Opinion ID: 1349036
Heading Depth: 4
Heading Rank: 2

Heading: Enforceability of chosen law as to fiduciary duty claim

Text: Applying the test we have adopted (see pt. I, ante, at pp. 464-466.), we find no reason not to apply the parties' choice of law to Seawinds's cause of action for breach of fiduciary duty. As we have explained, Hong Kong, the chosen state, has a substantial relationship to the parties because two of those parties are incorporated there. Moreover, their incorporation in that state affords a reasonable basis for choosing Hong Kong law. (See pt. II.B.1., ante, at pp. 467-468].) Seawinds identifies no fundamental public policy of this state that would be offended by application of Hong Kong law to a claim by a Hong Kong corporation against its allegedly controlling shareholder. We are directed to no California statute or constitutional provision designed to preclude freedom of contract in this context. Indeed, even in the absence of a choice-of-law clause, Hong Kong's overriding interest in the internal affairs of corporations domiciled there would in most cases require application of its law. (See Rest., § 306 [obligations owed by majority shareholder to corporation determined by the law of the state of incorporation except in unusual circumstances not present here]; McDermott Inc. v. Lewis (Del. Super. Ct. 1987) 531 A.2d 206, 214-216 [corporate voting rights dispute governed by law of state of incorporation]; Matter of Reading Co. (3d Cir.1983) 711 F.2d 509, 517 [minority shareholder fiduciary duty claim governed by law of state of incorporation].) For strategic reasons related to its current dispute with Nedlloyd, Seawinds seeks to create a fiduciary relationship by disregarding the law Seawinds voluntarily agreed to accept as binding  the law of a state that also happens to be Seawinds's own corporate domicile. To allow Seawinds to use California law in this fashion would further no ascertainable fundamental policy of California; indeed, it would undermine California's policy of respecting the choices made by parties to voluntarily negotiated agreements.