Author: King Fung Tsang
This Article explores two choice of law issues in international multiple derivative actions: (1) the choice of substantive law that should govern multiple derivative actions and (2) the characterization of different aspects of the multiple derivative actions between substantive and procedural laws. After a comparison of choice of law approaches among various common law jurisdictions, the author advocates that the first choice of law issue—the substantive law to be applied to the action—should be governed by the law with the closest connections to the multiple derivative actions. This is the only practical choice given the complex nature of international multiple derivative actions. Regarding the second choice of law issue, the same concern on practicality also demands that the leave requirement, if present, should be characterized as procedural. This will minimize the occasions to have more than one law governing the same multiple derivative action. The application of both of these proposals would make multiple derivative actions more accessible to deserving minority shareholders by promoting flexibility regarding the governing law.