may be alleged that a trustee of land held in several states has breached his fiduciary duty to the beneficiaries. That any order of the forum court might not match the scope of remedies available under the "lex situs" cannot prevent the equitable jurisdiction from ordering the trustee to comply.

Tangible movables

In the case of tangible movable property, the choice of a rule is less clear cut because the "situs" may change and so may be subject to manipulation by the interested parties (see the potential problem of evasion). By way of example:
*a husband wishes to evade the operation of community property rules. A wide range of property has been acquired from many different states both before and during the marriage. The husband moves all portable objects to, and establishes a habitual residence in, a jurisdiction that does not enforce community property rules; or
*a company owns an aircraft which routinely flies between several states. It is maintained in different locations and may be stored wherever the company directs when not in use.Seeking to apply the "lex situs" at the time of acquisition may not be helpful. This could be fortuitous, e.g. the buyer happened to be there when the goods were identified or the best price among many was offered in this state. Further, not everyone considers their legal situation when acquiring even expensive assets so applying the initial "lex situs" may be artificial and ignore the relevance of other laws. Thus, in the first example, the relevant matrimonial property laws or "lex domicilii", "lex patriae" or law of habitual residence of the new spouses might have an effect at the time of marriage to vary rights whether as vested rights or in subsequently acquired property. Or the "lex fori" of the court in which the title to the property is subsequently litigated may be the "situs" at the time the proceedings were commenced.

In the second example, the law of incorporation (the "lex incorporationis") may affect the nature of the interest that the company might have in the property and impose limits on what might be done with assets, but the business decision to locate in this state might have been dictated by the friendliness of the taxation regime or aspects of their corporate governance system, and its laws may have little relevance to the particular transactions in dispute. In this case, a rule referring to the law of the place of business at the time the transaction might be best so that those dealing with international business entities have an easily identified law by which to judge their rights.

Choses in action

Intellectual property rights are usually capable of being protected through some form of public registration system and therefore the law of the place of registration is an adequate rule for most purposes. In some states, copyright comes into existence through the act of investing labor in the process of creation and registration is not a precondition to validity. If the relevant state has no registration system, the place of creation will be appropriate subject to the obvious problem of proving what was created. The whole purpose of this branch of the law is to create monopolies for the commercial exploitation of creativity. Hence, the "situs" state and its courts have a direct economic and public policy interest in protecting the local monopoly rights in the relevant ideas by refusing recognition to any other state's registered monopoly rights, i.e. the registration process creates territorial rights co-extensive with the boundaries of each state and, as with criminal laws, there is no extraterritorial enforcement because this would breach sovereignty.

The "situs" of shares will be either the "lex incorporationis" or the law of the place(s) where a share register is maintained which may vary if the company is traded on stock exchanges in several different states. All other forms of "chose" will derive their existence from some form of contract and therefore the proper law will apply in the usual way.


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