Macmillan Inc v Bishopsgate Investment Trust plc [1996] 1 WLR 387

Facts: The plaintiff (Pl) (Macmillan) brought a claim against 5 defendants (D) arguing the transfer of shares was conducted without his consent. Pl’s argument was based on a breach of trust (governed by law of England, where the breach occurred). D did not dispute the breach of trust but claimed in defence that they had interests in the shares in priority to the Pl as they were purchasers for value in good faith and without notice. A question of priority would be governed by the law of the place where the shares were deemed to be located (NY law).

Note: The focus of this case is the resolution of a preliminary issue, namely, what is the proper law (English or New York law) to determine the issue?

Issue: What law (English or NY law) applies? 

Held (first instance): NY law applied.

Held (Court of Appeal): Appeal dismissed. NY law applied. “In finding the lex causae there are three stages. First, it is necessary to characterize the issue that is before the court. Is it for example about the formal validity of a marriage? Or intestate succession to movable property? Or interpretation of a contract? The second stage is to select the rule of Conflict of Laws which lays down a connecting factor for the issue in question. Thus the formal validity of a marriage is to be determined, for the most part, by the law of the place where it is celebrated; intestate succession to movables, by the law of the place where the deceased was domiciled when he died; and the interpretation of a contract, by what is described as its proper law. Thirdly, it is necessary to identify the system of law which is tied by the connecting factor found in stage 2 to the issue characterised in stage 1.”