Domestic Courts

Domestic courts may sometimes adjudicate upon disputes between nationals of different countries or disputes with transnational aspects. The court’s competence to hear and decide cases is referred to as jurisdiction.

International law limits the extent to which courts may hear disputes in relation to matters of an international nature. Certain entities, including, in particular sovereign entities, may be immune from the jurisdiction in courts.

Historically, foreign states had complete immunity from jurisdiction. However, domestic and foreign states and their state agencies are now commonly amenable to the civil jurisdiction of domestic courts in certain circumstances.

Criminal Jurisdiction

Domestic courts have limited international criminal jurisdiction. Generally, the crime or offence must have taken place within its jurisdiction. In some cases, courts hold persons who are nationals or have another connection with them liable for crimes committed abroad, where the crime impacts upon the states’ national interest.

Many states provide jurisdiction over offences that are recognized as being of universal concern, such as genocide, hijacking, war crimes and child abuse. Conventions between states increasingly seek to criminalise conduct regardless of the place of commission where there is a connection with the state of prosecution.

Civil Jurisdiction & Presence

States may exercise personal jurisdiction in respect of persons physically within their jurisdiction. They may be persons residents, nationals, domiciled persons or those who consent to the court’s jurisdiction. The court may hold that a person consents to the personal jurisdiction of the court by appearing in proceedings, agreeing to it in a contract or undertaking a certain activity.

Corporate entities are subject to jurisdiction in the same way as individuals. Corporations situated, incorporated or resident in a state may be subject to its domestic jurisdiction.

Foreign entities may be subject to jurisdiction if they are formed under local law and so recognized or consented. Corporate entities may give their consent in the same way as an individual. Consent may be by a contract.

In the United States, the Supreme Court has held that a foreign person or entity must have minimum contacts with the home state before it can be subject to its jurisdiction. It may be relevant whether the entity has performed acts relating to that state, whether the suit relates to those acts and whether the person or company by its acts, indicates an intention to rely on the benefit of the state’s laws, such as by doing business.

State Immunity

States are generally immune from the jurisdiction of other states when they are engaged in sovereign activities and when they act officially within their own jurisdiction. These are two separate criteria and basis of immunity.

Sovereign immunity obliges the domestic courts to refuse jurisdiction over disputes concerning foreign states and governments. This is due to deference in the conduct of international relationships.

Absolute immunity for states has been eroded over the last 50 to 60 years. In this period, states have branched out from traditional sovereign activity, such as tax collection and law-making, into a range of commercial and other activities.

Immunity & Trading

Many courts have come to deny sovereign immunity for ordinary trading activities. The distinction is drawn between purely governmental activities and non-core activities. Statutes may define the extent to which commercial activity by foreign states and governments and their various entities are subject to domestic jurisdiction.

States commonly deny immunity to claims for damages to persons or property where there is a link between the activity and the domestic state. The relevant act or omission must usually have happened within the state.

States may choose to waive immunity. This may happen in commercial contracts.

Enforcement v Foreign States

Modern laws allow enforcement against the assets of foreign states within the jurisdiction in certain circumstances, subject to limitations.

States courts are usually deferential in relation to the conduct by the government of international affairs. For example, the US courts will not determine cases involving the official acts of a foreign state performed in its own territory which involve declarations as to the validity or competence of the act concerned.

Choice of Law

Generally, parties to the contracts may choose the law that applies to their disputes. This may be done in a contract made after the dispute has emerged or in a pre-dispute contract, often contained in the contract that is subject of the dispute.

Agreements between businesses, with an international element with a choice of court (forum) and a choice of law, are usually upheld. In some cases, they may differ. In this case, the forum or court may apply foreign law. Foreign law needs to be proved before the court.

Some states allow a choice of law where there is absolutely no connection with the court concerned. Other states require some minimum connection.

The parties may agree or be deemed to agree to jurisdiction by submitting to it, even if the matter is contested. This may occur where the party has appeared and has not contested jurisdiction.

Where a choice of law is not specified, the courts apply rules and principles which are broadly similar internationally to determine the choice of law. In some states,  the rules are set out in legislation.

Appropriate Jurisdiction

Under the traditional vested rights principle, the court is to apply the law of the state where the parties of the suit vested. This is the state where the legal action arose.  Where nothing else is specified and the parties’ intention cannot be inferred, then the law of the place where the relevant act took place may be deemed to govern.

Traditionally where a civil wrong was involved, the courts apply the law of the place where the wrong was committed. In the case of a contract, the law where the contract was made typically governs validity. The law where the contract was performed determines matters of performance.

In the case of land and real property, the law of the place where the land is situated will determine the position.

States usually will not apply a foreign law where it breaches the fundamental public policy of the jurisdiction. It will apply its own procedural rules. It will not enforce illegal contracts. Traditionally foreign tax provisions were not enforced.

In European Union, the matter is dealt with by the judgments regulation. The EU Regulation on jurisdiction in the recognition of judgments in civil and commercial matters determines the position within the European Union. See the separate chapters on the same.

Contacts with State

Courts generally exercise exclusive power over immovable property (land and buildings) within their territory. They may also exercise jurisdiction over movable property physically within the state. This may extend for example, to a ship or aircraft temporarily within that state’s jurisdiction.

The most significant relationship principle requires the state to apply the law with the most contacts with the parties and the transaction. It will consider factors as to which state is most appropriate, having regard to the underlying policies of the legal systems.

It will consider which states’ laws best promote the needs of the international system and which states’ laws will be furthered most by applying it to the case.

The court will consider factors specific to the case. In civil wrong cases, the courts will have regard to the place where the act occurred, the place where the injury manifested itself, the domicile, residence or the place of incorporation of the parties .

In the case of movables, it will consider location, nationality, domicile, residence, and place of incorporation. In contract cases, the key factors would be the place of contracting, negotiation, performance, location of the subject matter, nationality, domicile, and residence of the party. In the case of real property, the location of the property will usually be determinative.

Some states will apply their own law unless otherwise asked. They will tend to favour their own law as they will be more familiar with it, where several states have an interest. If however, other states have a legitimate interest, then the court may dismiss the case if that state is in an inappropriate forum.

Anti-suit injunction

The courts of a sates court may issue a so-called anti-suit injunction. This is directed at the parties to the litigation personally and injuncts them not to proceed with litigation in the foreign jurisdiction.

Courts consider issues such as the application of their public policies and the protection of their own competence. They may grant an anti-injunction if further proceedings would cause undue hardship, are inequitable or vexatious.

Foreign Laws

Where a foreign law is applied, it must be proved as a fact. Some courts will recognise the laws of other states judicially. European Convention on Information on Foreign Law under the assistance of the Council of Europe, requires convention states to respond to requests from agencies in another signatory state with information on their law and procedure in civil and commercial fields as well as on their judicial organization.

Generally,  the courts will recognize and enforce the decisions and orders of foreign courts. States vary in the degree to which they will recognize the decisions of the other courts. It will usually be necessary to apply to a local court for an order adapting or enforcing it. It will consider whether the foreign courts had proper jurisdiction over the matter.

Enforcement may be refused if the foreign order is contrary to public policy. Courts will usually require reciprocity. The recognize decisions only where similar decisions by its domestic courts will be recognized in the other jurisdiction.


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