HIGH COURT OF AUSTRALIA
GLEESON CJ,
McHUGH, GUMMOW, KIRBY, HAYNE, CALLINAN AND HEYDON JJBARBARA MARY JOSEPHINE NEILSON APPELLANT
AND
OVERSEAS PROJECTS CORPORATION OF
VICTORIA LTD & ANOR RESPONDENTSNeilson v Overseas Projects Corporation of Victoria Ltd [2005] HCA 54
29 September 2005
P85/2004ORDER
1. Appeal allowed with costs.
2.Set aside the orders of the Full Court of the Supreme Court of Western Australia made on 3 May 2004 that set aside:
(a) the judgment entered at trial in favour of the plaintiff; and
(b) the order made at trial for her costs.
3.In their place, order that the appeal to the Full Court against the judgment and order entered at trial be dismissed with costs.
On appeal from the Supreme Court of Western Australia
Representation:
B W Walker QC with A S Bell and P Kulevski for the appellant (instructed by Talbot & Olivier)
G Griffith QC with L G De Ferrari and A B Lu for the respondent (instructed by Minter Ellison)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Neilson v Overseas Projects Corporation of Victoria Ltd
Private international law – Foreign tort – Choice of law – Appellant was injured in the People's Republic of China – Scope of the lex loci delicti – Where the lex loci delicti treats another connecting factor, such as nationality or domicile, as determining the applicable law – Whether Article 146 of the General Principles of Civil Law of the People's Republic of China was a relevant part of the lex loci delicti – Whether Article 146 of the General Principles of Civil Law of the People's Republic of China made the law of the parties' domicile the applicable law – Whether the doctrine of renvoi applies to international tort claims – Infinite regression of reference.
Evidence – Foreign law – Principles governing admission of evidence of foreign law – Where there is a deficiency of evidence – Whether there is a presumption that foreign law is the same as the law of the forum.
Words and phrases – "lex loci delicti", "choice of law", "renvoi", "single renvoi", "double renvoi", "infinite regression of reference".
GLEESON CJ. The issues in this appeal are narrower than those raised at trial. Furthermore, the issues at trial were narrower than those that might have been raised. It was for the parties to define the issues, and adduce such evidence as they chose. The case involved foreign law. It is possible, perhaps even likely, that the evidence of foreign law was incomplete. Nevertheless, it was necessary for the trial judge to decide the issues raised by the parties on the evidence which they presented. This is adversarial litigation, and the outcome of such litigation is commonly influenced by the way in which the parties have chosen to conduct their respective cases. Decisions about such conduct may have been based on tactical and other considerations which are unknown to a trial judge or an appellate court.
This appeal is concerned only with the claim made by the appellant against Overseas Projects Corporation of Victoria Ltd ("OPC") for damages for personal injuries suffered as a result of OPC's negligence. The appellant's husband was engaged by OPC to work on a project in Wuhan, in the People's Republic of China ("PRC"). His family went there with him. They were accommodated in a flat provided by OPC. The appellant fell down the stairs. She claimed that the stairs were dangerous, and that OPC, which owed her a duty to take reasonable care for her safety, was in breach of that duty. That claim was framed in conventional common law terms based on occupier's liability. The questions of duty, breach and damage were resolved in the appellant's favour, and are not presently in issue.
The action was brought in the Supreme Court of Western Australia. Counsel for the appellant informed the trial judge (McKechnie J), in his opening, that he would lead no evidence of PRC law, and intended to say as little about that topic as possible. His opponent, however, relied on PRC law and, in the course of the defence case, tendered English translations of the General Principles of Civil Law of the PRC ("the General Principles") and of the Code of Civil Procedure of the PRC, and an opinion of the Supreme People's Court (in Mandarin) on the implementation of the General Principles. He also called a Chinese lawyer, Mr Liu, who had law degrees from Shanghai University and from an Australian university. Mr Liu referred to, and translated portions of, the Supreme People's Court opinion. Following his cross-examination of Mr Liu, counsel for the appellant tendered a law journal article on PRC personal injury law.
Counsel for the first respondent argued that the substantive law to be applied by McKechnie J was the law of the PRC; that, according to that law (for reasons that are not material to this appeal), OPC did not assume any civil liability to the appellant; and that, if it did, such liability was extinguished under Art 136 of the General Principles, which specified a limitation period of one year for demands for compensation for bodily harm. Although McKechnie J decided the case by applying Australian law, relying in that regard on Art 146, he also dealt with those arguments and decided them against OPC. In particular, he dealt with the limitation point on the basis that Art 137 allowed a court, "under special circumstances", to extend the limitation period. He found that there were special circumstances. The Full Court disagreed with his reasoning on that question, but the issue does not arise if McKechnie J's decision based on Art 146 is upheld. The case has been argued at all levels on the assumption (which may or may not be correct) that, if the second sentence of Art 146 applied, Arts 136 and 137 were irrelevant.
The Full Court of the Supreme Court of Western Australia held that McKechnie J was wrong to invoke Art 146 and apply Australian law. That has been the focus of the present appeal.
The case has been conducted on the assumption that the General Principles, and in particular Art 106, which imposes civil liability either on the basis of fault or pursuant to legal stipulation, applied, or potentially applied, to the relations between the appellant and OPC and, further, that both the appellant and OPC were nationals of Australia within the meaning of Art 146 and, therefore, foreigners within the meaning of Art 142. Those may not be surprising assumptions, but they were not the subject of evidence and it is necessary, therefore, to note that they were not in dispute. Furthermore, no issue was raised concerning any complexities that might result from Australia's federal system. Article 146 of the General Principles seems to rise above questions of federalism, and the parties did not raise such questions in their evidence or arguments.
The General Principles are divided into nine Chapters. Chapter I is headed: "Fundamental Principles". It includes Art 8, which provides that, unless otherwise stipulated, the laws of the PRC apply to civil activities carried out within the PRC, and the provisions of the General Principles with regard to citizens apply to foreign nationals within the territory of the PRC. Chapters II and III deal with the status of "natural persons" and "legal persons", the former being citizens, and the latter being organisations possessing legal capacity. Chapters IV and V are not relevant. Chapter VI deals with civil liability, and includes Art 106 which has been summarised above. Chapter VII deals with limitation of actions, and includes Arts 136 and 137 to which reference has already been made. Chapter VIII is headed: "Application of the Law to Civil Relations involving Foreigners". It commences with Art 142, which states that the application of the law to civil relations involving foreigners shall be determined by the provisions of Ch VIII. It includes Art 146.
Not much was said in evidence about Art 146. The first sentence provides that, in a claim for compensation for damages resulting from an infringement of rights, the law of the place where the infringement occurred shall be applied: in the case of a fault-based claim such as the present, the lex loci delicti. Since Art 146, according to Art 142, applies to civil relations involving foreigners, the first sentence has general application to foreigners. Whether the first sentence of Art 146 would apply to a dispute between two citizens of China arising out of personal injury caused by one to the other in, say, Japan was not considered in evidence. The second sentence deals with a more particular case of civil relations involving foreigners. It applies only where the parties are nationals of the same country, or domiciled in the same country. It would have no application in the present case if, for example, OPC had been a Delaware corporation. (In argument it was assumed that the appellant, a Western Australian resident, and OPC, a Victorian corporation, were nationals of the same country. What would have happened if the laws of Victoria and Western Australia had been materially different was not considered.) Where both parties are nationals of the same country (relevantly, Australia), Art 146 says that the law of their own country may be applied.
McLure J, who gave the reasons of the Full Court, reasoned that this raised a question of renvoi; that Art 146 was a choice of law rule; that Australian law directed the Western Australian court to apply the law of the PRC as the lex loci delicti[1]; that the law of the PRC for that purpose did not include its choice of law rules; and that Art 146 was irrelevant. Her reasoning, which was supported by a body of learned opinion on the subject of renvoi, would have been exactly the same if the second sentence of Art 146 had been mandatory rather than permissive.
[1]Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491.
Subject to one qualification, there was no evidence as to any other laws of the PRC which affect the operation of the second sentence in Art 146. It was not shown that the Supreme People's Court had given any guidance on the matter. Perhaps the second sentence is what a common lawyer might call a flexible exception to the general principle stated in the first sentence[2]. If it is, the evidence did not cast much light upon the considerations that would bring the exception into play. The qualification is that, at one stage in the course of his cross-examination, Mr Liu assented rather hesitantly to the proposition that, if it appeared just and reasonable, a court in Wuhan might treat Australian (presumably meaning Western Australian) law as applicable to the appellant's claim for damages against OPC. His primary position was that Art 146 was irrelevant. His reason for that was unclear, but it may have been that, like the Full Court, he regarded Chinese choice of law rules as irrelevant. If that were his reason, then it was a proposition of Australian law, upon which his opinion, whether right or wrong, was immaterial.
[2]cf Boys v Chaplin [1971] AC 356; Red Sea Insurance Co Ltd v Bouygues SA [1995] 1 AC 190.
The rule of Australian law which directed McKechnie J to the lex loci delicti, the law of the PRC, did not require him to ignore the fact that the law of the PRC made special provision for claims for damages resulting from infringement of rights where both parties to the claim were foreigners and were also nationals of the same country. That the law of the PRC makes provision for such a case is not surprising. In a developing legal system and economy, where foreigners are brought into the country temporarily for special purposes, a decision that their civil relations might be governed by their own laws reflects an understandable policy. The Chinese authorities evidently consider that if, say, an Australian corporation, with Australian staff, is carrying out a construction project in China, it may be reasonable to decide the respective rights and obligations of the corporation, its staff, and their families, by reference to Australian law, assuming there is Australian law which is capable of application. (As it happens, in the present case McKechnie J ultimately decided that, apart from the limitation of actions question, there was no material difference between Western Australian law and the law of the PRC in their application to the facts. That aspect of his decision is not the subject of this appeal.)
There was no evidence to suggest that, as a matter of interpretation of Art 146, application of the second sentence would set up some sort of infinite regression by requiring a Chinese court which invoked that sentence to accept, as it were, a reference back from Australia. The word "applied", in both the first and the second sentences of Art 146, appears to refer to the norms of conduct, the obligations and liabilities, which will be determinative of the claim. Furthermore, it was not suggested in evidence that Art 136, the limitation provision, would anticipate and therefore defeat the application of Art 146. Mr Liu said that Art 136 was a matter of substantive law (subject to whatever might be the effect of Art 137), and the argument proceeded on the basis that if the law of the PRC applied, it included Art 136, but that if the law of Western Australia applied it was the Western Australian limitation period (which did not present a problem for the appellant) that was relevant.
The argument that the decision of this Court in Regie Nationale des Usines Renault SA v Zhang[3] directed McKechnie J to the General Principles excluding Ch VIII, that is to say, that the relevant law of the PRC should be taken to exclude the special provisions made with respect to foreigners in the PRC, was said to have the merit of certainty, and consistency with principle. This may be doubted. If it be accepted that one object of a choice of law rule is to avoid difference in outcomes according to selection of forum, then the objective ought to be to have an Australian court decide the present case in the same way as it would be decided in China. Directing the Western Australian court to the General Principles, but requiring it to ignore Ch VIII, if the appellant's argument about Art 146 is otherwise correct, would appear to ensure difference of outcome. As has been noted, McLure J's reasoning did not turn on the permissive aspect of Art 146. The reasoning would have been the same if Art 146 had clearly directed that, in a case between two foreigners of the same nationality, their law was to be applied. In that event, it would have been clear beyond argument that a Chinese court would apply Western Australian law, but, on the approach that a Western Australian court must ignore Ch VIII, a Western Australian court would apply the purely domestic law of the PRC. Why Australia's choice of law rule should seek such a result is difficult to see. I am unable to accept that conclusion.
[3](2002) 210 CLR 491.
There are, however, two further questions, both of which arise from the permissive nature of the second sentence of Art 146.
First, is the second sentence of Art 146 a legal rule of a kind that is capable of being picked up by an Australian choice of law rule that directs a Western Australian court to the law of the PRC? Australian law required the Western Australian court to consider the rights and obligations between the appellant and OPC by looking to the law of the PRC. When it looked, the Western Australian court found that, in a court in China, the law of Western Australia "may ... be applied". (The case was argued in the Supreme Court of Western Australia and in this Court, and the reasoning of the judges in the Supreme Court of Western Australia proceeded, on the assumption that "may also be applied" means "may be applied in place of PRC law".) The law of the PRC, in Ch VIII, makes special provisions concerning "civil relations involving foreigners". One such provision is that if both parties to a claim for damages resulting from an infringement of rights are nationals of the same country, the law of their own country may be applied by a Chinese court to decide that claim. It says nothing further to explain the word "may". The substratum of fact upon which the appellant's claim was based remained constant, and existed independently of the laws of either jurisdiction. Let it be assumed (contrary to the view of McKechnie J) that the legal incidents of the relations arising out of those facts according to the law of Western Australia were materially different from the legal incidents of the relations that would have existed had the parties been PRC nationals, or even nationals of two different foreign countries. Even so, the parties were both nationals of Australia, and the law of the PRC provided that, in such a circumstance, a Chinese court was empowered to resolve their dispute by the application of Western Australian law. The Western Australian court would then be faced with a question whether a Chinese court would exercise that power. That, for the Western Australian court, would be a question of fact. If the Western Australian court decided that question in the affirmative, then according to Australian choice of law rules it should apply the law of Western Australia as governing the legal incidents of the relations between the parties.
That raises the second question. Was the Western Australian court entitled to decide that question of fact in the affirmative? I find no assistance in a general presumption that, in the absence of evidence to the contrary, foreign law is the same as Australian law. That might be a rational and practical aid to decision-making in many cases, but, whatever its precise extent, the principle seems to me to be devoid of content in this case. The question is not sufficiently described, in abstract terms, as a question of the construction of Art 146. The question is one as to the considerations that are relevant to a decision to invoke the second sentence of Art 146 of the General Principles. There is no Australian law on that subject. In particular, Australian law does not accept a flexible exception to its rule that the lex loci delicti governs foreign torts. The first sentence of Art 146 accords with Australian choice of law rules. The second sentence does not. The principles governing its operation cannot be assumed to be the same as some corresponding Australian principle. The evidentiary presumption is only of assistance in a case where it can be given practical content. This, in my view, is not such a case.
The appellant, then, is thrown back on the evidence of Mr Liu. It was barely sufficient, but it is just enough to support McKechnie J's conclusion. It is not inherently implausible that Art 146 calls for a consideration of what is just and reasonable in the circumstances of the case. Furthermore, the present is a case where the relations between the parties were established in Australia (which must be what McKechnie J meant when he said the duty of care was assumed here), the Chinese authorities are totally unaffected by the outcome of the litigation, no Chinese interests are involved, and there appears to be no reason of policy for a Chinese court to resist the proposition that the rights and obligations of the parties should be determined according to the law of Western Australia, assuming the court were sufficiently informed of the law. No one has suggested that Art 150 would apply.
The appeal should be allowed. I agree with the further orders proposed by Gummow and Hayne JJ.
McHUGH J. The question presented in this case is whether the doctrine of renvoi is a part of the Australian choice of law rule in cases of tort. Specifically, it requires the Court to determine what law an Australian court should apply where:
.the lex fori's choice of law rules select a foreign law to resolve a particular legal question that is relevant to a dispute;
.the foreign law would choose not to answer the question by its own law; and
.the foreign law would answer the question by reference to the lex fori or the law of another legal system.
Statement of the case
In June 1997, the appellant, Mrs Barbara Neilson, sued the first respondent, Overseas Projects Corporation of Victoria Ltd ("OPC"), in the Supreme Court of Western Australia, in respect of injury she sustained while living in China. Mrs Neilson was born in the United Kingdom but is ordinarily resident in Western Australia. OPC is a company that is owned by the State of Victoria. Its registered office and principal place of business are in Victoria. The second respondent, Mercantile Mutual Insurance (Australia) Ltd ("Mercantile"), was OPC's public liability insurer. OPC joined Mercantile as a third party in the action, claiming that Mercantile was bound to indemnify it against any liability owed by OPC to Mrs Neilson.
In the action, Mrs Neilson alleged that she suffered injury as a result of OPC's breach of a contract and breach of a common law duty of care that it owed to her. In par 30(b)(1) of its Defence, OPC pleaded that the law that was applicable to resolve the claim was "the law of Wuhan, China". The trial judge rejected this contention of OPC. He also rejected the claim in contract but found that Mrs Neilson had been injured by reason of OPC's negligence. His Honour awarded her damages of $300,000, an amount on which the parties had agreed, and costs. His Honour also held that Mercantile was bound to indemnify OPC in respect of this judgment. The Full Court of the Supreme Court allowed the appeal, brought by Mercantile, in part on the ground that "the trial judge erred in applying Australian domestic law to Mrs Neilson's tort claim."[4]
[4]Mercantile Mutual Insurance (Australia) Ltd v Neilson (2004) 28 WAR 206 at 216 [48].
The material facts and findings
In October 1991, Mrs Neilson suffered severe injury when she fell down a flight of stairs in a double storey unit in the People's Republic of China. At the time, she lived in China with her husband. OPC employed Mrs Neilson's husband for a two-year term as a consultant under a contract, made in Victoria, which required him to live and work in Wuhan, China. Under the contract, OPC agreed to provide accommodation for Mr Neilson. The contract also expressly provided that Mrs Neilson could accompany her husband to Wuhan. Mr and Mrs Neilson were living in a unit provided by OPC when Mrs Neilson fell down the stairs and injured herself. The People's Republic of China assumed responsibility for building and maintaining the units.
About 4am on the day she was injured, Mrs Neilson fell over the edge of stairs while going to get a drink. The stairs had no balustrade. She suffered injuries to her head and back. She was in hospital for about 18 days.
The pleadings and evidence of foreign law
In its Defence, OPC gave three reasons why Mrs Neilson's claim was "not actionable" under Chinese law. First, under Arts 122 and 126 of the General Principles of Civil Law of the People's Republic of China ("the General Principles"), only the "owner, controller or manager of the building" is liable for "injuries sustained in relation to buildings". Second, under Art 135 of the General Principles, the limitation period for "protection of civil rights is 2 years from the date of the injuries being sustained". But under Art 136 of the General Principles, the limitation period for "personal injuries is 1 year from the date of the injuries being sustained." Article 136 declares: "In the following cases, the period of limitation of actions shall be one year: (i) demand for compensation for bodily harm". Third, Arts 119, 143, 144, 145 and 146 limited the "maximum damages" that Mrs Neilson could recover for past and future economic loss.
At the trial, OPC tendered an English translation of the General Principles. Chapter VIII of the General Principles is headed "Application of the Law to Civil Relations involving Foreigners" and Art 142 states that "[t]he application of the law to civil relations involving foreigners shall be determined by the provisions of this Chapter." Article 146 of the General Principles declares:
"With regard to compensation for damages resulting from an infringement of rights, the law of the place in which the infringement occurred shall be applied. If both parties are nationals of the same country or domiciled in the same country, the law of their own country or of their place of domicile may also be applied."
Article 150 of the General Principles contains a caveat to Art 146. It states:
"Where this Chapter provides for the application of the law of a foreign country or of international practice, this must not be contrary to the public interest of the People's Republic of China."
OPC also led evidence from an expert witness, Mr Hongliang Liu, as to Chinese law.
Decision of trial judge
The trial judge, McKechnie J, referred to the choice of law rule that this Court articulated in John Pfeiffer Pty Ltd v Rogerson[5] and applied to international torts in Regie Nationale des Usines Renault SA v Zhang[6]. His Honour held that it required him to apply the lex loci delicti to "all questions of substance to be determined in a proceeding arising from [a] ... tort."[7] McKechnie J found that Wuhan was the place of the tort, and Chinese law the applicable law, because:
"although a duty of care arose in Australia, breach of that duty of care did not give rise to any cause for complaint until 6 October 1991 when Mrs Neilson fell down the stairs in Wuhan. That was when the wrong crystallised by the infliction of damage."
[5](2000) 203 CLR 503.
[6](2002) 210 CLR 491.
[7]Pfeiffer (2000) 203 CLR 503 at 544 [102].
His Honour found that the General Principles applied to foreign nationals. He held that, under Art 106 of the General Principles, OPC assumed liability for "allowing Mr and Mrs Neilson to continue to live in the apartment which had this inherent danger." The danger arose from the lack of a balustrade at the top of the stairwell. He found that Mrs Neilson was not guilty of contributory negligence and awarded her the agreed damages of $300,000.
McKechnie J found that, under Art 137, the limitation periods enumerated in Arts 135 and 136 of the General Principles should be extended. However, at the end of this analysis, his Honour also found that Art 146 "gives me a right to choose to apply the law of Australia because both parties are nationals of Australia." McKechnie J then applied principles of Australian negligence law and found that OPC breached the duty of care that it owed Mrs Neilson as landlord and that Mrs Neilson was entitled to judgment in the sum of $300,000.
Decision of the Full Court of the Supreme Court
The Full Court allowed the appeal of the second respondent in part on the ground that "the trial judge erred in applying Australian domestic law to Mrs Neilson's tort claim."[8] This conclusion was reached on the basis that "the reasoning of the High Court in Pfeiffer and Zhang is inconsistent with the application of the renvoi doctrine to international torts"[9] and because "[t]he application of the double renvoi doctrine to international torts would not promote certainty and predictability" given that[10]:
"[i]t would require identification of Australia's choice of law rules, the foreign country's choice of law rules and its attitude to renvoi, from which a conclusion can then be reached as to the domestic law of which country applies."
[8]Mercantile Mutual Insurance (Australia) Ltd v Neilson (2004) 28 WAR 206 at 216 [48].
[9]Mercantile Mutual Insurance (Australia) Ltd v Neilson (2004) 28 WAR 206 at 216 [48].
[10]Mercantile Mutual Insurance (Australia) Ltd v Neilson (2004) 28 WAR 206 at 216 [47].
Applying Chinese law, the Court dismissed Mrs Neilson's claim against OPC on the ground that Mrs Neilson's claim was "time barred". The Court held "there were no special circumstances within the meaning of Art 137 that warranted the extension of the one year time limitation imposed by Art 136 of the General Principles"[11].
[11]Mercantile Mutual Insurance (Australia) Ltd v Neilson (2004) 28 WAR 206 at 220 [64].
The issue
The issue for determination is whether it is the law of Australia or China that sets the limitation period for the bringing of Mrs Neilson's claim in tort. If Australian law applies, then Mrs Neilson's claim was brought within time and the trial judge's order that OPC pay Mrs Neilson the sum of $300,000 should be restored. If Chinese law applies, then Mrs Neilson's claim is statute barred. Article 137 of the General Principles states that "special circumstances ... [may] extend the period of limitation of actions." However, there is no ground on which to challenge the Full Court's finding that "there were no special circumstances within the meaning of Art 137"[12]. The Full Court held that "the trial judge erred in rejecting the evidence of Mr Liu on the interpretation of Art 137 of the General Principles."[13] Mrs Neilson submitted to this Court that "it is not clear whether [the circumstances that Mr Liu outlined] were exhaustive of the possible special circumstances or merely a paradigm case."[14] But the burden of making clear whether there were additional "possible special circumstances" fell on Mrs Neilson. In failing to discharge that burden at trial, she cannot now rely on Art 137 of the General Principles.
[12]Mercantile Mutual Insurance (Australia) Ltd v Neilson (2004) 28 WAR 206 at 220 [64].
[13]Mercantile Mutual Insurance (Australia) Ltd v Neilson (2004) 28 WAR 206 at 220 [64].
[14][2005] HCATrans 192 at line 455.
Mrs Neilson argues that Australian law applies. This argument entails two propositions: one of fact and one of law. First, as to the proposition of fact, Mrs Neilson contends that Art 146 of the General Principles is a choice of law rule that chooses "the law of ... [the parties'] place of domicile" as the law that is applicable to this dispute. On its face, Art 146 is undoubtedly a choice of law rule. But it is a choice of law rule with a flexible exception. Article 146 mandates that the law that "shall be applied" is "the law of the place in which the infringement occurred". However, Art 146 also states that, "[i]f both parties are nationals of the same country or domiciled in the same country, the law of [the parties'] own country or of their place of domicile may also be applied." This discretionary aspect makes China's choice of law rule different from the choice of law rules that apply in Australia. In Zhang[15], this Court rejected the argument that our choice of law rules in international tort cases should be subject to a flexible exception.
[15](2002) 210 CLR 491.
The evidence is unclear as to how the Chinese courts would exercise the flexible exception that is entailed in the word "may". There are no findings of fact from the trial judge as to whether the Chinese courts would exercise the flexible exception in this particular set of circumstances. This gap in the evidence means that Mrs Neilson failed to discharge the burden that rested on her, as the party seeking to make Australian law applicable[16], to prove that the Chinese choice of law rule, in this case, would choose Australian law as the applicable law. That "the law of ... [the parties'] place of domicile may also be applied" does not establish, on the balance of probabilities, that that law would be applied. Without any additional evidence as to the manner in which this flexible exception is exercised by Chinese courts, Mrs Neilson has failed to discharge the persuasive burden of proof.
[16]Zhang (2002) 210 CLR 491 at 518 [70]; Standard Bank of Canada v Wildey (1919) 19 SR (NSW) 384 at 390-391; BP Exploration Co (Libya) Ltd v Hunt [1980] 1 NSWLR 496 at 503 [24]; Walker v W A Pickles Pty Ltd [1980] 2 NSWLR 281 at 285 [5]; Spain (King of) v Machado (1827) 4 Russ 225 at 239 [38 ER 790 at 795]; Lloyd v Guibert (1865) LR 1 QB 115 at 129; Szechter (orse Karsov) v Szechter [1971] P 286 at 296; Cross on Evidence, (looseleaf service), vol 1 at [41005].
In their judgment, Gummow and Hayne JJ seek to overcome this deficiency of evidence by holding that, in the absence of evidence, a presumption exists that a Chinese court would exercise the discretion in the same way that an Australian court would exercise a discretion under a statute. But that approach divorces the discretion from its context. It treats the exercise of the discretion as an abstract question divorced from its context in a choice of law rule. Article 146 is a choice of law rule with a flexible exception. It has no counterpart in Australian law. Its tender negated any presumption that the legal content of Art 146 is the same as the Australian law on that subject. The discretion contained in Art 146 concerns how a choice of law rule should be applied. It constitutes a flexible exception to the choice of law rule otherwise applicable. Hence, the discretionary aspect of the Article is part of the content of the choice of law rule, not an abstract jurisprudential concept. It is part and parcel of a rule of law that has no counterpart in Australian law. It surely cannot be right to hold that there is a presumption that Australian courts would exercise a discretion in accordance with Australian law in respect of a foreign rule of law that is contrary to the Australian rule on the subject. Moreover, for the reasons that Kirby J gives in his reasons for judgment, I am far from convinced that a Chinese court would apply the discretion in Mrs Neilson's favour.
Independently of the considerations in the last paragraph, Mrs Neilson cannot rely on the evidential presumption that Chinese law is the same as the lex fori to fill this gap in the evidence for two reasons. First, the evidential presumption is "said to operate against, not in favour, of the party whose obligation it is to prove foreign law."[17] Second, by tendering Art 146 of the General Principles in evidence, Mrs Neilson satisfied the evidential – even if not the persuasive – burden of proof as to whether the Chinese court would, or would not, exercise the flexible exception in favour of Mrs Neilson. That is, Mrs Neilson "adduc[ed] evidence sufficient to justify consideration of [the] particular issue"[18] as to the law that the Chinese courts would apply to this case. If the evidential burden of proof as to foreign law is satisfied, then the forum trial court is in a position to make factual findings as to the content of the foreign law. If the party on whom the burden rests fails to satisfy the persuasive burden of proving that a foreign choice of law rule is applicable to the party's case, it may be that the evidence that has been tendered is sufficient to satisfy the trial court that, in accordance with the contentions of the opposing party, another choice of law rule is applicable. In this case, the following parts of Art 146 of the General Principles prove, on the balance of probabilities, that a Chinese court would apply to this case, not Australian law, but Chinese law:
.The declaration that "the law of the place in which the infringement occurred shall be applied" persuasively indicates that generally this is the applicable choice of law rather than the exception that "the law of ... [the parties'] place of domicile may also be applied." Article 146 is found in Ch VIII of the General Principles. That Chapter is headed "Application of the Law to Civil Relations involving Foreigners". The opening words of Art 146, therefore, state the general rule that is applicable to cases involving foreigners.
.The terms of Art 146 of the General Principles indicate that the law of the parties' domicile is not applied instead of the law of the place of the infringement. Rather, that "the law of ... [the parties'] place of domicile may also be applied" indicates that the lex domicil is applicable only to a case where the laws of the place of the infringement and the parties' domicile may be applied cumulatively. In the context of Art 146, the adverb "also" indicates addition not substitution. Where, for example, the law of domicile provides the plaintiff with a number of causes of action alternative to those available under the law of the place of infringement, Art 146 permits the law of the parties' domicile to be applied. Similarly, it permits the law of domicile to be applied where that law provides the defendant with defences alternative to those available under the law of the place of infringement. But in both cases, the law of domicile is applied in addition to the law of the place of infringement. Where the laws specify different limitation periods, however, the laws are not alternatives. Consequently, it is not possible for the law of the parties' domicile to "also be applied". In such cases – and this is one of them – the law of the place in which the infringement occurred "shall be applied" to the exclusion of the law of the parties' domicile.
[17]Cross on Evidence, (looseleaf service), vol 1 at [41005].
[18]Cross and Tapper on Evidence, 10th ed (2004) at 166.
Let it be assumed in Mrs Neilson's favour, however, that the discretion in Art 146 would be exercised in this set of circumstances to make Australian law applicable, then a further issue arises. Mrs Neilson's second submission is that the lex loci delicti comprises the foreign law's choice of law rule, ie Art 146 of the General Principles, so that an application of the lex loci delicti entails an application of "the law of ... [the parties'] place of domicile". She contends that an application of Australian law as the law of Mrs Neilson's and OPC's "place of domicile" does not entail a re‑application of Australian choice of law rules for two alternate reasons. First, after having selected the Chinese law as the lex loci delicti, the choice of law rules were "spent" and "had no work to do". Secondly, for reasons of pragmatism, the doctrine of renvoi should be limited to single renvoi. The respondents submit that Chinese law applies because the doctrine of renvoi does not apply to international torts.
The issue that requires resolution is not whether choice of law rules form part of the lex loci delicti. That is a question of fact. On the evidence, there is no doubt that Art 146 of the General Principles is as much a part of Chinese law as Arts 135 and 136, which fix limitation periods. The issue is whether choice of law rules form part of the category of the lex loci delicti's laws that the forum court makes applicable to the characterised issue of law. In my opinion, they do not. This conclusion follows from the following propositions:
(i)Except in cases where evidence is tendered to show that the lex causae rejects the doctrine of total renvoi, applying the "whole" of the lex causae inevitably produces an "infinite regression". (Under the total renvoi doctrine, the forum court's own choice of law rule entails the application of the entirety of the lex causae, which includes choice of law rules and the lex causae's approach to renvoi.)
(ii)The "infinite regression" can be interrupted only by accepting that the issue cannot be resolved by reference to the entirety of the foreign law and sacrificing logic to concerns of pragmatism.
(iii)The point at which that sacrifice is best made, and the foreign law categorised into "applicable" and "inapplicable" foreign law, is fixed by reference to the purpose of choice of law rules. That purpose is to determine which country's legal rules govern the substantive issues in the case. It is furthered by rejecting the doctrine of renvoi and not applying the single renvoi. (Under the single renvoi doctrine, the forum court regards its reference to the law of a foreign jurisdiction as a reference to the choice of law rules of that jurisdiction. It then treats the reference by the choice of law rules of that foreign jurisdiction as a reference to the substantive law of the legal system to which those choice of rules refer the case. This legal system may be that of the forum court or a third legal system.)
(i) The "infinite regression" of renvoi
The doctrine of renvoi is infamous for infinitely requiring the forum court to apply choice of law rules, but to no end. The problem of the "infinite regression" arises when:
(a)the choice of law rule of the lex fori makes the lex causae the applicable law;
(b)the choice of law rule of the lex causae, as proved or presumed, makes the lex fori the applicable law[19]; and
(c)the lex fori has a doctrine of total renvoi.
[19]If the lex causae chooses the law of a third place, then the "infinite regression" arises if the law of that place chooses the lex causae and both laws apply the doctrine of total renvoi.
When these circumstances arise, the forum's choice of law rule requires the forum court to apply the choice of law rules of the lex causae. And those choice of law rules of the lex causae require the forum court to apply the choice of law rules of the lex fori. And so "applicable law" goes back and forth on an endless journey. The result is that it is impossible to identify which law resolves the issue that is in dispute.
There is only one circumstance where, in proceedings in which choice of law is an issue, the forum's acceptance of the total renvoi doctrine with respect to a choice of law rule will not cause this "hall of mirrors". That circumstance is when a party tenders evidence that shows, to the requisite standard of proof[20], that the lex causae rejects the doctrine of renvoi, or has a doctrine of only single renvoi, with respect to the particular choice of law rule. In the first instance, the forum court applies the choice of law rules of the lex causae so as to identify the lex fori as the applicable law and makes no reference to the lex fori's choice of law rules. Only the "substantive" law of the lex fori is applicable. In the latter instance, the forum court goes through the same process, but with one additional step. The court must apply the lex fori's choice of law rules for a second time, but this time ignore the lex causae's choice of law rules. Only the "substantive" law of the lex causae is applicable the second time around.
[20]As already discussed, the onus rests on the party that contends that the foreign law's doctrine of renvoi differs from the lex fori's; Zhang (2002) 210 CLR 491 at 518 [70]; Lloyd v Guibert (1865) LR 1 QB 115 at 129; Wright, Heaton and Co v Barrett (1892) 13 LR (NSW) 206 at 210; BP Exploration Co (Libya) Ltd v Hunt [1980] 1 NSWLR 496 at 503 [24]; Szechter (orse Karsov) v Szechter [1971] P 286 at 296; Cross on Evidence, (looseleaf service), vol 1 at [41005].
If a party tenders evidence that shows that the lex causae applies a doctrine of total renvoi to its choice of law rule, then the lex fori's own commitment to total renvoi will require the forum court to embark down the long road to nowhere. This is also the case when, as is most common and as occurred in the instant case, the parties tender no evidence as to the applicability of renvoi to the lex causae's choice of law rule. This is because, in the absence of evidence as to foreign law, the forum court "presumes" that foreign law is the same as the lex fori[21]. Thus, the forum court must presume that the lex causae, like the lex fori, applies a doctrine of total renvoi to its choice of law rule.
[21]Wright, Heaton and Co v Barrett (1892) 13 LR (NSW) 206 at 210; Bowden Bros & Co v Imperial Marine and Transport Insurance Co (1905) 5 SR (NSW) 614 at 616; BP Exploration Co (Libya) Ltd v Hunt [1980] 1 NSWLR 496 at 503 [24]; Broken Hill Pty Co Ltd v Federal Commissioner of Taxation 99 ATC 5193 at 5,214 [85]; Lloyd v Guibert (1865) LR 1 QB 115 at 129; Bumper Development Corporation v Commissioner of Police of the Metropolis [1991] 1 WLR 1362 at 1368; [1991] 4 All ER 638 at 644; Mount Cook (Northland) Ltd v Swedish Motors Ltd [1986] 1 NZLR 720 at 726-727; Cross on Evidence, 7th Aust ed (2004) at 1358-1360 [41005].
In their joint judgment, Gummow and Hayne JJ hold that "Art 146 is not to be understood as permitting, let alone requiring, a Chinese court to have regard to Australian choice of law rules" because "[i]t was not contended, and there was no evidence, that Art 146 was to be understood as having that effect."[22] With great respect, that conclusion does not sit easily with their Honours' conclusion that "the lex loci delicti is the whole of the law of that place"[23], on the one hand, and their Honours' application of the evidential presumption as to the state of foreign law on the other. The reason for the uneasiness is that no evidence was tendered before McKechnie J, and McKechnie J made no findings of fact, as to the operation of renvoi with respect to the Chinese choice of law rule in tort. The General Principles provide no foundation for concluding that the reference in Art 146 to "the law of their own country or of their place of domicile" is a reference only to that law's "substantive" law and not to its choice of law rules. At all events, the text and context of the General Principles do not establish it clearly enough to satisfy the evidential or persuasive burden of proving foreign law.
[22]Reasons of Gummow and Hayne JJ at [131] (emphasis added).
[23]Reasons of Gummow and Hayne JJ at [102].
In the absence of evidence, this Court would ordinarily assume that Chinese law is identical to Australian law. On that hypothesis and for the purposes of resolving this appeal, the Court would presume that Chinese law concerning the applicability of renvoi to the choice of law rule in tort was the same as under Australian law. Hence, if the Australian choice of law in tort selects "the whole of the law of that place", then the Chinese choice of law in tort would be presumed to select also "the whole of the law" of its chosen country.
The end result in cases like this one is that this Court can only interrupt the "infinite regression" and reach a decision if the Court rejects the doctrine of total renvoi. Accordingly, the doctrine of total renvoi should be rejected, not only for cases such as the present, but for all other cases, including those in which the foreign law's approach to renvoi is provable.
The remaining options, then, are either to apply a doctrine of single renvoi or reject the entire doctrine of renvoi.
(ii) The logical impossibility of applying the entirety of the lex loci delicti
Regardless of whether this Court rejects the entire doctrine of renvoi or adopts a doctrine of single renvoi, the Court can resolve the appeal only by applying less than the entirety of (what the evidence and the evidential presumptions demonstrate is) Chinese law. I cannot accept, therefore, that this Court can fully "take account of what the foreign jurisdiction would do if the matter were to be litigated there"[24].
[24]Reasons of Gummow and Hayne JJ at [107].
Mrs Neilson contends that the Australian choice of law rule in tort requires the forum court to apply all laws of the lex loci delicti, except for laws that the forum court classifies as renvoi laws; ie laws that define the scope of the lex causae's choice of law rules. She relies on a dictum of Scrutton LJ in Casdagli v Casdagli[25]. His Lordship said that, where the choice of law rules of the lex causae require the application of the lex fori, the lex fori:
"may well apply its own law as to the subject-matter of dispute, being that which the country of domicil [the lex causae] would apply, but not that part of it which would remit the matter to the law of domicil, which part would have spent its operation in the first remittance."
[25][1918] P 89 at 111.
This reasoning applies the doctrine of single renvoi. It requires the forum court to apply the lex causae's choice of law rules. But it does so without regard to whether the lex causae would also require the application of the whole of its chosen law. It is not a modified doctrine of total renvoi because it is not the lex causae, but the lex fori, that considers the choice of law rules of the lex fori to have "spent its operation".
OPC rejects the doctrine of renvoi and classifies Chinese law differently. OPC submits that the Australian choice of law rule in tort requires the forum court to apply all laws of the lex loci delicti. The only exception is laws that the forum court classifies as choice of law rules; ie laws that identify the circumstances in which the rest of its laws are inapplicable and the laws of another place are applicable.
Given that, to reach a decision in this case, the Court must categorise Chinese law and apply something less than its whole, the question to be answered is: how should Chinese law be categorised? That is, which Chinese laws should this Court exclude from the bundle of laws that apply to the resolution of this appeal?
(iii) Rejecting renvoi or adopting single renvoi?
Where the forum's choice of law rules make foreign law applicable to a case, it seems logical to conclude that those choice of law rules should be applied in the way that causes the foreign law to be applied most fully. Thus, to ascertain whether a doctrine of renvoi should be rejected, or a doctrine of single renvoi should be applied, the scope of the foreign law that each approach makes applicable to the contentious issue needs to be compared.
Foreign law is applied during the choice of law process in two different spheres. First, it is applied during the "discourse" between the legal systems. That is, it is applied in the process through which the forum court refers to the foreign law in order to identify the law that is determinative of the issue. Second, the lex causae is applied to determine the issue. A doctrine of no renvoi and a doctrine of single renvoi differ in that the latter doctrine causes the foreign law to be more fully applicable during the "discourse", but the former doctrine causes the foreign law to be more fully applicable to determine the issue.
(a) No renvoi
If the doctrine of renvoi is made inapplicable to the choice of law rule in tort, then none of the lex loci delicti is applied during the discourse. This is because the forum court ignores the choice of law rules of the lex loci delicti. However, the end result of this choice of law discourse is that the forum court applies the laws that the lex loci delicti would have applied to a set of facts that is identical to the instant case in all respects. There is one exception and that is where the parties or the events of the case were connected to another legal system. In this case, the forum court's rejection of renvoi would cause it to apply Art 136 of the General Principles to fix the period of limitations in which Mrs Neilson needed to have brought her claim. On Mrs Neilson's submission as to the meaning of Art 146 of the General Principles, the Chinese courts would also have applied Art 136 to a case like hers, as long as the plaintiff and defendant were not domiciled in or nationals of the same country. Thus, if the doctrine of renvoi is rejected, the result is that the forum court applies the law that the lex loci delicti would apply to a set of facts that are analogous to, but not congruous with, the facts of the instant case.
(b) Single renvoi
If the doctrine of single renvoi is applied to the choice of law rule in tort, then the forum court applies all the laws that the lex loci delicti would apply to the set of facts in the instant case during the choice of law discourse. Again there is an exception: it is the law with respect to renvoi. But the end result of this choice of law process is that the forum court applies the laws that the lex loci delicti would not have applied to these facts or to any other set of facts if the lex loci delicti had, in fact, been the lex fori. This is because the doctrine of single renvoi precludes the forum court from taking notice of the lex loci delicti's approach to renvoi and from applying the law that that approach would select.
If, in this case, the forum court is an Australian court, then the forum court's application of a doctrine of single renvoi would select Australian law (without its conflict laws) to determine the issue. This is because the doctrine of single renvoi requires the Australian court to apply the Chinese law's (ie the lex loci delicti's) choice of law rules, which select, under Mrs Neilson's construction of Art 146 of the General Principles, Australian law as "the law of [the parties'] own country or ... domicile". However, the Australian court cannot have regard to whether Chinese law would also require the application of the whole of the law of the parties' country or domicile.
The problem with this result is that there is no factual circumstance in which a Chinese court would apply Australian law to determine the issue if a Chinese court was the forum court. If the plaintiff and defendant were domiciled in or nationals of the same country, then Art 146 of the General Principles states that "the law of their own country or of their place of domicile may also be applied." In this case, the absence of evidence as to the way that Chinese law defines the reference in Art 146 to "the law of their own country or of their place of domicile" means that the Chinese courts must be presumed to have the same approach to renvoi in tort as the Australian courts; ie adopt a doctrine of single renvoi. Under this doctrine, the Chinese forum court would take notice of the lex domicil's (ie Australian law's) choice of law rules. As the Australian choice of law rules select Chinese law, the result would be that Chinese law (without its conflicts laws) would be applicable to determine the result. Thus, an application by the Australian courts of a doctrine of single renvoi results in the Australian courts applying a set of laws that is entirely different from the set of laws that (an Australian court presumes) would be applied if the action were heard in China. This result is clearly contrary to the aim of Australian conflicts laws, which is to take account of what the foreign jurisdiction would do.
In contrast, rejecting the renvoi doctrine enables the forum court to apply the law of the lex loci delicti as fully as possible. Accordingly, it is the preferable approach given the reasoning in our decisions in Pfeiffer[26] and Zhang[27]. The choice of law rule in tort that was articulated in Pfeiffer[28] and applied to international torts in Zhang[29] requires the forum court to apply the law of the lex loci delicti, but not those laws that merely "direct[] which law is applicable to a given set of facts."[30] The result is that, in this case, Art 146 of the General Principles – which is a law that permits "the law of the place in which the infringement occurred" or "the law of [the parties'] own country or of their place of domicile" to be applied – is not applied by the forum court. Article 146 then cannot be invoked to resolve the issue as to the period of limitations in which the appellant needed to have brought her claim. Article 136 of the General Principles had to be applied by the forum court – the Supreme Court of Western Australia – with the result that Mrs Neilson's claim was statute barred. It follows that the decision of the Full Court must be upheld.
[26](2000) 203 CLR 503.
[27](2002) 210 CLR 491.
[28](2000) 203 CLR 503.
[29](2002) 210 CLR 491.
[30]Mann, "Statutes and the Conflict of Laws", (1972-1973) 46 British Year Book of International Law 117 at 118.
On the view that the majority in this Court take of the construction of Art 146, my conclusion has the result that Mrs Neilson loses an action that, on the majority's construction of Art 146, would have succeeded if the case had been commenced and heard in China. But that result is achieved by placing a construction on Art 146 that, with great respect, I think is unjustified. As I have indicated, it is reached only by concluding that "the law of their own country or of their place of domicile" in that Article means the substantive law and not the whole law of the parties' country or place of domicile. There is no evidence to support that construction of Chinese law – which after all is a question of fact – and it runs counter to the presumption, in the absence of evidence, that the Chinese choice of law rules are the same as the Australian choice of law rules. And, as I have indicated, even if the construction that the majority have placed on Art 146 is accepted, I am far from convinced that Mrs Neilson has established that a Chinese court would have applied the substantive law of Australia to resolve the dispute.
Order
The appeal must be dismissed with costs.
GUMMOW AND HAYNE JJ. When a tort or delict is committed in a place outside the area over which a court has jurisdiction, what legal significance is the common law to give to the fact of it having been committed in a foreign place? For many years, the common law attached only limited significance to that fact. It applied the "double actionability" rule. That rule, established in 1870[31], was that an act done in a foreign country was a tort, actionable as such, only if it was both actionable as a tort according to the law of the forum and "not justifiable" by the law of the place where it was done. If those tests were met, the rights and duties of the parties were to be determined according to the law of the forum[32].
[31]Phillips v Eyre (1870) LR 6 QB 1 at 28-29.
[32]Koop v Bebb (1951) 84 CLR 629.
In 2000, in John Pfeiffer Pty Ltd v Rogerson[33], this Court restated the common law choice of law rule to be applied in Australian torts involving an interstate element. The Court held that, in intranational torts, the law governing all questions of substance was the law of the place of commission of the tort (the lex loci delicti). In 2002, in Regie Nationale des Usines Renault SA v Zhang[34], this Court held that the substantive law for the determination of rights and liabilities in respect of foreign torts was also the lex loci delicti.
[33](2000) 203 CLR 503.
[34](2002) 210 CLR 491.
The double actionability rule now has no application in Australia to intranational[35] or foreign[36] torts. No exception, flexible or otherwise, is recognised[37] to the rule that the lex loci delicti is to be applied to determine substantive questions in both intranational torts and foreign torts.
[35]John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 at 542 [96] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ, 546‑547 [109]‑[113] per Kirby J.
[36]Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491 at 515 [60] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ, 534‑535 [121] per Kirby J.
[37]cf Chaplin v Boys [1971] AC 356.
The particular issues which must be examined in this appeal concern a foreign tort. They stem from one fundamental question. What is meant by the lex loci delicti? In particular, what is to be done when the law of the place of commission of the tort would apply the law of a different place because it attaches significance to a particular feature of the factual circumstances such as the nationality or domicile of one or more of the parties? That is, what is to be done when Australian law chooses the place where the tort is committed as the relevant connecting factor, but the law of that place treats another connecting factor, such as nationality or domicile, as determining the applicable law?
The parties to the appeal proffered different answers to these questions. They agreed, however, upon two points. First, there is no determinative judicial authority. Secondly, the answers to the questions that have been identified are to be provided by considerations of basic principle, not by simply pointing to the fact that Australian law chooses the law of the place of commission of the tort. Noting that Australian law makes that choice does no more than pose the questions; it does not answer them. As will appear, the answers to be given to the questions require the appeal to be allowed.
The essential facts
The appellant, a long‑term resident of Western Australia, was the wife of an employee of the first respondent ("OPC"), a company owned by the State of Victoria and having its registered office and principal place of business in that State. The appellant's husband was employed to work in Wuhan, in the People's Republic of China. The husband was required to live in an apartment provided to him by OPC. The appellant accompanied her husband to Wuhan. Before leaving for Wuhan the appellant agreed to do some work as personal assistant to the director of the programme being undertaken by OPC in Wuhan. In Wuhan, the appellant and her husband lived in the apartment provided by OPC.
In October 1991, the appellant fell down stairs in the apartment and was injured. More than five years after the accident, in July 1997, the appellant and her husband sued OPC in the Supreme Court of Western Australia. The appellant claimed damages for the personal injuries she had suffered. Her Statement of Claim made no reference to the law of China. She alleged several causes of action, including breach of contract and negligence, but these reasons need deal only with her claim in negligence. The other claims made against OPC failed at trial and are not pursued further in this Court.
The second respondent to the appeal, Mercantile Mutual Insurance (Australia) Ltd ("the insurer"), was OPC's public liability insurer. It was originally joined as a third party to the proceedings. In this Court, OPC and the insurer were named as respondents and were jointly represented. It is not necessary to make any further separate reference to the position of the insurer.
In its defence, OPC alleged that the appellant's claim was not actionable under the law of China. It asserted that, by Chinese law, the claims the appellant made were statute barred after one year. It asserted that, in any event, by Chinese law the damages that might be awarded were limited to past and future economic loss.
OPC's defence referred to a number of provisions of the General Principles of Civil Law of the People's Republic of China. The pleading described these General Principles as having been adopted at the 4th Conference of the 3rd National People's Congress on 12 April 1986 with effect from 1 January 1987. In evidence they were described as having been adopted on 12 April 1986 by the 4th Session of the 6th National People's Congress. Nothing turns on this difference. It is convenient to refer to them as the "General Principles". An English translation of the General Principles was tendered in evidence. This showed the General Principles to be divided into Chs I-IX. Chapter I (Arts 1-8) was headed "FUNDAMENTAL PRINCIPLES" and Art 8 read:
"Unless otherwise stipulated by law, the laws of the People's Republic of China shall apply to civil activities carried out within the territory of the People's Republic of China.
Unless otherwise stipulated by law, the provisions of this Law with regard to citizens apply to foreign nationals and stateless persons within the territory of the People's Republic of China." (emphasis added)
OPC's contention that, under Chinese law, the appellant's claim was statute barred relied upon Arts 135 and 136 of the General Principles. Chapter VII (Arts 135‑141) of the General Principles was headed "LIMITATION OF ACTIONS". Articles 135 and 136 were translated as providing:
"Article 135. The period of limitation of actions on a request to the People's Court for the protection of civil rights is two years, unless otherwise stipulated by the law.
Article 136. In the following cases, the period of limitation of actions shall be one year:
(i) demand for compensation for bodily harm ..."
The appellant did not file a reply to OPC's defence. As a result, there was a simple joinder of issue on the matters raised by OPC's defence. It appears, however, that the pleadings were not treated by the parties as confining the issues that were to be debated at trial. In particular, although not mentioned anywhere in either side's pleadings, the appellant relied upon Art 146 of the General Principles as an answer to OPC's contentions about the law of China.
Chapter VIII (Arts 142‑150) of the General Principles was translated with the heading "APPLICATION OF THE LAW TO CIVIL RELATIONS INVOLVING FOREIGNERS". This invites attention back to the reference to other legal stipulation in the general provision made in Art 8 set out above.
Article 146 was translated as providing that:
"With regard to compensation for damages resulting from an infringement of rights, the law of the place in which the infringement occurred shall be applied. If both parties are nationals of the same country or domiciled in the same country, the law of their own country or of their place of domicile may also be applied.
Acts which occur outside the territory of the People's Republic of China and which the law of the People's Republic of China does not recognise as acts of infringement of rights shall not be dealt with as such."
The appellant placed chief emphasis in argument in this Court, and in the courts below, upon the second sentence of that provision, namely, that "[i]f both parties are nationals of the same country or domiciled in the same country, the law of their own country or of their place of domicile may also be applied". The appellant contended that her claim in negligence against OPC was to be determined by Australian law because Chinese law (by Art 146) would have applied Australian law.
The primary judge
In accordance with what had been decided in Zhang, the primary judge (McKechnie J) concluded[38] that "the proper law to be applied in this case [to the appellant's claim in negligence, was] the law of the People's Republic of China".
[38]Neilson v Overseas Projects Corporation of Victoria Ltd [2002] WASC 231 at [123].
At the trial only one witness was called to give expert evidence about Chinese law. That witness (Mr Hongliang Liu) was called by OPC. The primary judge found Mr Liu to be an honest and impartial witness and accepted and "rel[ied] in general" on his opinion as to Chinese law[39]. His Honour concluded that the General Principles applied to foreign nationals within the territory of China and thus covered the claim by the appellant against OPC[40]. His Honour further concluded that, under Art 106 of the General Principles, if the acts or omissions of the first respondent caused harm to the appellant, the first respondent "would assume civil liability"[41]. The correctness of these conclusions is not in issue in the appeal to this Court.
[39][2002] WASC 231 at [126].
[40][2002] WASC 231 at [128].
[41][2002] WASC 231 at [144]. Article 106 is found in Section 1 (Arts 106-110), headed "General Provisions", of Ch VI, titled "CIVIL LIABILITY", in the translation. Article 106 states:
"A citizen or legal person who violates a contract or fails to fulfil other obligations shall assume civil liability.
A citizen or legal person who through his own fault infringes upon State or collective property or upon another person, or who harms another person, shall assume civil liability.
If he is not at fault but the law stipulates that he shall assume civil liability, he shall assume such liability."
Although the primary judge went on to consider how the limitation provisions of the General Principles applied in the matter, it is convenient to pass by this aspect of his Honour's reasons. That is because the primary judge concluded[42] that he should apply Art 146 of the General Principles. The primary judge described the consequence of his resort to Art 146 as being the exercise by him[43] of "a right to choose to apply the law of Australia"[44]. It will be necessary to return to consider whether it was correct to treat what, on its face, is a power or discretion given by Art 146 to Chinese courts as if it were a power or discretion to be exercised by an Australian court.
[42][2002] WASC 231 at [204].
[43][2002] WASC 231 at [208].
[44][2002] WASC 231 at [204].
Applying Australian common law principles of negligence[45], the primary judge held that the appellant should recover damages, assessed in accordance with Australian principles, and entered judgment accordingly.
[45][2002] WASC 231 at [209]‑[221].
The Full Court
The insurer appealed to the Full Court of the Supreme Court of Western Australia. That Court (McLure and Johnson JJ, Wallwork AJ) allowed the appeal in part[46] and set aside the judgment obtained by the appellant. The principal reasons of the Court were given by McLure J, the other members of the Court agreeing with her Honour's reasons. McLure J considered[47] the central issue in the appeal was "whether the private international law doctrine of renvoi applies to international tort claims". Her Honour held[48] that the primary judge had erred in applying Australian common law, and that the primary judge "should have applied Chinese domestic law and held that the claim was statute barred". Her Honour concluded[49] that to apply "the double renvoi doctrine to international torts would not promote certainty and predictability". This was said[50] to follow from the need to identify "Australia's choice of law rules, the foreign country's choice of law rules and its attitude to renvoi, from which a conclusion can then be reached as to the domestic law of which country applies".
[46]Mercantile Mutual Insurance (Australia) Ltd v Neilson (2004) 28 WAR 206.
[47](2004) 28 WAR 206 at 208 [1].
[48](2004) 28 WAR 206 at 220 [65].
[49](2004) 28 WAR 206 at 216 [47].
[50](2004) 28 WAR 206 at 216 [47].
By special leave the appellant appeals to this Court.
The particular questions in this Court
The particular questions raised in the appeal to this Court may be identified as being:
1.When applying the lex loci delicti to determine substantive questions arising in the appellant's tortious claim against OPC, was Art 146 of the General Principles a relevant part of that law?
2.If Art 146 was a relevant part of the lex loci delicti, how, if at all, was that provision to be applied in the present case?
This second question will require consideration of two subsidiary questions:
(a)What evidence was given at trial about s 146?
and
(b)What consequences follow from any gap in or deficiency of that evidence?
and may require consideration of two further consequential questions:
(c)What is the possibility of "infinite regression of reference" from any identification by Art 146 of the law of Australia as the applicable law in this case?
and
(d)What are the consequences of the reference in Art 146 to the law of the country of nationality when Australia is a federation?
The particular questions which arise in this appeal are best examined after some more general underlying principles are identified.
General principles
Legal scholars have devoted much attention and effort to suggesting what is to be done when the law of the forum, deciding the rights and obligations of parties to a dispute which has some connection with a foreign legal system, looks to that foreign legal system only to find that it would decide the parties' rights and obligations by reference to either the law of the forum or the law of another legal system. To put the question another way, if the law of the forum chooses one connecting factor as determining the choice of law, but the law chosen by the forum treats some other connecting factor as determinative, to which system does the forum look in deciding the rights and obligations of the parties?
In some early cases where this problem was recognised and examined, the foreign law chosen by the forum as the governing law (the lex causae) would have applied the law of the forum[51]. That came about because the law of the forum chose the place of occurrence of events as the relevant connecting factor, whereas the foreign law chose as the connecting factor a status of the parties – nationality or domicile.
[51]Collier v Rivaz (1841) 2 Curt 855 [163 ER 608]; Kahn‑Freund, General Problems of Private International Law, (1976) (Kahn‑Freund) at 286 referring to the Forgo case, Cass. civ. 24.6.1878, D.P. 1879.1.156; S. 1878.1.429, and the Soulier case, Cass. req. 9.3.1910, D.P. 1912.1.262.
It is in this context that, some years later, metaphorical references to renvoi ("return" or "reference back") entered the English legal lexicon[52] as the description to be applied to the problem and its solution. That is, the problem was presented as if some dialogue occurred between jurisdictions. Would a foreign jurisdiction to whose law the forum had referred, "refer" the issue back to the forum and say that forum law should be applied? Would the forum "accept" the reference back? Could there be an infinite regression of reference, followed by reference back?
[52]See the Note at (1898) 14 Law Quarterly Review 231; Griswold, "Renvoi Revisited", (1938) 51 Harvard Law Review 1165.
An immense amount of scholarly literature has been produced. Subsets of the problem have been identified as cases of single renvoi or double renvoi. Scholars have asserted that there was not[53] or there was[54] a fundamental logical fallacy underlying what was happening. One leading scholar has said[55] of the literature that it is "extensive and partly of very high quality" and that, as a result, "[i]t is difficult to believe that anyone could produce any argument which has not already been advanced". But the scholarly debate has focused more upon theoretical explanations for the method of solution than upon the principal and essentially practical concern of the courts, which is to decide the controversies that are tendered by the parties for decision.
[53]Cowan, "Renvoi Does Not Involve a Logical Fallacy", (1938) 87 University of Pennsylvania Law Review 34.
[54]Griswold, "In Reply to Mr Cowan's Views on Renvoi", (1939) 87 University of Pennsylvania Law Review 257.
[55]Kahn-Freund at 285.
Against this background it is necessary to begin consideration of the problems presented in this appeal by stating some premises from which the examination proceeds. Three premises are identified. They can be referred to as "No advantage"; "Certainty and simplicity"; and "The significance of theories of renvoi".
No advantage
The first and most important premise for considering the issues raised in the appeal is that the rules adopted should, as far as possible, avoid parties being able to obtain advantages by litigating in an Australian forum which could not be obtained if the issue were to be litigated in the courts of the jurisdiction whose law is chosen as the governing law.
Once Australian choice of law rules direct attention to the law of a foreign jurisdiction, basic considerations of justice require that, as far as possible, the rights and obligations of the parties should be the same whether the dispute is litigated in the courts of that foreign jurisdiction or is determined in the Australian forum. This is not a consideration which seeks uniformity for the sake of the aesthetic value of symmetry. Nor is it a precept founded in notions of international politeness or comity[56]. As has been said[57], comity is "either meaningless or misleading"; it is "a matter for sovereigns, not for judges required to decide a case according to the rights of the parties".
[56]Kahn-Freund at 318.
[57]North (ed), Cheshire's Private International Law, 9th ed (1974) at 4; cf North and Fawcett (eds), Cheshire and North's Private International Law, 13th ed (1999) at 5.
Rather, adopting a rule that seeks to provide identical outcomes is neither more nor less than an inevitable consequence of adopting a choice of law rule to which there is no exception. To apply that choice of law rule in a way that would permit a party to gain some advantage by litigating in the courts of the forum, rather than the courts of the jurisdiction whose law provides the governing law, would constitute a considerable qualification to that choice of law rule. A party could gain an advantage by litigating in the courts of the forum rather than the courts of the foreign jurisdiction only if the forum were to choose to apply only some of the law of that foreign jurisdiction. And to do that would make a significant inroad upon what on its face is stated to be an unqualified choice of the law which is to govern the rights and obligations of the parties: the lex loci delicti.
Certainty and simplicity
The second premise for consideration of the problem is that certainty and simplicity are desirable characteristics, not only when stating the applicable rule, but also when a court comes to apply the rule. Perhaps they are ideals that can never be attained. But as Kahn‑Freund pointed out[58], the intellectual challenge presented by questions of conflict of laws is its main curse. Whenever reasonably possible, certainty and simplicity are to be preferred to complexity and difficulty.
[58]Kahn‑Freund at 320.
Certainty and simplicity are important consequences of adopting[59] the rule that the lex loci delicti governs questions of substance in tort and rejecting[60] exceptions or qualifications, flexible or otherwise, to that rule. What have come to be known as "flexible exceptions" to choice of law rules are necessarily uncertain[61]. That is the inevitable consequence of their flexibility. Experience reveals that such rules generate a wilderness of single instances. Especially is that so if the application of the exception depends upon giving content to qualitative expressions like "more significant relationship ... to the occurrence and the parties"[62]. And experience also dictates that these difficulties are not removed by reference to considerations such as State interests[63].
[59]Pfeiffer (2000) 203 CLR 503 at 539‑540 [83]‑[86] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ; Zhang (2002) 210 CLR 491 at 517 [66] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ.
[60]Pfeiffer (2000) 203 CLR 503 at 538 [79]‑[80] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ.
[61]Pfeiffer (2000) 203 CLR 503 at 538 [79] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ; cf Babcock v Jackson 191 NE 2d 279 (1963) and subsequent decisions about guest passenger liability.
[62]Restatement of Conflict of Laws, 2d, vol 1, Ch 7, Topic 1, Title B, "Particular Torts", (1971), §146.
[63]Alaska Packers Association v Industrial Accident Commission of California 294 US 532 (1935); Allstate Insurance Co v Hague 449 US 302 (1981); Phillips Petroleum Co v Shutts 472 US 797 (1985); Franchise Tax Board of California v Hyatt 538 US 488 (2003).
To take no account of what a foreign court would do when faced with the facts of this case does not assist the pursuit of certainty and simplicity. It does not assist the pursuit of certainty and simplicity because it requires the law of the forum to divide the rules of the foreign legal system between those rules that are to be applied by the forum and those that are not. This requires the forum to impose on a foreign legal system, which must be assumed is intended to constitute an integrated system of interdependent rules, a division which that system may not make at all. And to make that division, the forum must consider hypothetical circumstances which are not identical to those of the case under consideration. Neither dividing the rules of the foreign legal system nor the manner of effecting that division assists the pursuit of certainty and simplicity.
An example may illustrate the point. A foreign legal system may make separate provision for the kinds of loss sustained by a person as a result of a traffic accident, recoverable from the party whose negligence caused that loss, according to whether the negligent party was a national of, or domiciled in, that foreign country. The differences may reflect not only different insurance arrangements for "local" drivers from those applying to others but also different social security and health arrangements. That is, the foreign legal system may also make provision in its social security and health legislation for giving larger benefits to those who are nationals of, or domiciled in, the country than the benefits allowed to others. If the Australian choice of law rules look only to the "domestic" law of that country, what account is to be taken of these different social security and health provisions in deciding the extent of the liability to an Australian citizen of the Australian employer of a negligent "local" driver sued in an Australian court? Is reference to be made only to the foreign law that deals with recovery of damages? Is reference to be made to the social security and health provisions? Any division that is made is necessarily an incomplete and incoherent reflection of the law of that place.
The significance of theories of renvoi
In most respects this one is not a hard case. The proceedings have in fact been instituted in Australia. There is no contest between courts. The parties are all here. Their presence in China was temporary. The issue of liability was a simple one of negligence according to Australian common law. No one has argued that the Supreme Court of Western Australia was an inappropriate forum. All of those should incline the Australian court, if it may, to the application of Australian law. They are, it can be said, considerations arguing against the rebounding of the question of the law to be applied backwards and forwards potentially infinitely between Australian and Chinese law, and the mechanical use of renvoi as to which Scoles et al say[249]:
"Nevertheless, a mechanical use of renvoi by all concerned jurisdictions could theoretically produce the problem of circularity. In this case, however, it is suggested that the forum accept the reference to its own law, refer no further, and apply its own law. This is the practice of most jurisdictions that do employ renvoi[250]. This is good policy: the foreign conflicts rule itself discloses a disinterest to have its own substantive law applied, indeed it recognizes the significance of the forum's law for the particular case; the case therefore probably presents a 'false conflict.' This view was expressly adopted by the Court of Appeals of Maryland. Furthermore, since uniformity in result would not otherwise be achieved in these circumstances, ease in the administration of justice is furthered by the application of forum law rather than by the use of foreign law." (further footnote omitted)
[249]Conflict of Laws, 4th ed (2004) at 139-140.
[250]See, eg, Austria: Federal Statute on Conflict of Laws §5(2), Bundesgesetzblatt 1978, No 304; France: Cass. Civ. June 24, 1878, D.P. 79.1.56, S. 78.1.429 and Cass. Reg. February 22, 1882, S. 82.1.393 (Forgo case); Germany: Introductory Law to the Civil Code (EGBGB) Art 4(1) (1986), and Kegel & Schurig, Internationales Privatrecht 393-94 (9th ed 2004); Japan: X v Y, [1994] HJ (1493) 71 (S Ct of Japan), transl in 18 Japanese Ann Int'l L 142 (1995); Switzerland: Federal Statute on Private International Law Art 14 (1987). For the German provision see also Ebenroth & Eyles, Der Renvoi nach der Novellierung des deutschen Internationalen Privatrechts, 1989 IPRax 1. For comparative treatment see Bauer, Renvoi im internationalen Schuld-und Sachenrecht (1985). European law makes one exception: there is no renvoi in choice of law for contract. Rome Convention on the Law Applicable to Contractual Obligations Art 15; Germany, EGBGB Art 35(1). In addition, the EU Commission's Proposal for a Regulation for the Law Applicable to Non-Contractual Obligations would also exclude renvoi in cases of tort injury without mandate, and unjust enrichment. Art 20 COM (2003) 0427; Japan: X v Y, [1994] HJ (1493) 71 (S Ct) transl in 18 Japanese Ann Int'l L 142 (1995). [balance of footnote omitted]
The matters to which I have referred are the sorts of matters which influence courts in deciding the appropriateness of a forum. The two questions, which law should be applied, and in which forum should it be applied, are closely related[251], and will often admit, indeed demand, the same answer. In all of the circumstances here, the Western Australian Supreme Court is an appropriate forum and is better fitted, unless it is compelled not to do so, to find and apply Australian law to this case.
[251]cf Briggs, "In Praise and Defence of Renvoi", (1998) 47 International and Comparative Law Quarterly 877 at 883.
I agree that the right course to adopt here is for the Australian courts to accept the (likely) Chinese reference to Australian law in accordance with the practice of most other jurisdictions. The truth is that although choice of law rules are part of the domestic or municipal laws of a country, they are very special rules as this case shows and should not be mechanically applied to all situations. Indeed as Lord Atkinson pointed out in Casdagli v Casdagli, fallacies lurk in the term "municipal law" in any event[252].
[252][1919] AC 145 at 192-193.
It is also important to note that in that case, the House of Lords approved the dissenting judgment of Scrutton LJ in the Court of Appeal, in which his Lordship said[253]:
"Practical and theoretical difficulties arise from the fact that, while England decides questions of status in the event of conflict of laws by the law of the domicil, many foreign countries now determine those questions by the law of the nationality of the person in question. Hence it has been argued that if the country of allegiance looks to or sends back the decision to the law of the domicil, and the country of domicil looks to or sends back (renvoyer) the decision to the law of nationality, there is an inextricable circle in 'the doctrine of the renvoi' and no result is reached. I do not see that this difficulty is insoluble. If the country of nationality applies the law which the country of domicil would apply to such a case if arising in its Courts, it may well apply its own law as to the subject-matter of dispute, being that which the country of domicil would apply, but not that part of it which would remit the matter to the law of domicil, which part would have spent its operation in the first remittance. The knot may be cut in another way, not so logical, if the country of domicil says 'We are ready to apply the law of nationality, but if the country of nationality chooses to remit the matter to us we will apply the same law as we should apply to our own subjects.'"
[253][1918] P 89 at 111. See also Jaber Elias Kotia v Katr Bint Jiryes Nahas [1941] AC 403 at 413, which was a decision of the Privy Council.
How then should the principle be stated? In my opinion, it is, in relation to the remedying of wrongs committed in foreign countries, that although the lex loci delicti is to be applied to cases brought in Australian courts, if the evidence shows that the foreign court would be likely to apply Australian law by reason of its choice of law rules or discretions, then the Australian common law of torts should govern the action. This is a solution which offers finality, and limits the need to search for and apply foreign law. It does not however eliminate the need to find the foreign choice of law rules so that it can be ascertained whether they would be likely in fact to require the application of Australian tort law. Each case will depend upon the evidence before the court. Foreign law must as a matter of fact be pleaded and proved (or absent proof, presumed) as with any other fact in issue.
The appeal should be allowed with costs. I agree with the consequential orders proposed by Gummow and Hayne JJ.
HEYDON J. The background circumstances are set out in the judgments of Gummow and Hayne JJ and Callinan J. I agree with the orders proposed by Gummow and Hayne JJ for the following reasons, grouped under headings noting the key questions for decision.
What law determines the plaintiff's rights?
Since the events giving rise to the plaintiff's injury took place in the People's Republic of China, it is necessary to look to the lex loci delicti – the law of that place – for the resolution of her claim[254].
[254]Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491.
How much of the law of China is to be looked to?
The respondents' submission was in effect that in applying the lex loci delicti – Chinese law – an Australian court should only look at Arts 106[255] and 135-137[256] of the General Principles of Civil Law of the People's Republic of China ("the General Principles"). They submitted that it would be wrong for Australian courts to have recourse to Ch VIII of the General Principles because this was to have impermissible recourse to the conflicts rules of China. Alternatively, it was submitted for the same reason that if Australian courts were to have recourse to Ch VIII, and Art 146 within that Chapter, they were limited to the first sentence of Art 146, and could not examine the second. Article 146 provides:
"With regard to compensation for damages resulting from an infringement of rights, the law of the place in which the infringement occurred shall be applied. If both parties are nationals of the same country or domiciled in the same country, the law of their own country or of their place of domicile may also be applied.
Acts which occur outside the territory of the People's Republic of China and which the law of the People's Republic of China does not recognise as acts of infringement of rights shall not be dealt with as such."
[255]Article 106 is set out at [231] of Callinan J's reasons.
[256]Articles 135 and 137 and the relevant parts of Art 136 are set out at [231] of Callinan J's reasons.
In evaluating the merits of the respondents' submission, it is desirable to analyse its consequences. Those consequences can only be seen by examining what, on each side's case, are said to be the relevant provisions of Chinese law. In deciding the content of those provisions, it is necessary to apply appropriate principles of construction.
There was no evidence about what principles of construction ought to be applied to Art 146. That is so for the reasons given by Callinan J[257]. It is appropriate to employ Australian principles of construction, both for the reasons given by Callinan J[258] and for the reasons given by Gummow and Hayne JJ (on the hypothesis that there was an evidentiary deficiency on this point[259]). The general correctness of that approach (pursuant to which the relevant foreign law is assumed to be the same as the lex fori if there is no, or only incomplete, proof of the foreign law) has been questioned[260], but no argument adverse to its general correctness was advanced in this appeal, and it was described by the respondents as "trite". The only relevant argument was that that approach should not be permitted to result in the plaintiff's success, for that would destroy, by a side-wind, the requirement that only the domestic lex loci delicti be applied. For reasons given below, there is not in the present case any requirement of that kind. Further, this Court in Regie Nationale des Usines Renault SA v Zhang[261] said nothing about the approach in question.
[257]Callinan J's reasons at [248]-[249].
[258]Callinan J's reasons at [249].
[259]Reasons of Gummow and Hayne JJ at [125].
[260]Fentiman, Foreign Law in English Courts, (1998) at 149-156.
[261](2002) 210 CLR 491.
On Australian principles of construction, Ch VIII is to be read as dealing with the application of the law to civil relations involving foreigners. The opening words of Art 142 make it plain that it does so in a manner which excludes other parts of the General Principles: "The application of the law to civil relations involving foreigners shall be determined by the provisions of this Chapter." Various provisions apart from Art 146 provide for the application of principles other than those of Chinese law. Thus the balance of Art 142 provides:
"Where the provisions of an international treaty which the People's Republic of China has concluded or has acceded to differ from civil laws of the People's Republic of China, the provisions of the international treaty shall apply, with the exception of those articles to which the People's Republic of China has declared its reservation.
Where the law of the People's Republic of China and international treaties concluded or acceded to by the People's Republic of China do not contain provisions in relation to civil matters involving foreigners, international practice may be applied."
Article 143 provides:
"In the case of a citizen of the People's Republic of China who has settled in a foreign country, the law of the country in which he has settled may be applied with regard to his capacity for civil acts."
Article 144 provides:
"With regard to the ownership of real estate, the law of the place in which the real estate is located shall be applied."
Article 145 provides:
"Unless otherwise stipulated by law, the parties to a contract involving foreigners may choose the law applicable to the handling of disputes arising from the contract.
If the parties to a contract involving foreigners have not made a choice, the law of the country of closest connection to the contract shall be applied."
Article 147 provides:
"With regard to a marriage between a citizen of the People's Republic of China and a foreign national, the law of the place in which the marriage is concluded shall be applied. With regard to divorce, the law of the place in which the court handling the case is located shall be applied."
Article 148 provides:
"With regard to the support of dependants, the law of the country of closest connection to the dependant shall be applied."
And Art 149 provides:
"With regard to the legal inheritance of property, the law of the place in which the deceased was domiciled at the time of death shall be applied to personal property, while the law of the place in which real estate is situated shall be applied to such real estate."
Thus in some cases Ch VIII contemplates that a law other than Chinese law must apply (Arts 142 (second sentence), 144, 145, 146 (first sentence, subject to the second sentence), 147, 148 and 149). And in other cases the provisions of Ch VIII confer a discretion to select a law other than Chinese law, but they make it plain that once the other law is selected, it must apply. To all these possibilities there remains a residual exception in Art 150:
"Where this Chapter provides for the application of the law of a foreign country or of international practice, this must not be contrary to the public interest of the People's Republic of China."
But subject to that, where questions about civil relations involving foreigners arise, the provisions of Ch VIII operate in place of other provisions of the General Principles. Among the provisions of Ch VIII is the second sentence of Art 146, which creates a discretion to apply Australian law and hence remove Chinese law as the relevant source of rights and obligations.
This conclusion would unquestionably have followed if the present parties, or parties in the position of the present parties, had participated in proceedings instituted in China. The respondents argued, however, that this conclusion did not follow where the proceedings had been instituted, as they were, in Australia. The respondents contended that there was a general "no renvoi" principle in the present circumstances: an Australian court required to apply the lex loci delicti was required to apply "the domestic law of the foreign law area". The respondents also contended that that principle was "implicit" in Regie Nationale des Usines Renault SA v Zhang, and one passage of the majority joint reasons was referred to[262]. However, there was no textual demonstration that the principle contended for was to be found in any part of Regie Nationale des Usines Renault SA v Zhang, and indeed it cannot be found in that or any other case. Further, the principle, at least in cases like the present, cannot exist. That is because it would be absurd if it did. This Court has seen it as undesirable that "the existence, extent and enforceability of liability [should vary] according to the number of forums to which the plaintiff may resort"[263]. It would be absurd for Australian courts to do what the supposed principle requires, namely to apply Chinese law to disputes even though Chinese law would not apply had the proceedings been instituted in China and a decision to apply Australian law were made pursuant to the second sentence of Art 146. That is, it would be absurd, if the supposed principle existed, that the body of law to be applied in proceedings commenced in China by the plaintiff against the respondents in relation to the incident causing her injuries should be different from that to be applied in proceedings commenced in Australia by the plaintiff against the same parties in relation to the same incident. Finally, it would be absurd that the regime – the lex loci delicti – which the Chinese Government enacted for incidents causing injuries of the type which the plaintiff suffered should be set at naught by reason of Australian law, as it would be if the supposed principle existed.
[262](2002) 210 CLR 491 at 520 [75] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ.
[263]John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 at 539 [83] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ.
Is the plaintiff's action defeated by the Chinese law of limitations?
Had the plaintiff sued in China, assuming that no extension of the limitation period were granted under Art 137 and Australian law were not applied under Art 146, Art 136 would have debarred the plaintiff from suing. That is because she sued nearly six years after the incident causing her injuries, ie nearly five years after the period stipulated in Art 136(i). The question is whether Art 136 operates in the present circumstances rather than Art 146, or vice versa.
On Australian principles of construction, because Ch VIII is an exclusive statement of the principles which apply to civil relations involving foreigners, it applies in substitution for principles stated in other Chapters of the General Principles which might have applied if Ch VIII had not existed. Hence, where both parties to a dispute about compensation for damages resulting from an infringement of rights are nationals or domiciliaries of the same country, and the law of this country is applied pursuant to the second sentence of Art 146, the law so applied includes its law on limitations. This country's law on limitations therefore applies instead of Arts 135-137 in Ch VII.
Is the discretionary decision contemplated by the second sentence of Art 146 a decision of a Chinese court?
The answer is in the affirmative for the reasons given by Gummow and Hayne JJ[264].
[264]Reasons of Gummow and Hayne JJ at [113].
What factors are relevant to the decision of a Chinese court under the second sentence of Art 146?
The process of applying Australian principles of construction to Art 146 leads to the conclusion that the factors relevant to the decision of a Chinese court engaged in deciding how to exercise its discretion under Art 146 are those listed by Callinan J[265]. Those factors support the conclusion that a Chinese court would exercise its discretion in relation to this controversy in favour of applying Australian law.
[265]Reasons of Callinan J at [251].
What parts of Australian law are to be applied?
Should the whole of Australian law be applied, including its rules as to the conflict of laws? Or only the domestic Australian law of tort?
The problem in this case is not to be solved by seeking to identify some principle of universal or general application. It is to be solved rather by construing Art 146. Article 146 is part of the Chapter of the General Principles dealing exclusively with foreigners in relation to the civil law of China. It sits alongside provisions contemplating that in many respects civil relations involving foreigners are to be resolved by bodies of law other than Chinese law. It contemplates that when a Chinese court decides to apply the law of the country of which the parties are nationals or domiciliaries to a claim for compensation for damages resulting from an infringement of rights, it is to decide to apply that law in such a way as to prevent any remission of the controversy to China. Thus in this case an application of the law of Australia under Art 146 would not apply any part of Australian law which might result in recourse back to China as the lex loci delicti. It is unnecessary to decide how Art 146 would operate if the parties were nationals or domiciliaries of a country having rules of the conflict of laws calling for the controversy to be decided by the law of a third country.
There is no inconsistency between:
(a)deciding that in this case at least the Australian rules of the conflict of laws refer to the entirety of the lex loci delicti (as distinct from Chinese "domestic" law only); and
(b)deciding that recourse to the second sentence of Art 146 leads to an application only of domestic Australian law.
That is so for two reasons.
First, the above examination of the lex loci delicti reveals that Ch VIII exhaustively deals with civil relations involving foreigners. There is no authority for any general principle mandating the exclusion of Ch VIII in relation to the foreigners engaged in these proceedings, and no such general principle could stand with the absurdity inherent in it of an Art 146 order applying Australian law if proceedings were instituted in China, but not if they were not.
Secondly, to construe Art 146 in relation to an application of the law of Australia as an application only of Australian domestic law is not to describe any rule of the common law, but simply to reach a conclusion about the content of Chinese legislation.
In short, the result in this case turns on the specific content of Chinese legislation, not on the wider principles that each of the parties to this appeal advocated.
The respondents objected that an outcome favourable to the plaintiff could only rest on the recognition of some "flexible exception" to the rule that controversies about foreign torts are governed by the lex loci delicti, and that any such recognition was forbidden by earlier authority in this Court[266]. That objection is groundless. There is a fundamental difference between, on the one hand, "flexible exceptions" to a rule of law commanding attention to the lex loci delicti, and, on the other hand, the consequences which flow from attention to and application of the rules of foreign law, proved or assumed as facts, varying as they do in the hundreds of jurisdictions throughout the world.
[266]Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491 at 520 [75] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ.