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29 Dec

CONFLICT 2.2 CHOICE OF LAW IN PROPERTY

CHOICE OF LAW IN PROPERTY.

 

Property can be classified into various forms/types. However, for the purpose of this course, property is classified into moveable and immoveable. Let us treat immovables first.

IMMOVABLE

Includes land and other things permanently attached to land. Here, the question of choice of jurisdiction and choice of law are merged. Meaning that the choice of law would be answered in the process of determining jurisdiction. The jurisdiction for land is the lex situs. Meaning that suits in respect of immovables (like land) are to be instituted in the place where the land is situate (located). This principle is reflected in British South Africa V Companhia de Mocambique where the plaintiff sought for a declaration that he was in lawful possession of the land, an injunction to restrain further trespass and damages(of E25,000) for trespass. The court held that since the land was situate in foreign territory, the plaintiff must go to the place where the land is located to sue. Same stand followed in Hesperides Hotels Limited V Aegean Turkish Holidays Limited although the court noted that damages to moveable contents of the building was actionable. Furthermore, Section 30 of the UK Civil Jurisdiction Act now provides that suits in relation to damages for trespass to foreign land constitute an exception to the rule. The Nigerian courts are enjoined to do as the English courts would-Section 10 High Court Laws, Lagos, Agunane V NTC.

EXCEPTIONS TO THE MOCAMBIQUE’S RULE.

The mocambique case rule is that an action relating to land should be instituted in the place where the land is located (Lex situs). Some exceptions to the rule include:

  1. Equitable intervention and Contract Obligation: where the claim relates to personal obligation arising out of contract or fiduciary relationship or where there is fraud, the court can exercise its equitable jurisdiction and entertain the suit. (This is because equity acts in personam without taking due notice of the land especially to prevent unconscionable situations- Paget V Notwithstanding that the court is not located in the same area as the land in question-NPA V Panalpina World Transport. Also Deschamps V Miller. Examples include; action to redeem mortgage, to reclaim gift made under undue influence, recovery of rent, and so on. In Bata Shoe V Melikan, the court held that it could exercise jurisdiction for specific performance of a contract (relating to assignment of the respondent’s leasehold notwithstanding that it was in foreign land). Similarly in NPA V Panalpina World Transport, the court entertained the plaintiff’s suit asking the defendant to account from proceeds of rent. It noted that was a fiduciary relationship and there is no big deal since the action does not relate to declaration of title over the land.

Note also that (being an equitable intervention), it cannot be exercised against a third party bona fide purchaser for value without notice… nor would jurisdiction be exercised if it requires constant supervision of the court. Note also that there should be some contract or equitable obligation between the parties.

  1. A capacitated court can determine questions of title to foreign immovable for the purposes of administration of estate or trust property-Nelson V Bridport. This was also noted in the Nigerian case of Ogunro V Ogedengbe.
  2. Admiralty Damage to foreign land: a ship that causes damage to foreign land can be sued where it is found-The Tolten, Section 2 and 7 Admiralty Jurisdiction Act.

The funny fact remains that: where a plaintiff (under the above listed circumstances) sues outside the forum, the court would still have recourse to the lex situs which would determine the applicable law. Ren Voi concept may be useful here.

FOR MOVEABLE PROPERTY.

Moveable may be tangible or intangible.

Tangible moveables:

If the property has not moved, the law of the place where the chattel has constantly been located would apply (Lex situs)-Glencore International AG V Metro Trading International. Except on grounds of public policy.

Where the chattel has moved: the courts would have to choose the law to apply. The courts have usually leaned in favour of the transactional lex situs (law of the place where the property was sold). Morris notes that there are four technical rules here.

Rule 1: where title is acquired in one State, that title shall be valid until overridden by another title validly acquired under the law of another State.

Rule 2: Title acquired in State A can only be overridden by another title acquired in accordance with State A’s law.

Rule 3: where A reserves title to goods and B (who may have gotten the goods on hire purchaser) sells it in another State, the subsequent purchaser may not have overriding title.

Rule 4: the law of a territory cannot regulate transactions concluded in another territory.

The cases of Cammell V Sewel and Winkworth V Christie lean in favour of choosing the transactional lex situs (the applicable law to be the law of the place where the sale of the property was effected… The law of the place where the property was sold) In Cammel V Sewel timber was bought in Russia to be shipped to England. The timber was validly sold in Norway under Norway’s law… but under England’s law, such sale would be invalid (not confer title). The court upheld Norway’s law (being the place where the property was sold). Similarly, in Winkworth V Christie stolen artworks were sold to a bona fide purchaser for value without notice in Italy. Such transaction was valid under Italian law. The court held that Italian law would govern (being the law of the place where the property was sold).

The rules shall be applied based on the facts of each case.

Intangible Moveables.

Lex situs is not useful here-Raiffeisen Zentralbank Osterreich AG V Five Star General Trading Llc and others.

Tangible moveables may be classified into voluntary and involuntary intangible moveable.

:: Voluntary: This relates to assignment of choses in action or debt. The applicable law would be the law governing the debt. In Nigeria for example, the right to collect salary is not assignable. Therefore, if Ade (a Nigerian working for a Nigerian company) assigns the right to collect his salary to Bayo, Nigerian law would govern the transaction notwithstanding that he might have assigned it according to a foreign law or he assigned it while he was in a foreign country. In determining priority, the law governing the debt would still apply. E.g. if Ade (a Nigerian worker for a Nigerian company) assigns his right to collect his salary to Bayo (In Ghana) and then subsequently to Tunde (in France)… The question is: whose interest prevails? Equity as applicable in Nigeria says the first in time prevails. Now what if according to Ghanaian Law, the last in time prevails? THE ANSWER is that Nigerian law would apply since it is the law governing the debt and therefore; (as with other common law countries) the first in time prevails.

:: Involuntary: This relates to the garnishee action: Occurs where A, the Creditor of B asks C the debtor of B to pay him (ie to pay A) rather than pay B. Also called third party debt action Here, the law of the debt governs. Therefore, as Morris noted, the question to ask is whether under the governing law the third party would be discharged if he obeys the instruction-Societe Eram Shipping Company ltd V Compagnie Internationale De Navigation, Kuwait Oil Tanker Company SAK V Qabazard.

 

Isochukwu

Quite eccentric really

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