Characterization and Classification in Conflict of Laws

Characterization and Classification in Conflict of Laws

Introduction

In a conflict-of-laws case, a court cannot simply look at two competing legal rules and immediately decide which one should govern. Before applying a choice-of-law rule, the court often must first determine what kind of legal issue it is dealing with.

Is the issue one of contract, tort, property, family law, procedure, or some other category? Is a particular rule substantive or procedural? Is a particular claim contractual even though it arises from conduct that might also support a tort claim? Is a statute of limitations a procedural matter governed by the forum’s law, or a substantive limitation that should follow the law selected under the forum’s choice-of-law rules?

This preliminary process is known as characterization or classification.

The terminology varies, but the basic idea is the same: the court must classify the legal issue before it can determine which conflict-of-laws rule governs that issue. Cornell’s Legal Information Institute explains that characterization or classification is part of the process by which a court determines what law should apply, and that the determination is ordinarily made according to the law of the forum. Cornell Legal Information Institute — Conflict of Laws

Characterization may appear technical, but it can be outcome-determinative. Two jurisdictions may apply completely different rules depending upon whether an issue is characterized as substantive or procedural, contractual or tortious, property-related or personal, or belonging to one legal category rather than another.

The central difficulty is therefore not merely discovering the law. It is determining which legal category the issue belongs to for purposes of the conflict-of-laws analysis.

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1. What Is Characterization?

Characterization is the process of determining the legal nature or classification of an issue for purposes of applying conflict-of-laws rules.

Suppose a lawsuit involves a transaction between a person in State A and a company incorporated in State B. The contract was negotiated partly in State A, performed partly in State B, and the alleged injury occurred in State C.

The court may have to decide several separate questions:

• Is the dispute contractual or tortious?
• Is a particular rule substantive or procedural?
• Is a limitation period procedural or substantive?
• Is a particular interest classified as real property or personal property?
• Is an issue one of capacity, validity, or enforcement?
• Does a particular statute regulate conduct or merely establish a method of litigation?

Each classification may lead to a different choice-of-law rule.

Characterization therefore functions as a gateway question.

The court first identifies the legal issue.

It then characterizes that issue.

It applies the appropriate choice-of-law methodology.

Finally, it selects the law that governs the issue.

This sequence is particularly important because modern conflict-of-laws analysis generally does not assume that an entire lawsuit must be governed by the law of one jurisdiction.

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2. Why Characterization Matters

The importance of characterization becomes apparent when two jurisdictions treat the same legal question differently.

Imagine that State A treats a particular rule as procedural while State B treats the same rule as substantive.

If the forum follows the traditional principle that procedural matters are governed by the law of the forum, the classification could determine the result.

For example, assume a plaintiff brings an action in State A involving conduct that occurred in State B.

State A has a two-year limitations period.

State B has a five-year limitations period.

If the forum characterizes the limitations period as procedural, it may apply State A’s two-year period.

If it characterizes the limitation as substantive, the court may instead apply the limitations rule selected under its substantive choice-of-law methodology, potentially resulting in application of State B’s five-year period.

Thus, characterization is not merely a matter of terminology.

Classification can determine which legal system gets to decide the substantive question.

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3. Characterization Is Different From Choice of Law

Characterization and choice of law are related but distinct.

Characterization asks:

What kind of legal issue is this?

Choice of law asks:

Which jurisdiction’s law governs that issue?

Consider a negligence lawsuit involving an accident in one state and a plaintiff who resides in another.

The court might first characterize the issue as one concerning tort liability.

Only after identifying the issue as tortious does the court apply the forum’s tort choice-of-law methodology.

That methodology might consider:

• the place of injury;
• the place of conduct;
• the domicile or residence of the parties;
• the relationship between the parties;
• the policies of the competing jurisdictions;
• the parties’ justified expectations; and
• other contacts or interests identified by the applicable choice-of-law system.

Characterization therefore comes before the actual selection of governing law.

It is the classification of the issue, not the final selection of the jurisdiction whose law will govern it.

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4. The Traditional Procedural-Substantive Distinction

One of the oldest and most important characterization problems concerns the distinction between procedural law and substantive law.

Traditionally, American conflict-of-laws doctrine developed around the principle that:

Procedural matters are generally governed by the law of the forum, while substantive matters may be governed by the law selected through the forum’s choice-of-law rules.

The traditional terminology is often expressed through the Latin phrase lex fori, meaning the law of the forum.

Under this approach, a court generally applies its own procedural rules even when another jurisdiction’s substantive law governs the dispute.

For example, a court in State A might apply State B’s substantive tort law while using State A’s own rules concerning courtroom procedure.

The distinction made sense in part because courts naturally control the administration of their own proceedings.

But the distinction becomes difficult when a rule does not fit neatly into either category.

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5. What Is Procedural Law?

Procedural law generally concerns how litigation is conducted.

Examples may include rules concerning:

• pleadings;
• service of process;
• courtroom procedure;
• methods of presenting evidence;
• scheduling;
• joinder;
• trial administration;
• certain aspects of discovery; and
• the mechanics by which a claim is litigated.

These matters are ordinarily closely connected to the functioning of the forum’s judicial system.

A court generally does not want to conduct its proceedings according to the procedural rules of a foreign jurisdiction.

For example, if a case is being tried in a California court, the California court will ordinarily conduct the proceeding according to the procedural rules applicable in that court even if another state’s substantive law governs the underlying dispute.

But the word procedural does not automatically settle the question.

Some rules that appear procedural may have significant substantive consequences.

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6. What Is Substantive Law?

Substantive law generally determines the rights, duties, liabilities, and legal relationships of the parties.

Examples include rules governing:

• whether a contract is valid;
• whether a defendant is liable for negligence;
• whether punitive damages are available;
• whether a person owns particular property;
• whether a particular act creates liability;
• whether a party has a particular legal right;
• the elements of a cause of action; and
• the defenses that determine the existence or extent of liability.

Substantive law therefore tends to affect the legal relationship between the parties rather than merely the mechanics of the litigation.

When a conflict exists between jurisdictions concerning substantive rights, courts ordinarily must use their applicable choice-of-law methodology to determine which jurisdiction’s substantive law governs.

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7. The Problem With a Simple Procedural/Substantive Test

Although the procedural-substantive distinction remains important, modern conflict-of-laws analysis recognizes that it cannot always be applied mechanically.

A rule may have both procedural and substantive characteristics.

For example, a limitations period appears procedural because it establishes the period within which a lawsuit must be brought.

Yet limitations rules can also substantially affect whether a plaintiff possesses an enforceable claim at all.

Similarly, a damages limitation may look procedural because it regulates the amount that can be recovered in litigation. But it can also reflect a substantive policy concerning the extent of liability.

Courts therefore sometimes examine the purpose and effect of the particular rule, rather than relying exclusively on its label.

This is one reason characterization can be difficult.

A court must sometimes determine what the classification means for conflict-of-laws purposes, rather than simply adopting the classification used in another legal context.

The Restatement (Second) of Conflict of Laws recognizes this problem. Courts applying its approach have explained that a characterization used in an ordinary domestic-law context should not automatically control the characterization of the same concept in a conflict-of-laws analysis.

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8. Characterization Under the Law of the Forum

A traditional and important American principle is that the forum ordinarily characterizes the issue according to its own conflict-of-laws methodology.

The forum is the jurisdiction whose court is hearing the case.

For example, if a federal diversity case is pending in an Oregon federal court, the federal court ordinarily applies the conflict-of-laws principles that an Oregon state court would apply.

This follows from the broader Erie and Klaxon framework governing diversity jurisdiction.

The Ninth Circuit has expressly stated that in diversity cases federal courts apply the conflict-of-laws principles of the forum state and that characterization must likewise be made according to the law of the forum.

This is particularly important because the characterization question itself can potentially determine which jurisdiction’s law will ultimately govern.

The court therefore does not ordinarily ask:

How would the other jurisdiction characterize this issue?

Instead, it initially asks:

How does the forum’s conflict-of-laws system characterize this issue?

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9. The Modern Restatement Approach

The Restatement (Second) of Conflict of Laws attempted to move characterization away from rigid formal categories.

Section 7 addresses the general principle of characterization and recognizes that legal concepts can have different meanings in different jurisdictions.

This creates an important problem.

Suppose State A and State B use the same legal term but give it different legal meanings.

If a court simply applies the forum’s definition, it may effectively decide the choice-of-law issue before applying the actual choice-of-law rule.

The Restatement (Second) approach can therefore lead to a more nuanced method.

Where the applicable choice-of-law rule points toward the law of another jurisdiction, the characterization of a particular legal concept may sometimes be determined according to the law of the jurisdiction whose substantive law governs the issue.

Courts have applied this reasoning in appropriate circumstances. For example, in Backar v. Western States Producing Co., a federal court discussed the Restatement (Second)’s approach to characterization and concluded that where New York law governed the relevant issue, New York’s internal classification of the property interest could control the characterization question.

This approach illustrates an important evolution:

Characterization does not always have to be a rigid preliminary exercise in which the forum permanently imposes its own labels on every legal concept.

Instead, the characterization question may itself interact with the choice-of-law methodology.

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10. Characterization and the Nature of the Claim

Courts may also have to determine what type of legal claim a plaintiff has actually asserted.

A factual situation may support several possible legal theories.

For example, an employee may claim that an employer:

• breached an employment contract;
• committed a tort;
• violated a statutory duty; or
• violated a public policy protecting employees.

The legal theories may arise from the same facts but involve different legal rules.

The characterization question therefore becomes:

What legal issue is the court actually being asked to resolve?

This matters because a contract claim may be governed under contractual choice-of-law principles, while a tort claim may be governed under tort choice-of-law principles.

The same factual event can therefore generate several different conflict-of-laws questions.

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11. Characterization Does Not Necessarily Apply to the Entire Case

One of the most important developments in modern American conflict-of-laws doctrine is the movement away from treating an entire lawsuit as a single indivisible conflict.

A single case may contain multiple legal issues, each of which may be governed by a different jurisdiction’s law.

This technique is commonly associated with depecage.

Under depecage, a court may apply:

• one state’s law to liability;
• another state’s law to damages;
• forum law to procedure;
• another jurisdiction’s law to a particular contractual issue; and
• yet another jurisdiction’s law to a property question.

The result may seem complicated, but it reflects the reality that different legal issues may have different connections to different jurisdictions.

For example, in a multistate tort case, the law governing whether the defendant is liable might differ from the law governing the amount or availability of punitive damages.

Characterization therefore increasingly occurs issue by issue, rather than merely case by case.

Courts applying the Restatement (Second) methodology have expressly recognized this form of issue-by-issue analysis.

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12. Characterization of Statutes of Limitations

Statutes of limitations provide one of the classic examples of characterization problems.

Traditionally, American courts often treated statutes of limitations as procedural.

Under that approach, the forum would apply its own limitations period even if another state’s substantive law governed the dispute.

But many jurisdictions have modified or abandoned this simple rule.

Some jurisdictions treat certain limitations provisions as substantive.

Others distinguish between ordinary statutes of limitations and statutes of repose.

A statute of repose may operate differently from a conventional statute of limitations because it can establish an outer deadline measured from a specified event regardless of when the plaintiff’s claim accrues.

Courts therefore may ask not merely:

Is this called a statute of limitations?

but rather:

What function does this particular limitation rule perform, and how should it be characterized under the forum’s conflict-of-laws system?

This illustrates a broader lesson: the label attached to a rule is not necessarily decisive.

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13. Characterization of Statutes of Repose

Statutes of repose have generated particularly difficult characterization disputes.

A jurisdiction may classify its statute of repose as substantive because it defines the temporal boundaries of the underlying right.

Another jurisdiction may historically have described similar rules as procedural.

Federal courts confronting such conflicts must determine how the applicable state conflict-of-laws system treats the question.

In Baxter v. Sturm, Ruger & Co., the Second Circuit confronted the question whether an Oregon statute of repose should be characterized as substantive or procedural under Connecticut law. The court emphasized that the characterization used in an ordinary domestic-law context should not automatically be imported into conflict-of-laws analysis.

The case illustrates the broader methodological point: characterization must be connected to the purpose of the choice-of-law inquiry.

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14. Characterization of Property

Property provides another major area of classification.

A legal interest may need to be classified as:

• real property;
• personal property;
• tangible property;
• intangible property;
• an ownership interest;
• a contractual interest; or
• another form of legal entitlement.

That classification can determine the applicable choice-of-law rule.

For example, traditional conflict-of-laws principles have often given special importance to the location of tangible property, particularly land.

The classification of property can therefore affect whether the court applies the law of the place where the property is located or another jurisdiction’s law.

But even here, characterization can be complicated.

An interest that one jurisdiction treats as real property might be treated differently by another jurisdiction.

The question then becomes whether the forum should use its own classification or the classification of the jurisdiction whose law governs the property issue.

Modern conflict-of-laws methodology may require a more sophisticated analysis than simply applying the forum’s domestic property definitions.

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15. Characterization in Contract Cases

Contracts generate their own classification problems.

A dispute may involve questions concerning:

• formation;
• validity;
• interpretation;
• performance;
• breach;
• remedies;
• capacity;
• enforceability;
• fraud;
• mistake; or
• public policy.

These issues do not necessarily have identical connecting factors.

For example, the law governing whether a contract was validly formed may differ from the law governing a particular remedy for breach.

A choice-of-law clause can also affect the analysis.

If the parties expressly choose governing law, the court must first determine the scope and enforceability of that provision under the applicable legal framework.

Thus, even where a contract contains a choice-of-law clause, characterization remains relevant.

The court may have to determine whether a particular issue falls within the scope of the clause or is governed by another body of law.

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16. Characterization in Tort Cases

Tort cases often involve several distinct legal questions.

Consider a multistate product-liability dispute.

The court might separately consider:

1. whether the defendant owed a duty;
2. whether the defendant breached that duty;
3. whether the plaintiff’s conduct constitutes comparative fault;
4. whether punitive damages are available;
5. whether a particular damages limitation applies; and
6. whether the plaintiff’s claim is timely.

Although all of these questions arise from the same accident, they do not necessarily have identical policy considerations.

A modern court may therefore characterize and analyze each issue separately.

This is one of the reasons why conflict-of-laws analysis cannot always be reduced to the simple formula:

Accident occurred in State A, therefore State A law applies.

The actual inquiry may be much more refined.

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17. Characterization in Family Law

Family-law disputes can also present difficult classification questions.

A single dispute may involve:

• marriage validity;
• divorce;
• property division;
• child custody;
• support;
• parental rights;
• inheritance;
• legitimacy; or
• recognition of a foreign family status.

Each issue may involve different connecting factors and different governmental interests.

For example, the law governing the validity of a marriage may not necessarily govern the distribution of property following divorce.

Likewise, the law governing parental custody may not be identical to the law governing financial support.

Characterization helps the court separate these questions instead of treating the entire family relationship as governed by one undifferentiated legal system.

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18. Characterization and Procedural Rules in Federal Courts

Federal courts add another layer of complexity.

When federal courts exercise diversity jurisdiction, they generally apply state substantive law and the forum state’s choice-of-law rules under the Erie/Klaxon framework.

At the same time, federal courts ordinarily use federal procedural law where the Federal Rules of Civil Procedure or other valid federal procedural provisions govern.

This means that a federal court may have to distinguish:

• a federal procedural rule;
• a state substantive rule;
• a state procedural rule;
• a state choice-of-law rule; and
• potentially a federal substantive rule.

Characterization is therefore sometimes connected to the larger question of whether a particular issue is controlled by federal law or state law in the first place.

The analysis is not simply:

Federal court = federal law.

Nor is it:

State-law claim = every aspect of the case is governed by state law.

The court must identify the legal source governing each issue.

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19. Characterization and Federal Question Cases

The analysis differs when federal law supplies the governing substantive rule.

If Congress has enacted federal law governing the issue, a state court may be required to apply that federal law even though the litigation occurs in state court.

Similarly, a federal court exercising federal-question jurisdiction may apply federal substantive law where federal law controls.

In such cases, the traditional state conflict-of-laws characterization framework may not determine the governing law.

The first question may instead be:

Is this issue governed by federal law?

Only after that question is answered does the court determine whether a state conflict-of-laws analysis remains relevant.

This distinction prevents courts from using state characterization doctrines to displace controlling federal law.

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20. Characterization and the Principle of Depecage

Depecage deserves particular attention because it demonstrates why characterization has become more sophisticated.

Under a rigid approach, a court might attempt to identify one jurisdiction whose law governs the entire dispute.

Under depecage, the court instead asks:

Which jurisdiction has the strongest or most appropriate relationship to this particular legal issue?

For example:

• State A may govern the validity of a contract.
• State B may govern the consequences of a tort.
• State C may govern a property interest.
• State D, as the forum, may govern procedural matters.

This can produce a mixed legal framework within a single case.

Characterization makes that possible because it identifies the individual legal questions before the court.

It therefore works closely with modern interest-analysis and most-significant-relationship approaches.

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21. Characterization and the Avoidance of Artificial Labels

One danger in conflict-of-laws analysis is that legal labels can become artificial.

Suppose a state describes a particular rule as “procedural” for purposes of its own domestic law.

That does not necessarily mean the rule should automatically be treated as procedural when deciding which state’s law should apply.

The purposes of the two classifications may be entirely different.

Domestic classification may exist for one reason.

Conflict-of-laws classification may exist for another.

The Restatement (Second) approach recognizes this distinction and encourages courts to consider whether the policy behind a particular classification supports using that classification in the conflict-of-laws context.

The court should therefore be cautious about treating terminology as if it were a complete legal analysis.

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22. Characterization and Competing State Policies

At a deeper level, characterization is often connected to competing governmental policies.

Suppose State A has a rule limiting liability for a particular type of conduct.

State B permits broader liability.

If the issue is characterized as substantive, the court may conduct a choice-of-law analysis that considers the interests and policies of both jurisdictions.

If the issue is characterized as procedural, the forum may simply apply its own procedural rule.

Thus, characterization can determine whether the court must engage in a broader conflict-of-laws inquiry at all.

This is one reason courts should not characterize issues casually.

A classification can effectively determine which state’s policy will be given effect.

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23. Characterization and Party Expectations

In contractual disputes especially, characterization may affect the parties’ expectations.

Commercial parties often structure their relationships with a particular legal system in mind.

A contract may specify governing law.

The parties may have negotiated their agreement against the background of a particular jurisdiction’s rules.

If a court unexpectedly characterizes an issue as falling outside the contractual choice-of-law provision, a different legal system may become relevant.

Consequently, characterization can interact with:

• contractual autonomy;
• reasonable expectations;
• predictability;
• commercial certainty; and
• the policies underlying the selected law.

These considerations are particularly important in sophisticated commercial transactions.

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24. Characterization and the “False Conflict”

Before engaging in extensive characterization, a court may also ask whether there is actually a conflict.

If the potentially applicable jurisdictions would reach the same result, there may be no meaningful conflict requiring a choice-of-law analysis.

Some courts describe this as the absence of an actual conflict.

For example, suppose State A and State B have different legal terminology but their rules produce the same result on the particular issue before the court.

The court may have little reason to undertake a complicated conflict-of-laws inquiry.

The characterization question is therefore most consequential when the classification could affect which legal rule applies and the competing rules could produce different results.

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25. Characterization, Renvoi, and Other Conflict-of-Laws Problems

Characterization does not exist in isolation.

It interacts with other conflict-of-laws doctrines.

For example, renvoi concerns whether a reference to another jurisdiction’s law includes that jurisdiction’s conflict-of-laws rules.

Characterization asks what kind of legal issue is before the court.

Renvoi asks what body of law is included when the choice-of-law rule points toward another jurisdiction.

The two questions can therefore interact.

A court may first need to characterize an issue before determining the applicable choice-of-law rule. If that rule points to foreign law and the jurisdiction recognizes some form of renvoi, the court may then face additional questions concerning the scope of that reference.

Similarly, characterization can interact with:

• public policy;
• incidental questions;
• depecage;
• domicile;
• habitual residence;
• forum non conveniens;
• choice-of-law clauses; and
• recognition of foreign judgments.

Conflict-of-laws analysis is therefore best understood as a sequence of connected decisions rather than a collection of isolated doctrines.

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26. The Forum’s Characterization Is Not Always the End of the Analysis

Although the forum ordinarily performs the initial characterization, the modern approach can be more nuanced.

The important question is not always:

What does the forum call this?

It may instead be:

What legal issue is actually before the court, what choice-of-law rule governs that issue, and what role should the law selected by that rule play in defining the relevant legal concept?

This distinction becomes particularly important where jurisdictions attach different legal meanings to the same terminology.

The ultimate goal is not simply linguistic consistency.

The goal is to identify the legal system that should appropriately govern the particular dispute.

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27. A Practical Example

Assume that a resident of State A enters into an employment agreement with a corporation headquartered in State B.

The employee works partly in State A and partly in State B.

The employee later brings an action alleging breach of contract and seeks damages.

State A permits a claim to be filed within five years.

State B applies a three-year period.

The case is filed in State A.

The court may need to determine several separate questions.

First, is the employee’s claim contractual, statutory, or tortious?

Second, is the limitations rule procedural or substantive under State A’s conflict-of-laws methodology?

Third, if the limitations rule is substantive, which jurisdiction’s substantive law governs it?

Fourth, does the contract contain a valid choice-of-law clause?

Fifth, if there is such a clause, does it cover the limitations issue?

Notice how many decisions occur before the court reaches the simple question:

Is the lawsuit timely?

The answer depends not merely on counting years.

It may depend upon characterization.

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28. A Practical Analytical Method

When confronting a characterization issue, a court or legal researcher can proceed systematically.

Step One: Identify the precise legal issue

Do not characterize the entire case prematurely.

Identify the specific question that must be resolved.

Step Two: Identify the competing jurisdictions

Determine which jurisdictions have legally significant connections to that issue.

Step Three: Determine whether an actual conflict exists

Compare the potentially applicable rules.

If they produce the same result, an elaborate choice-of-law inquiry may be unnecessary.

Step Four: Identify the forum’s conflict-of-laws methodology

The characterization question is ordinarily governed initially by the law of the forum.

Step Five: Determine the relevant category

Ask whether the issue concerns:

• procedure;
• substance;
• contract;
• tort;
• property;
• family law;
• limitations;
• damages;
• remedies; or another legal category.

Step Six: Examine the purpose of the classification

Do not rely exclusively on terminology.

Ask why the jurisdiction treats the rule as procedural, substantive, contractual, tortious, or otherwise classified.

Step Seven: Apply the appropriate choice-of-law rule

Once the issue has been properly characterized, apply the forum’s methodology for selecting governing law.

Step Eight: Analyze each distinct issue separately when appropriate

Do not assume that one characterization governs every issue in the case.

This is where depecage may become important.

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29. Why Characterization Can Be Difficult

Characterization is difficult because law does not always divide itself into clean categories.

A single rule can serve several purposes.

A statute can regulate procedure while also protecting substantive rights.

A claim can arise from a contract while also implicating tort principles.

A damages rule can affect courtroom remedies while also reflecting a jurisdiction’s substantive policy concerning liability.

A limitations rule can regulate litigation while potentially determining whether a legal right can be enforced.

Property can be simultaneously connected to territorial interests, contractual relationships, and personal rights.

For this reason, characterization requires legal judgment rather than simple classification by dictionary definition.

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30. The Importance of Issue-by-Issue Analysis

The most useful modern lesson is that a conflict-of-laws case should generally be broken down into its individual legal issues.

Consider a multistate accident involving a defective product.

The court might separately analyze:

• duty;
• standard of care;
• causation;
• comparative fault;
• damages;
• punitive damages;
• limitations;
• contribution among defendants; and
• procedural questions.

There is no inherent reason why every one of those questions must be governed by the same jurisdiction’s law.

Characterization allows the court to separate the issues and apply the appropriate conflict-of-laws methodology to each.

This makes the analysis more precise and can better reflect the actual policies of the jurisdictions involved.

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31. Characterization and Legal Certainty

Characterization may sometimes make conflict-of-laws litigation appear more complicated, but it also serves an important purpose.

Without classification, courts could select governing law without first determining what legal problem they were actually solving.

That would make choice-of-law analysis unpredictable.

Characterization creates an analytical structure:

identify the issue → classify the issue → identify the applicable choice-of-law rule → select governing law → resolve the issue.

The process is not always simple, but it helps prevent courts from moving directly from facts to a preferred legal result without explaining why a particular jurisdiction’s law should govern.

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32. Characterization in International Cases

The same conceptual problem arises when the competing legal systems belong to different countries.

A U.S. court may have to determine whether an issue concerns:

• contract;
• tort;
• property;
• family status;
• succession;
• procedure;
• public policy; or another category.

The characterization may determine which choice-of-law rule the U.S. forum applies.

International cases can make the problem even more complicated because foreign legal systems may organize legal concepts differently.

A concept that is familiar within one legal system may not have an exact equivalent in another.

The court may therefore need to understand the functional nature of the foreign legal rule rather than simply translate its name.

This is one reason characterization is a central technique of conflict-of-laws law.

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33. Characterization Is Not Merely a Matter of Vocabulary

It is tempting to think that characterization means giving a legal issue a label.

That is too narrow.

Characterization is ultimately about allocating a legal issue to the choice-of-law framework that should govern it.

Calling an issue “procedural” can lead toward forum law.

Calling it “substantive” can trigger a broader choice-of-law analysis.

Calling a dispute “contractual” can lead to contractual choice-of-law principles.

Calling it “tortious” can invoke tort choice-of-law principles.

Calling an interest “real property” may direct attention toward the law of the property’s location.

The classification therefore has legal consequences.

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34. The Relationship Between Characterization and Fairness

Characterization also raises questions of fairness.

If a court applies its own procedural classification automatically, it may sometimes give the forum an advantage that has little relationship to the underlying dispute.

Conversely, applying foreign classifications indiscriminately could make the forum’s own judicial system difficult to administer.

The challenge is therefore to balance:

• forum administration;
• predictability;
• territorial interests;
• governmental policies;
• justified expectations;
• fairness to the parties; and
• respect for the legal systems connected to the dispute.

Modern conflict-of-laws methodology attempts to address these competing considerations rather than relying exclusively on formal labels.

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35. Key Takeaways

Characterization and classification are foundational concepts in conflict-of-laws analysis.

The essential principles are:

1. Characterization determines the legal nature of an issue for conflict-of-laws purposes.
2. Characterization generally precedes the selection of governing law.
3. The forum ordinarily applies its own conflict-of-laws methodology when initially characterizing an issue.
4. The traditional distinction between procedural and substantive law remains important but is not always mechanically decisive.
5. A rule’s domestic legal label does not necessarily determine its characterization for conflict-of-laws purposes.
6. The same lawsuit may contain multiple issues requiring different choice-of-law analyses.
7. Depecage permits different legal issues within the same case to be governed by different jurisdictions’ laws.
8. Statutes of limitations and statutes of repose frequently produce difficult characterization questions.
9. Contract, tort, property, family-law, and international disputes can all require characterization.
10. Federal courts in diversity cases generally follow the forum state’s conflict-of-laws rules, including its approach to characterization.
11. Characterization is closely connected to other conflict-of-laws doctrines, including renvoi, public policy, and choice-of-law rules.
12. The purpose and function of a legal rule can matter more than the label attached to it.

Ultimately, characterization answers a deceptively simple question:

What legal question are we actually deciding?

Only after that question has been answered can the court intelligently determine which choice-of-law rule should govern and which jurisdiction’s law should ultimately be applied.

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Frequently Asked Questions

What is characterization in conflict of laws?

Characterization is the process by which a court determines the legal nature or category of an issue for purposes of applying conflict-of-laws rules. It may involve deciding whether an issue is substantive or procedural, contractual or tortious, property-related, or within another legal category.

Is characterization the same as choice of law?

No. Characterization determines what kind of legal issue is being considered. Choice of law determines which jurisdiction’s law governs that issue.

Who determines characterization?

Generally, the forum court applies the conflict-of-laws methodology of the forum jurisdiction. In federal diversity cases, the federal court ordinarily follows the conflict-of-laws rules of the state in which it sits.

Why is the procedural-substantive distinction important?

Traditionally, procedural questions are governed by the law of the forum, while substantive questions may be governed by another jurisdiction’s law selected through the forum’s choice-of-law rules. The distinction can therefore affect the outcome of a case.

Is every procedural rule governed by the forum’s law?

Not necessarily in every circumstance. Modern conflict-of-laws doctrine recognizes that some rules have both procedural and substantive characteristics and that different jurisdictions may classify the same rule differently.

Can the same case involve more than one characterization?

Yes. A case may contain separate contractual, tort, property, procedural, damages, and limitations issues. Each may require its own characterization and choice-of-law analysis.

What is depecage?

Depecage is the practice of applying the law of different jurisdictions to different issues within the same case. It reflects the idea that one jurisdiction’s law does not necessarily have to govern every legal question presented in a multistate dispute.

Why are statutes of limitations important in characterization?

Because jurisdictions differ in how they classify limitations rules. A forum may treat a limitation as procedural, while another jurisdiction may regard a similar rule as substantive. That classification can affect which jurisdiction’s limitations period applies.

Does the name of a legal rule determine its characterization?

Not necessarily. Courts may examine the purpose and function of the rule rather than simply adopting its label in another legal context.

Why is characterization important in international cases?

Different legal systems may organize legal concepts differently. Characterization helps a U.S. court identify the relevant legal category and apply the appropriate conflict-of-laws methodology when foreign law may be involved.