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250 INTERNATIONAL TRANSACTIONS, BY THEIR NATURE, involve the application of the laws of at least two states: in the case of an international sale of goods, those of the seller and of the buyer. Where more than one legal system can potentially apply to any aspect of an international transaction an issue is raised of what is called, generally, “conflict of laws”. Each state has its own system of conflict of laws.89
251 The topic is within the realm of private international law: private, because it is not limited in its application to states, and international, because the transaction with which it deals involves more than one legal system. Private international law forms part of domestic law, and in this respect it differs fundamentally from public international law which is concerned with relationship among states.
252 There are a number of areas in which different states have the same rules of private international law, and there have been important harmonisation exercises in this field. More fundamentally, the objectives of private international law are generally similar in different jurisdictions, and are strongly influenced by concepts of comity,90 and mutual respect and recognition of the civil justice systems of other states. The basic objectives of New Zealand’s private international law are practical, and are intended to ensure the principled and efficient resolution of cross-border disputes and to protect New Zealand’s interests both domestically and as a member of the international community. Those objectives are:
253 With the objectives of private international law in mind, the present discussion of conflict of laws is pitched at two levels: at a purely domestic level and in a global context. For a New Zealand Law Commission reporting primarily to a New Zealand audience, including those who sell from or buy into New Zealand, it is convenient to focus on how New Zealand law (both domestic and conflicts rules) approaches some of these issues. But we must not lose sight of the fact that other legal systems involved in the transaction may deal with them quite differently. It is necessary constantly to consider what issues may arise, and what may be their answers, from the standpoint of the legal system of each state which may be or become involved in the litigation and enforcement of any judgment. For the assistance of readers (but not as a substitute for the need for specific advice in any given case) we include a brief comparative law study on the conflict of laws issues in appendix D of this report.
254 There are four broad issues which arise under the heading of conflict of laws.91 They are:
255 In the context of electronic commerce questions of conflict of laws are put into sharper focus by the fact that one cannot necessarily identify the physical location of the party with whom one is dealing. For example, if a New Zealand retailer of books orders books from Amazon.com (an internet book supplier) what law applies to that contract in the event of a dispute? In what state is Amazon.com located? The presumptive regime set out in the Vienna Sales Convention (applied to New Zealand through the Sale of Goods (United Nations Convention) Act 1994; see para 112) only applies where both parties to a dispute are located in states that are signatories to the Convention. If Amazon.com was located in a state that is not a signatory to the Convention (eg, Guatemala), the presumptive regime would not apply.
256 Problems involved in the use of the internet were identified by O’Connor J in Reno v American Civil Liberties Union 117 S Ct 2329 (1997). In the context of an indecency issue, O’Connor J compared the “real world” with the “electronic world” in the following terms:
A minor can see an adult dance show only if he enters an establishment that provides such entertainment. And should he attempt to do so, the minor will not be able to conceal completely his identity (or, consequently his age). Thus, the twin characteristics of geography and identity enable the establishment’s proprietor to prevent children from entering the establishment, but to let adults inside.
The electronic world is fundamentally different. Because it is no more than the inter-connection of electronic pathways, cyberspace allows speakers and listeners to mask their identities. Cyberspace undeniably reflects some form of geography; chat rooms and Web sites, for example, exist at fixed “locations” on the Internet. Since users can transmit and receive messages on the Internet without revealing anything about their identities or ages, . . . however, it is not currently possible to exclude persons from accessing certain messages on the basis of their identity.
Cyberspace differs from the physical world in another basic way: Cyberspace is malleable. Thus, it is possible to construct barriers in cyberspace and use them to screen for identity, making cyberspace more like the physical world and, consequently, more amenable to zoning laws. This transformation of cyberspace is already under way. . . . Internet speakers (who use post-material on the Internet) have begun to zone cyberspace through the use of “gateway” technology. Such technology requires Internet users to enter information about themselves – perhaps an adult identification number or a credit card number – before they can access certain areas of cyberspace, . . . much like a bouncer checks a person’s driver’s license before admitting him to a night club. (909; original footnotes omitted)92
257 It is necessary to bear in mind these fundamental differences when addressing conflict of laws issues in relation to electronic commerce. Some issues require complex analysis. Generally, however, once analysed correctly, existing principles of conflict of laws will enable resolution of matters in issue.
258 The first obligation of any court asked to determine a case is to consider whether it possesses jurisdiction to entertain the case under the law of its own state (the law of the forum, or lex fori). “Jurisdiction” in this sense is being used to denote the possession of authority over a dispute, and we term it “basic jurisdiction”. Elsewhere in this chapter “jurisdiction” is also used in a second and third sense, each broader than the first. The second refers to the possession of authority over a dispute and the decision to exercise basic jurisdiction and uses the word in that sense without adjective. The third refers to the territory over which the court in question has governance. This last case we refer to as “territorial jurisdiction”.
259 Under New Zealand law its courts possess basic jurisdiction only if
260 The High Court is a court having general authority to administer justice throughout New Zealand, and is called a court of general jurisdiction: see Reid v Rowley [1977] 2 NZLR 472, 483 (which employs the term in the sense of basic jurisdiction). The jurisdiction of the High Court derives from s16 of the Judicature Act 1908 which states:
The Court shall continue to have all the jurisdiction which it had on the coming into operation of this Act and all judicial jurisdiction which may be necessary to administer the laws of New Zealand.
(The sense of basic jurisdiction).
261 This provision conferred on the High Court all the legal (or common law), equitable, and probate jurisdiction which the superior courts had in England at that time (see Laws NZ, Courts, para 132). Section 16 also preserved the court’s inherent basic jurisdiction, that being the basic jurisdiction (or authority) to enable the High Court to make any order necessary for it to act effectively, subject only to statutory or regulatory provisions to the contrary (see Laws NZ, Courts, para 11; Hunt v BP Exploration Co (Libya) Ltd [1980] 1 NZLR 104 provides an example of inherent jurisdiction springing from s 16).
262 Under the common law adopted as part of the law of New Zealand, New Zealand courts have basic jurisdiction over a person resident overseas and events occurring outside the territorial jurisdiction so long as the damage is sustained within New Zealand.93 However, the more tenuous the connection between the conduct and New Zealand, the less likely a New Zealand court is to consider New Zealand the appropriate forum to determine matters in issue and exercise jurisdiction.
263 In contrast, the District Court, not being a court of inherent jurisdiction, is reliant for its basic jurisdiction upon statute in the form of the District Courts Act 1947 ss 29–42A (see generally Laws NZ, Courts, para 42). Under s 29 of that Act the District Court’s basic jurisdiction in civil matters is generally limited to claims of not more than $200,000.94
264 The foundation of basic jurisdiction is proper service on a defendant. Proceedings can be served on a defendant in New Zealand as of right. The law of New Zealand authorises service on an overseas defendant if there are circumstances connecting the defendant to the New Zealand territorial jurisdiction, as set out in rule 219 of the High Court Rules. Rule 219 provides:
Where in any proceeding statement of claim or counterclaim and the relevant notice of proceeding or third party notice cannot be served in New Zealand under these rules, they may be served out of New Zealand without leave in the following cases:
(a) Where any act or omission for or in respect of which damages are claimed was done or occurred in New Zealand:
(b) Where the contract sought to be enforced or rescinded, dissolved, annulled, or otherwise affected in any proceeding, or for the breach whereof damages or other relief is demanded in the proceeding
(i) Was made or entered into in New Zealand; or
(ii) Was made by or through an agent trading or residing within New Zealand; or
(iii) Was to be wholly or in part performed in New Zealand; or
(iv) Was by its terms or by implication to be governed by New Zealand law:
(c) Where there has been a breach in New Zealand of any contract, wherever made:
(d) Where it is sought to compel or restrain the performance of any act in New Zealand:
(e) Where the subject-matter of the proceeding is land, stock, or other property situated in New Zealand, or any act, deed, will, instrument, or thing affecting such land, stock, or property:
(f) Where the proceeding is for the execution of the trusts of any written instrument of which the person to be served is a trustee and which ought to be executed according to the law of New Zealand:
(g) Where any relief is sought against any person domiciled or ordinarily resident in New Zealand:
(h) Where any person out of New Zealand is a necessary or proper party to a proceeding properly brought against some other person duly served or to be served within New Zealand:
(i) Where the proceeding is for the administration of the estate of any deceased person who at the time of his death was domiciled in New Zealand:
(j) Where the proceeding is brought under the Carriage by Air Act 1967, unless the party to be served is a High Contracting Party to a Convention therein set out:
(k) Where the proceeding is a proceeding for relief under the Matrimonial Property Act 1963 or the Matrimonial Property Act 1976, and the Court has jurisdiction to hear and determine the proceeding:
(l) Where the proceeding is brought under the Marine Pollution Act 1974:
(m) Where the person to be served has submitted to the jurisdiction of the Court.
265 Where the circumstances do not fall within High Court Rule 219, the plaintiff must seek leave pursuant to rule 220 to serve proceedings on an overseas defendant (see generally Laws NZ, Courts). Rule 220 provides:
(1) In any other proceeding which the Court has jurisdiction to hear and determine, any document may be served out of New Zealand by leave of the Court.
(2) An application for leave under this rule shall be made on notice to every party other than the party intended to be served.
. . .
(4) Upon any application for leave under this rule, the Court, in exercising its discretion, shall have regard to
(a) The amount or value of the property in dispute or sought to be recovered; and
(b) The existence, in the place of residence of the person to be served, of a Court having jurisdiction in the matter in question; and
(c) The comparative cost and convenience of proceeding in New Zealand or in the place of residence of the person to be served.
. . .
It should be noted that different countries apply different connecting factors to determine whether or not an overseas defendant can be served. Also, New Zealand’s rules as to recognition of foreign judgments do not mirror precisely the rules relating to service of New Zealand proceedings overseas.
266 The provisions of the District Courts Rules 1992 in relation to service out of the jurisdiction and forum conveniens are identical to the provisions contained in the High Court Rules. Rules 242–243 of the District Courts Rules cover service out of New Zealand, while protest to jurisdiction is covered by rule 139.
267 High Court Rule 220 is an example of a long-arm statutory provision. It vests the court with a wide discretion to determine whether or not an overseas defendant can be served if the circumstances do not fit within those stipulated by rule 219: see Cockburn v Kinzie Industries Inc (1988) 1 PRNZ 243.
268 Some statutes seek to give New Zealand courts basic jurisdiction in respect of conduct which occurs at least in part out of the territorial jurisdiction.95 It is clear that the courts will interpret strictly statutes which seek to give extra-territorial jurisdiction: unless clear language is used, a state will not be taken as intending to legislate in regard to matters lying outside its territorial jurisdiction: Mount Albert Borough Council v Australian Temperance and General Mutual Life Assurance Society Ltd [1938] AC 224 (PC) 243.
269 An example of a statute which purports to apply to persons outside New Zealand (and which is likely to be applicable in the electronic commerce environment) is s 3 of the Fair Trading Act 1986:
This Act extends to the engaging in conduct outside New Zealand by any person resident or carrying on business in New Zealand to the extent that such conduct relates to the supply of goods or services, or the granting of interests in land, within New Zealand.
270 The question whether representations made on the internet or via other means of electronic communication can constitute “carrying on business in New Zealand” under that provision remains untested in the courts. However, there is potential for the Act to apply to a person who is outside New Zealand if that person offers goods or services for sale over the internet and those goods or services are supplied within New Zealand (Tokeley 1997 65). Australian authority has already established that misrepresentations made from outside Australia by telephone and facsimile to an Australian company constitute “carrying on business within Australia” for the purposes of s 5 of the Trade Practices Act 1974 (Cth): Paper Products Pty Ltd v Tomlinsons (Rochdale) (1993) 122 ALR 279, 287.
271 It is likely that misrepresentations made from outside New Zealand by email or electronic data interchange (analogous to telephone and facsimile communications) to New Zealand based traders in respect of goods, services or interests in land in New Zealand would fall within the Fair Trading Act 1986. It is more debatable whether the section would cover placement of misleading information on the internet which can be accessed from New Zealand but which does not relate, at the time of placement on the internet, specifically to the supply of goods or services, or the granting of interests in land, within New Zealand (Tokeley 1997 64–65).
272 A United States example of a long-arm statute is a statute which provides for personal jurisdiction, via substituted service of process, over persons or corporations which are not residents of the state but which go voluntarily into the state, directly or by agent, to communicate with persons within the state for limited purposes (Black’s Law Dictionary 1990 942; see also International Shoe Co v State of Washington 326 US 310, 316 (1945)). In this context an issue arises whether internet activity in a state is sufficient to endow that state with basic jurisdiction over the subject matter of the dispute: Maritz Inc v CyberGold Inc 947 F Supp 1328 (ED Mo 1996); reconsideration denied 947 F Supp 1338 (ED Mo 1996).
273 In France, long-arm statutes rely on the place of legal domicile or citizenship (Park and Cromie 1990 28; see also the French New Code of Civil Procedure article 42).
274 In a New Zealand context it is necessary to focus upon the following questions in determining whether internet activity will be sufficient to confer basic jurisdiction upon a New Zealand court under the High Court and District Courts rules in a suit for breach of contract:
These questions focus attention on the nature of internet activity. If any of these tests is satisfied a New Zealand court has basic jurisdiction over the dispute.
275 So far as tortious proceedings are concerned it will be necessary for the court to consider whether any act was done, or whether any omission occurred in New Zealand in respect of which damages are claimed in the proceeding before the court: High Court Rule 219(a) and District Court Rule 242(a); see also Kuwait Asia Bank EC v National Mutual Life Nominees Limited [1989] 2 NZLR 43; [1989] 2 NZLR 50 (CA); [1990] 3 NZLR 513 (PC).
276 Problems are caused when electronic commerce is in issue because under the law of New Zealand, and many other states, territory is the bedrock for determining basic jurisdiction, and electronic commerce is not territorially based; the physical location of the party is not necessarily relevant to the transaction. The type of problems caused by internet activity can be readily seen from a consideration of materials placed before the United States District Court in Pennsylvania in American Civil Liberties Union v Reno 929 F Supp 824 (ED, Pa, 1996) (affirmed on appeal by the Supreme Court: 117 S Ct 2329 (1997); see also 111 Harvard LR 329–349 (1997)). American Civil Liberties Union v Reno provides comment on the history of the internet; the nature of cyberspace; the way in which individuals can access the internet; methods by which communication can occur over the internet; and the operation of the world wide web (830–838). See also Oggi Advertising Limited v McKenzie (unreported, HC, Auckland, 2 June 1998, CP147/98, 4–9; to be reported in [1998] NZLR) which refers to these matters in the context of a passing off claim arising out of the use of domain names.
277 In Maritz Inc v CyberGold Inc 947 F Supp 1328 (ED Mo 1996) a direct issue of conflict of laws relating to the internet came before the United States District Court in Missouri. Maritz Inc brought an action against the operator of an internet site (CyberGold Inc) for trademark infringement. At issue was whether a court in Missouri could assume personal jurisdiction for “commission of a tortious act” when the operator had its place of business in California, where the internet server was also located. District Judge Webber held that the Missouri long-arm statute applied and that the proceedings should not be stayed, taking the view that under the Missouri long-arm statute there was a sufficient connection with Missouri for a court in that state to assume jurisdiction in the proceeding before the court (1337).
278 In the United States there have been a series of cases which have discussed the question of whether internet advertising is sufficient to confer personal jurisdiction over an out of state defendant (see generally, Bauman 1997; Flower 1997 851–860). In discussing the cases determined in different states of the United States, Flower referred in particular to the Connecticut case of Inset Systems Inc v Instruction Set Inc 937 F Supp 161 (D Conn 1996) in which the court found that personal jurisdiction existed over a Massachusetts corporation in a suit brought for trademark infringement even though the defendant did not maintain an office or have a sales force in Connecticut. The courts took the view that the defendant’s use of an internet website for advertising satisfied the minimum contact necessary to establish personal jurisdiction. As Flower points out:
The court also found that this Internet advertising was more purposeful than standard radio or television advertising because once posted, it was available continuously to any Internet user. (Flower 165)
279 When courts in two different states each consider that they have basic jurisdiction the next question is whether one court will decline to exercise its basic jurisdiction and defer to the other. In an extreme case, a court that has determined it will exercise jurisdiction may, upon application of a party, issue an anti-suit injunction, in an attempt to pre-empt access to a court in another territorial jurisdiction. Although undoubtedly available for exercise by the New Zealand courts they have yet to utilise the anti-suit injunction.96
280 In New Zealand, the High Court or a District Court may, on the application of a named defendant, direct that the proceedings be stayed because it is more appropriate for the proceedings to be dealt with in a territorial jurisdiction other than New Zealand (High Court Rule 131; District Courts Rule 139). If New Zealand is regarded as the more appropriate jurisdiction then New Zealand is forum conveniens; if New Zealand is not regarded as the most appropriate venue then New Zealand is forum non conveniens.
281 As with basic jurisdiction, so the laws of different states may vary in their test as to whether or not to exercise jurisdiction. Because each state applies its own domestic rules on the topic regrettable differences in approach emerge which cause difficulties in practice. For example, there is, unfortunately, a fundamental difference of approach between the test applied by courts in New Zealand and Australia to determine which forum is more appropriate.
282 The test applied in New Zealand differs according to whether or not the proceedings are served as of right. In general it can be said that where a party is served in New Zealand, the court is inclined to exercise its jurisdiction and, where a proceeding is served on an overseas party, the court is less inclined to exercise its jurisdiction.
283 Where the circumstances fall within High Court Rule 219, proceedings may be served on a defendant as of right. It is then open for the defendant to protest a New Zealand court exercising basic jurisdiction. The defendant may in addition, or alternatively, seek to satisfy the New Zealand court that there is another court with jurisdiction to hear and determine the matter, in which the proceeding could be more suitably tried in the interests of the parties and for the ends of justice: the New Zealand court is forum non conveniens.97
284 Where recourse to High Court Rule 220 is necessary to serve a party outside New Zealand, the court must consider, among other things, whether New Zealand is an appropriate forum before granting leave for the plaintiff to serve an overseas party. At this stage, the party being served will not be aware of the application before the court. Accordingly, it is for the plaintiff to persuade the court that New Zealand is forum conveniens: Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 (HL). Upon the evidence of the applicant, the court may be satisfied that New Zealand is forum conveniens, and allow service on the overseas party. Once served, the overseas party has the right to apply for a stay of the New Zealand proceedings on the ground that the New Zealand court is forum non conveniens.98 If the court does not consider that New Zealand is forum conveniens, the court will allow the objection to jurisdiction.
285 In Australia a very different approach is taken to forum conveniens: the Australian courts will assume jurisdiction unless it is shown that Australia is clearly inappropriate as a forum to resolve the litigation: Voth v Manildra Flour Mills (1990) 171 CLR 538 (HCA); also Henry v Henry (1996) 135 ALR 564 (HCA). Compatibility of approach to forum conveniens between Australia and New Zealand is made difficult by this presumption and has led to stalemate in trans-Tasman litigation: Gilmore v Gilmore (1993) 10 FRNZ 469. If New Zealand were to adopt the same rule, the potential for stalemate in trans-Tasman disputes would be increased rather than reduced as each court would be likely to assume jurisdiction.
286 Various practical factors are taken into account by the court in determining whether New Zealand is the appropriate forum. In Kidd v Van Heeren [1998] 1 NZLR 324, 342–343, citing with approval the content of Laws NZ, Conflict of Laws: Jurisdiction and Foreign Judgments para 30, these factors were said to include:
287 A further significant factor is whether the defendant accepts the territorial jurisdiction in which proceedings have been issued. Filing a pleading, such as a statement of defence, will constitute submission to jurisdiction and waiver of the right to object.99
288 When the parties have agreed, in advance, that a dispute will be resolved in a state other than New Zealand, the New Zealand courts will, unless strong cause to the contrary is shown, stay any New Zealand proceedings to enable the dispute to be resolved in the jurisdiction of the parties’ choice: Society of Lloyd’s and Oxford Members’ Agency Limited v Hyslop [1993] 3 NZLR 135 (CA); Kidd v Van Heeren [1998] 1 NZLR 324. These agreements are choice of forum clauses as opposed to choice of law clauses (see para 291). As with presumptive choice of law rules (see para 296), we invite submissions on whether a presumptive rule should be enacted dealing with forum by reference to the state to which goods are to be delivered or services provided.
289 In deciding whether or not to exercise jurisdiction, the court needs to bear in mind concepts of comity and practical considerations to ensure, so far as possible, disputes are dealt with in an appropriate way. It is not possible, however, especially when dealing with cases arising from the operation of electronic commerce, to predict with any degree of certainty whether the court will exercise or decline to exercise jurisdiction. With lack of certainty, the issue is whether the law can be made more workable. An option for the short term is to enact in New Zealand a presumptive rule which provides:
290 A more ambitious option is to promote international discussion with a view to formulating a convention likely to be acceded to by most of New Zealand’s major trading partners. At this stage, the Law Commission prefers the latter approach in the long term, but calls for submissions on the preferred method of reform.
291 The question whether a New Zealand court has jurisdiction is distinct from the question as to the law which governs the rights in respect of the contract or tortious act. Parties to a contract are free to choose the law which will apply to their contract. If parties include a New Zealand choice of law clause this will be treated as supporting a determination that New Zealand is forum conveniens. However, if a New Zealand court determines that New Zealand is forum conveniens, and the choice of law clause is upheld and specifies a foreign law, then the trial will occur in New Zealand and apply foreign law. Where a question of foreign law is involved that law must be proved as a question of fact in the proceeding by admissible evidence from a witness; in the absence of evidence as to foreign law, it will be presumed to correspond with New Zealand’s domestic law.101
292 Under New Zealand law the court will give effect:
293 It is open to the parties to select, subject to issues of public policy, either a particular system of law or something wider by which their agreement should be interpreted. For example, it is not uncommon in international arbitration for the law governing the agreement to be “internationally accepted principles of law governing contractual relations” (Hafez 1998 s1–s15). That phrase is derived from s 38(1) of the Statute of the International Court of Justice: see also Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334.
294 The ability of parties to select a particular domestic law in advance which will be applied to contractual disputes gives certainty to the contract. However, where liability arises out of tortious acts or out of specific laws which deal with non-consensual conduct it will not be possible to provide, in advance, for the law of a particular jurisdiction to apply (see generally Prebble 1973 435, 636).
295 Although the parties to any particular dispute are unlikely to have agreed what law is to apply in the event of an action being brought in tort, there are various rules which the court will apply in determining what law applies. Generally speaking, although the issues are much more complex than this, a New Zealand court is likely to apply New Zealand law provided that the alleged misconduct either occurred in New Zealand or occurred overseas in circumstances where both:
296 In the absence of a choice of law clause and assuming there is a dispute between parties as to the law which is to govern their relations, the broad tests applied by the court make it difficult to predict in any particular case the law which a New Zealand court will determine governs the contract. In line with our proposals for determining forum conveniens (see paras 288–290), we suggest a short-term option to make the domestic law of New Zealand regarding choice of law more certain through the creation of a presumptive rule which provides:
The existence of such presumptive rules will focus attention on the issues by either the parties or their advisers and may encourage greater use of choice of law and choice of forum clauses in international contracts.
297 Another option for the long-term is to encourage international discussion with a view to formulating a convention likely to be acceded to by most of New Zealand’s major trading partners. At this stage, the Law Commission prefers the latter approach, but calls for submissions on the preferred method of reform.
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Should New Zealand adopt presumptive rules as to choice of law and choice
of forum such as those relating to sales contracts provided for by the Vienna
Sales Convention?
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298 A foreign judgment has no direct operation in New Zealand. However, some foreign judgments may provide the basis upon which a New Zealand court will grant a judgment which will then be enforced in the same way as any New Zealand judgment.
299 Problems arise when enforcement of a judgment of a court of state A is sought in state B and the courts of state B (say New Zealand, perhaps because assets exist here) do not accept that the courts of state A possessed jurisdiction to determine the case. The judgment will not be recognised if, under the conflict of laws rules of state B, state A had no jurisdiction to determine the case.
300 At common law a New Zealand court may grant judgment to enforce a money judgment given against a defendant by a foreign court whose jurisdiction over the defendant is recognised by New Zealand’s rules of private international law,103 provided:
301 There are certain types of judgments given in foreign courts which, as a matter of public policy, a New Zealand court will decline to enforce. Examples are attempts to enforce foreign revenue and penal law;105 judgments obtained by fraud; and judgments given overseas in breach of the rules of natural justice, as applied in New Zealand: Connor v Connor [1974] 1 NZLR 632.
302 The jurisdiction of a foreign court to give a judgment in personam which binds the judgment debtor will be recognised in New Zealand at common law if the judgment debtor:
But, as Goddard stated in “Conflict of Laws: The International Element in Commerce and Litigation” in November 1991, a New Zealand court will not impose sanctions of any kind for failure to comply with an order made by a foreign court (35).
303 Further, an action may be brought at common law on the basis of a cause of action estoppel or an issue estoppel created as between the parties to the foreign proceedings which will then result in a judgment of the New Zealand court which can be enforced in the normal way (Laws NZ, Conflict of Laws: Jurisdiction and Foreign Judgments para 62).
304 A judgment of a foreign court may be registered in New Zealand if it was given by a court of a state to which the Reciprocal Enforcement of Judgments Act 1934 refers. In addition, some judgments will be recognised under the Judicature Act 1908 s 56(1).106
305 Over the last 2 decades New Zealand’s pattern of trade has reflected an attempt to diversify both its markets and its range of products (New Zealand Official Yearbook 1997, 559). The bulk of the country’s trade is with Australia, the United States, the European Community and Japan. There are also major trading relationships with the People’s Republic of China, Republic of Korea (South Korea), Malaysia, Singapore, Chinese Taipei (Taiwan) and Thailand, as well as substantial trade with countries in the Middle East, notably Saudi Arabia, Turkey and Iran (New Zealand Official Year Book 1998 520–526).
306 In deciding whether there is a need to legislate in the area of conflict of laws one must consider the laws of our major trading partners to see whether some degree of consistency can be achieved. In that regard, we refer to appendix D. Two points are of note:
307 In the European Union some statutory modification of conflict of laws rules has emerged through the Brussels Convention and Lugano Convention: for example, Coin Controls Ltd v Suzo International (UK) Ltd & Ors [1998] 3 WLR 420. The possibility of the adoption of those conventions in this part of the world has been considered by the Australian Law Reform Commission. Its 1996 report, Legal Risk in International Transactions, notes that the basis of the Brussels Convention is one of mutual recognition of civil and commercial judgments of Contracting States without any special procedure being required (para 9.22). The Lugano Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters deals with matters of both jurisdiction and enforcement of judgments in civil and commercial matters and extends the regime established by the Brussels Convention to the whole of Western Europe (para 9.42). Consideration will need to be given to whether the Lugano Convention should be adapted to and adopted in New Zealand.107The benefit of subscribing to a document such as the Lugano Convention is that New Zealand’s law would be brought into line with the approach adopted by a number of our major trading partners.
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Should New Zealand adopt the Lugano Convention on conflict of laws and
recognition of foreign judgments?
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308 The use of electronic commerce has the capacity to enhance business profitability and, therefore, the national economy. To achieve maximum benefits from its use unnecessary costs must be avoided. Unnecessary costs are incurred when disputes arise and arguments ensue over issues such as the law which applies and the state in which the dispute will be litigated. These costs can be reduced by parties providing for the result in their contracts. If parties do not take heed of the need to provide a contractual solution some form of presumptive regime may assist. Also, in the area of recognition of foreign judgments, some benefits may be gained from adoption of a convention such as the Lugano Convention. Ultimately, however, because the internet is a global resource a global solution to the problems caused by conflict of laws rules is preferable. We await comment on the issues we have raised for discussion.
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