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The Supreme Court affirms orthodox approach to the application of foreign law

By Jack Wass (Stout Street Chambers)

The Supreme Court has recently confirmed the approach that the courts should follow where a question of foreign law appears on the facts of a case, but the parties have failed to plead foreign law.

In earlier Blog posts, we explained that where the parties have failed to plead or prove foreign law, then the general rule is that the court can and must apply the substantive law of New Zealand in default. Although courts in recent years have recognised that this default rule may sometimes be displaced, this has only been permitted in three categories of case: where the plaintiff’s claim positively relies on foreign law and they have failed to establish it; where case management considerations make it necessary for the parties to address foreign law; or where New Zealand law is inherently local and cannot be applied to foreign facts. We explain these principles in more detail in Chapter 3 of The Conflict of Laws in New Zealand.

In Schaeffer v Murren [2020] NZSC 98, the trial had been conducted on the basis of the New Zealand law of negligent misstatement and the Fair Trading Act 1986 (except for one cause of action based on a Nevada statute). The Court of Appeal rejected the proposition that the High Court ought to have applied Nevada law to all issues, and because Nevada law had not been proved by the plaintiffs the claim should have failed. The Supreme Court dismissed an application for leave, confirming the orthodox position described in The Conflict of Laws in New Zealand that where the parties have not pleaded foreign law then the court is entitled and required to decide the case on the basis of New Zealand law. Although acknowledging that there were exceptions to the default rule, these were not engaged on the facts.

While only a leave decision, the Court’s judgment is a valuable affirmation of the orthodox approach to the application of foreign law. The scope of the exceptions to the default rule remains an interesting issue for determination in a later case.

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