Conflict of Laws Analysis: Argentina vs. California

This essay analyzes a conflict of laws issue, specifically whether Argentina or California law should apply to a Joint Venture Agreement (JVA) breach. The analysis uses Sections 6 and 188 of the Restatement (Second) of Conflict of Laws to determine which state has the most significant relationship to the transaction. The essay considers factors such as the place of contracting, the location of the subject matter, and the parties' domiciles. While arguments are presented for both Argentina and California law, the essay concludes that Argentina law should apply due to its stronger connection to the JVA's core activities and the need to foster international commercial relations with Argentine companies.

Omar Alhusayni
Essay (1)
Issue:
Whether Argentina law should apply to the issue of whether USCO has
breached the JVA under Sections 6 and 188 of the Restatement (second) of Conflict
of Laws.
Rules:
(1)When a court has no statutory directive on choice of law, the court may
consider the needs of the interstate and international systems. Restatement
(Second) of Conflict of Law Section6.Am.cmt.k Am.Law inst (1969) In contract, the
rights and duties of the parties are determined by the law of the state that has the
most significant relationship to the transaction and the parties under the principles
stated in Section 6 of conflict of law. Restatement (Second) of Conflict of Law
Section188.Am.cmt.k Am.Law inst (1969) (2) In the absence of an effective choice
of law by the parties, to apply the principles of §6 in determining the law
applicable to an issue , the court may consider: the place of contracting, the
location of the subject matter of the contract, and the domicile, residence,
nationality, place of incorporation and place of business of the parties. These
contacts are to be evaluated according to their relative importance with respect to
the particular issue. Id
Application:
Here, since ARGCO and USCO consent to jurisdiction of federal cour t in
Miami for purposes of dispute resolution , but while do not specify any governing

law clause, Argentina law should apply because of several factors. First, Argentina
has the most significant relationship to the transaction and the parties . In other
words Argentina is the place where JVCO products are to be sold by ARGCO,
Second, to satisfy the needs of interstate and international systems , Argentina law
should apply . Accordingly, Argentina law will facilitate commercial intercourse
between foreign companies, and further harmonious relations between states.
Otherwise , Argentina companies would be discouraged from entering into
ventures with foreign companies. Third, a group of contacts stated as follows:
Argentina is the place and the residence of JVCO, the principal corporation, and
the place of contracting , since signature was made in Argentina , and the place of
the subject matter of the JVA Agreement, which is requiring the parties to exert their best
efforts to develop the business of JVCO, which was to enter the telecom business in Argentina,
using confidential technology supplied by USCO to develop telecom products, therefore,
inventors will maintain their incentive to develop new trade secrets. Accordingly, Argentina law
should apply.
On the other hand, there are significant factors standing in favor of the
argument that California law should apply. First , California arguably has the most
significant relationship to the transactions made by JVCO when JVCO products are
subject to be sold out of Argentina by USCO , which means broad sales will be
made by USCO throughout the world , whereas ARGCO only sells JVCO products
within Argentina . Second, to satisfy the needs of interstate and international
systems, California law should apply .To illustrate, applying California law when it
has the most significant relationship to the transactions, will facilitate commercial
intercourse between foreign companies and further harmonious relations between

states. Otherwise, multi-national companies would be discouraged from entering
into ventures with Argentine companies. This is a significant factor especially when
USCO should not be responsible for Exec’s conduct of disclosure of trade secrets based on the
“Employment Agreement” with JVCO, which indicates that Mr. Exec was employed after
approval by USCO, ARGCO and BigBank as the shareholders of JVCO.
Conclusion:
In sum, under Sections 6 and 188 of the Restatement (second) of Conflict of
Laws, Argentina law should apply in determining whether USCO breached the JVA,
because Argentina is the state of most significant relationship to the transactions
when foreign companies will be discouraged from entering into ventures with
Argentine companies if other law applies.