EFL arises when a domestic rule must be preferred over an inconsistent foreign rule. There are three situations where a foreign law may be excluded: 1) foreign revenue, penal, and public laws, 2) foreign expropriatory legislation, and 3) foreign laws repugnant to public policy. Courts will not enforce foreign laws that involve an assertion of sovereign authority by one state in another state's territory, such as claims to recover taxes or enforce confiscation decrees. The situs of the property in question and the state's control over it outside its territory are also considered for foreign expropriatory legislation.

1. Exclusion of Foreign Law (EFL)

2. EFL arises in circumstances in which the lex fori
must be preferred to the foreign law
E.g. Doctrine of ordre public where domestic rule is
designed to protect the public welfare which must
prevail over an inconsistent foreign rule
Three situations:
A) Foreign Revenue, Penal and Public Law
B) Foreign Expropriatory Legislation
C) Foreign Laws Repugnant to Public Policy

3. Foreign Revenue Law, Foreign Penal
Law and Other Foreign Public Laws
No court will lend its aid to the enforcement
either directly or indirectly of foreign revenue,
penal or other public laws
The common thread that underlines this
exclusionary rule is that laws will not be
enforced if they involve an assertion of a
sovereign authority by one state within the
territory of another

4. Foreign Revenue Law
Government of India v Taylor: A company
registered in England and carrying out trading
operations in India. Company had gone into
voluntary liquidation and the Indian
Commissioner of Income Taxes made a demand
for taxes on the capital gains made from the sale
of the business.

5. Held that the claim was not maintainable as it
was the claim of the Government of India to
recover tax. “…enforcement of a claim for taxes
is but an extension of the sovereign power
which imposed the taxes, and that an assertion
of sovereign authority by one State within the
territory of another…is contrary to the concept
of independent sovereignties.”

6. • Brokaw v Seatrain UK Ltd: The United States
claimed title to goods shipped on a US
registered ship by persons (owners of the
goods) alleged to owe tax to the US.
• A notice of levy had been issued to the ship-
owner demanding that the goods be
surrendered. But when the goods arrived in
the United Kingdom was not surrendered to
the US government

7. • Held it was a claim to enforce a revenue law
and it failed as it amounted to indirect
enforcement of FRL. ((But if the US
government had obtained an
acknowledgement of title from the master of
the ship, or otherwise obtained possession
prior to the export, the claim would have been
upheld as it would amount to a possessory
title than a revenue law))

8. Foreign Penal Law
• Banco de Vizcaya v Don Alfonso, the former King of Spain
had brought securities and instructed that they should be
held by a London bank according to his agents, BdV.
• Spanish Republican Government later decreed that all his
property should be confiscated and deposited with the
Spanish banks.
• BdV claimed the delivery of the securities on the ground of
contractual right of recovery by virtue of the instructions of
public by King Alfonso
• Held the P’s were asserting the rights of the Spanish
Republic and to admitting the claim would amount to
enforce the penal law of Republic

9. Other Foreign Public Laws
• Camdex International Ltd v Bank of Zambia (No
2), the English court held that it would not
entertain a civil cause of action where the Bank of
Zambia under the Zambian law wanted to initiate
a proceeding against a Zambian mining company
to recover outstanding foreign exchange.
• Held this would amount to enforcement of
Zambian public law as the bank was exercising its
authority under Zambian statute which was a
part of the public law of Zambia

10. Foreign Expropriatory Legislation
• Expropriation is the act of a government
taking over private property for public use or
in public interest. Expropriation takes as
requisition, nationalization, compulsory
acquisition and confiscation
• The main question is the extend to which a
decree of foreign state implementing
expropriation affects the property belonging
to nationals of that state or aliens

11. To determine this the judge at the forum will
look in to three factors:
1)The interpretation of the foreign legislation
2) The situs of the property at the time of the
legislation
3) The question whether the foreign sovereign
was in actual possession or control of the
property outside his territory

12. • Territorial principle is that property situated in
a country cannot be affected by a foreign
decree of appropriation and that the rights of
the owner remains unchanged even if the
property is not in possession or control of the
foreign state or outside the territorial
jurisdiction of the state at the time of the
expropriation

13. Luther v Sagor
• A quantity of wood belonging to the plaintiffs at their
saw-mills in Russia was declared to be the property of
the Russian State by a decree of “nationalization”
passed in 1918. The wood was then sold by the Russian
Trade Delegation in London to the defendants, a
London firm, who imported it into England; whereupon
the plaintiffs started an action here, claiming that the
wood was their property.
• CoA decided that legislation of the Soviet Government,
which had then been recognized by UK Government,
appropriating without compensation the property in
Russia of a Russian national must be recognized and
given effect in UK

14. • Lecouturier v Rey, where under the French
Statute, the Carthusian monks were expelled
from France and their properties were
confiscated. Later they moved to Spain and
began to manufacture the liqueur according to
the original secret formula. It was held that
the monks could exploit their liqueur in
England as the French Statute could not affect
the property outside the French territory

15. Foreign Laws Repugnant to Public Policy
 Fundamental concepts of justice and fairness
are affronted like the violation of principles of
natural justice
 English concept of morality are infringed
 Relations with foreign power is affected
 Violation of human rights
 Breach of International Law