California courts play host to hundreds of asbestos personal injury cases that involve diverse claims that arise from alleged exposures in different states, and even different countries.  The resolution of choice-of-law disputes has significant implications for California litigants – – what law will apply, to which claims?  The answers to those questions has a profound impact on the potential liability and risk at stake.

In August 2014, Judge Emilie H. Elias of the Los Angeles County Superior Court denied a request to apply Iranian law in an asbestos wrongful death action.  The case was brought by the heirs and estate of Galin Keshavarzi, who allegedly died of mesothelioma caused by exposures to asbestos at an oil refinery in Iran from 1950 to 1979.  Defendants UOP LLC, Chevron U.S.A. Inc., and Texaco Inc. urged the application of Iranian law because, under California’s “governmental interest” approach to choice of law, Iran has a greater interest than California in having its law applied to the case.

Defendants argued that the 1954 Iranian Oil Consortium Agreement and Iran’s 1955 Act for Attraction and Protection of Foreign Capital demonstrate Iran’s intention to limit liability and damages for the purpose of promoting foreign investments. Additionally, defendants contended that because Iran owned the oil refinery, and because the decedent was a resident of Iran when the alleged exposures took place, Iran has a greater interest in having its law applied.  Defendants also pointed to three federal courts which have previously decided to apply Iranian law, most recently in the 2012 in the D.C. Circuit.  Plaintiffs responded that following its 1979 revolution, Iran no longer has an interest in protecting this type of foreign investment.  They also contended that application of Iranian law may involve application of Islamic law, which would violate the separation of church and state under the United States and California Constitutions.

Judge Elias ultimately decided to deny the motion, but not without serious consideration.  The Court explained that application of Iranian law would not be permissible because mullahs administer the law, and Shi’ite Islamic law may be used to decide the case. Furthermore, Judge Elias was persuaded that Iran’s purported interest in promoting foreign investments is no longer applicable to American companies in the post-revolution era.  The Court invited appellate review of her decision, acknowledging that the question of whether to apply Iranian law is a controlling question of law as to which there are substantial grounds for difference of opinion.

Although Ms. Keshavarzi resided in the state at the time of her death, many plaintiffs in California asbestos lawsuits are non-residents, and/or allege exposures outside the state.  While the California Court of Appeal has ruled in favor of applying another state’s law in a case arising from asbestos exposures outside California (McCann v. Foster Wheeler, 160 Cal. App. 4th 689 (2008)), trial courts continue to wrestle with the scope of that ruling and the application of the governmental interest test.