Choice of law refers to what jurisdiction’s law is to be applied in a particular case. Choice of law refers to the area of law in which the court determines whether to apply the forum state law or apply the law applicable in another jurisdiction which has an interest in the controversy.
Courts faced with a choice of law issue generally choose between the laws of the state where the lawsuit was brought and laws of the state where the cause of action arose. The law of the state where the cause of action arose is usually chosen to decide substantive matters.
The three basic types of approaches to choice of law are traditional vested rights doctrine, various interests and analysis approach and most significant relationship theory. The traditional “vested rights” doctrine is based on the notion that a state has the power to prescribe the rules of conduct for transactions or occurrences that takes place on its own territory. Once the last event of the transaction or occurrence takes place on the territory of that state, the parties to it acquire “vested right” under the law of that jurisdiction.