Law Applicable to Persons Pursuant to Draft Private International Law Act
| Author | Karin Sein |
| Pages | 133-141 |
Karin Sein
Law Applicable to Persons Pursuant to Draft Private International Law Act
The draft Private International Law Act planned to enter into force together with the drafts of the new Law of Obligations Act and the General Part of the Civil Code Act is currently at its second reading in the Riigikogu (Estonian parliament). Unfortunately, the volume of this article is too limited to introduce the draft as a whole. Therefore, I would like to focus on a topic that was a subject of many discussions during the preparation of the draft and that is internationally the least harmonised issue of all: what kind of law should be applied to subjects of law, i.e. to natural and legal persons.
Whilst in the international law of property the principle lex rei sitae is applied and accepted in the whole world and the principle lex loci delictii is almost everywhere the basis for the determination of law applied to the infliction of damage, in the case of persons two fundamentally different traditional theories have developed, and at least now there is no sign of one theory completely surrendering to the other. Thus, the law applied to a natural person (i.e. the personal statute) is determined either by the domicile or nationality of the person, depending on the country; the determination of the passive and active legal capacity of legal persons is generally based on the theory of location or incorporation. These fundamental choices had to be made also during the preparation of the new draft Private International Law Act of Estonia; therefore, I will now try to give an overview of the reasons for the preference of one or another solution and the consequences that the choices will have. I would like to pay special attention to the issues of law applicable to legal persons as so far this not-at-all irrelevant subject has been neglected in Estonian legal literature, and several theories and standpoints that have long been accepted elsewhere may at first glance seem somewhat unaccustomed.
As mentioned above, two fundamentally different options exist for the application of the legal order of a certain country to natural persons: the basis can be either the principle of domicile or the principle of nationality. Disputes about the advantages and disadvantages of these two theories are the most heated discussions ever held on the theory of private international law. The principle of domicile (lex domicilii) is taken as the basis mainly on the Anglo-American legal territory, but also in Switzerland and in some Scandinavian countries; the principle of nationality (lex nationalis) dominates in the rest of Europe.
One of the main advantages of the principle of domicile is considered to be the fact that a person is bound to a legal order that surrounds the person and that is known to him or her. Another positive aspect is the simplification of the work of courts where the national law can then be applied more frequently (to be discussed in detail below). The supporters of the principle of nationality, in turn, consider a person's nationality to be an easily determined connecting factor that rarely changes throughout the person's life and that excludes possible manipulations with regard to the change of domicile and the concurrent change of personal statute.
Despite the dominance of the principle of nationality, the triumph of which at the end of the previous century was largely induced by the development of nation states and the resulting national view of the world, the importance of the principle is gradually diminishing. This can be traced in the development of German and Swiss law of the conflict of laws which served as a basis for the preparation of the new draft Private International Law Act of Estonia, but most of all in the unification of private international law in the conventions of the Hague Conference on Private International Law where the practice of taking the connecting factor of nationality as a point of departure has been limited considerably since 1951.
The concept of habitual domicile 1 used in the conventions established by the Hague Conference on Private International Law can be considered the modern trend that increasingly gains importance. Such a connecting factor is employed, for example, in the Convention on Law Applicable to Maintenance Obligations 2 of 1973, in the Hague Convention on the Form of Wills 3 of 1961 as well as in the later Hague conventions such as the Convention on the International Protection of Adults adopted in 2000. In addition thereto, the Rome Convention on the Law Applicable to Contractual Obligations of 1980 that is in force between the EU Member States also uses the habitual domicile as the connecting factor4. Since the above-mentioned Hague conventions are the loi uniforme type of conventions ? i.e. they replace fully the national conflict of laws rules of the Member States ? it is obvious that the importance of the notion of habitual domicile is growing in the whole world, including the countries that have traditionally followed the principle of nationality. This has also now been acknowledged in the German legal writing where the principle of nationality has been so far observed with extreme conservatism5.
But what exactly is meant by the habitual domicile of a person? Both domicile and nationality are concepts long known to everyone, their meaning is at least theoretically relatively easy to guess. Habitual domicile, however, seems to be rather strange at first glance. Why is it so that different conventions have abandoned the concept of domicile and have started to use a new connecting factor, unknown until that time?
The main reason for this is the extremely varied definition of the concept of domicile in different countries. Some countries allow a person to have only one domicile, while some allow several domiciles. Some countries require that a person should have lived at the place of domicile for a particular period of time. Yet other countries require that a person should be nationally registered to belong to a certain territorial unit in order to create a domicile. As a result, a concept not present in traditional legal regulations has been searched for a long time, and in the last decades the concept of habitual domicile has proved to be the one. This apart, despite the increasingly frequent use, the concept has never been defined in international conventions. Nevertheless, in 1972 the Council of Europe did issue a recommendation for the uniform interpretation of the concept of habitual domicile 6 in which it has been provided, among other things, that a person's length of stay at the place of domicile as well as other personal and financial circumstances that indicate a constant connection between the person and his or her domicile are to be taken into account when determining the habitual domicile, emphasising that the existence of a habitual domicile does not depend on the existence of a domicile permit.
Looking back at history, it can be said that the principle of domicile has almost always been favoured in Estonia. The principle of lex domicilii rather than the principle of nationality was taken as a basis already in the Baltic Private Law Code that entered into force in 1865 and that can be considered the first code in force on the territory of Estonia that contained the conflict of laws rules7. The principle survived in the draft Civil Code of 1940 that was largely based on the Baltic Private Law Code, and today it is contained in sections 130 and 131 of the General Part of the Civil Code Act. The only period of time in which ? clearly for political reasons ? the principle of nationality has been at least partially in force in Estonia was the Soviet period.
Knowing the historical background, the transfer from the principle of domicile to the principle of nationality would have meant an extremely fundamental change in the foundations of the Estonian private international law as a whole. Yet there was no actual need for this. On the contrary, the enforcement of the principle of nationality in a country where the citizens of foreign countries form a large percentage of the population would render the work of courts much more complicated. It is namely the principle of domicile that generally leads to the application of lex fori or the law of the court's state of location because a person's domicile is more likely to coincide with jurisdiction than his or her nationality. This means, for example, that in the case of Finnish citizens residing in Estonia, the court will not have to determine and apply the law of the person's state of nationality, in this case Finland, but it may proceed from the familiar national legislation8. Consequently, the abundance of the citizens of foreign countries residing in Estonia, which was the reason for keeping the principle of lex domicilii already in the draft Civil Code of 1940 9 , was also the main argument in the preparation of the draft Private International Law Act, and it can be claimed firmly that the law of a person's state of domicile is and will be the basis for the determination of a natural person's "statute" in Estonia.
What country's law should the court...
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