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Conflict of laws is a set of rules of procedural law which determine the legal system and the law of jurisdiction applying to a given legal dispute.  In civil law, lawyers and legal scholars refer to conflict of laws as private international law.  They typically apply when a legal dispute has a “foreign” element.  In other words, Private International law or Conflict of law is a branch of interanational interstate laws and international law that controls all proceedings concerning a “foreign” law factor.

The term conflict of laws originates from situations where the ultimate outcome of a legal dispute depends upon which law applied, and the common law courts manner of resolving the conflict between those laws.  However, private international law is a feature of municipal law which vary from country to country

In the United States, the existence of many states with legal rules often at variance makes the subject of conflict of laws especially urgent.  In 1938, the Supreme Court ruled that each federal court must apply the conflict of laws rules of the state in which it sits.  Certain provisions of the U.S. Constitution deprive the states of complete freedom to determine how they will decide cases.  Article 4, Section 1 provides that, “Full Faith and Credit shall be given in each State to the Public Acts, Records, and judicial Proceedings of every other State.”  The U.S. Supreme Court has interpreted this provision as requiring each state to treat as valid any judgment rendered by another state that had jurisdiction over the matter and to lend its powers of enforcement to the judgment.  The sole exception is that the courts of one state do not enforce claims arising under the penal law of another.

Courts faced with a choice of law issue generally have two choices when it comes to conflict of law: A court can apply the law of the forum (lex fori)– which is usually the result when the question of what law to apply is procedural, or the court can apply the law of the site of the transaction, or occurrence that gave rise to the litigation in the first place (lex loci)– this is usually the controlling law selected when the matter is substantive.

Renvoi
Courts may look for a provision in the law of the choice of law state that permits the court to use the lex fori, i.e. law of the forum state. For example, suppose State X has a rule that says that if property located in State X is conveyed by a contract entered into in any other state, then the law of that other state will govern the validity of the contract. Suppose also that State Y has a rule that says that if a contract entered into in State Y conveys property located in any other state, then the law of that other state will govern the validity of the contract. Now suppose that party A conveys land located in State X to party B through a contract entered into in State Y. If a lawsuit arising from that transaction is brought in State X, the law of State X requires the courts of that state to apply the law of the state where the contract was made, which is state Y. However, the courts of State X might note that a court in State Y would apply the law of State X, because that is where the land is located, and the law of State Y follows the land.
Most U.S. states frown upon (disapprove) renvoi in a choice of law situation. In this example, they would insist that the only law the courts of State X should look at is the law of contracts of State Y, not the "whole law" of State Y, which includes that state's law governing choice of law. The basic criticism of renvoi is that it can lead to an endless circle. In the above example, it could be argued that if the law of State Y points back to State X, then the law of State X would only once again require application of the law of State Y, and so forth and so on without end.

Significant contacts test
The significant contacts test evaluates the contacts between the states and each party to the case, and determines which state has the most significant contacts with the litigation as a whole. This test has been criticized for failing to respect the sovereignty of the state in which the cause of action arose, and because courts can tip the balance in one way or another in deciding which contacts are significant.

Seat of the relationship test
The seat of the relationship test specifically examines the relationship between the parties to the lawsuit, and uses the law of the state in which the relationship between the parties was most significant. For example, if two people who live in State X meet and develop a relationship in State Y, and a cause of action arises between them while they are traveling through State Z, a court of any state applying this test would probably apply the law of State Y, because that state is the seat of the relationship between these two parties.

Balance of interests test
The balance of interests test examines the interests of the states themselves, and the reasons for which the laws in question were passed. It is the brainchild of University of Chicago law professor Brainerd Currie, who outlined the doctrine in a series of articles from the 1950s and 60s. Under this form of analysis, the court must determine whether any conflict between the laws of the states is a true conflict, a false conflict, or an unprovided-for case.
A true conflict occurs when one state offers a protection to a particular party that another state does not, and the court of the state that offers no such protection is asked to apply the law of the state offering the protection. For example, suppose A, lives in State X, which has no cap on tort damages for injuries received in an auto accident. B lives in State Y, which caps tort damages for injuries received in an auto accident at $100,000. While traveling through State X, B causes an auto accident in which A is seriously injured. A sues B in B's home State of Y, but asks the court there to apply the law of State X. In this situation, it can be argued that State X has chosen to place no limit on recovery in order to protect its citizens and keep its roads safer; while State Y has chosen to place a limit on tort damages to prevent tort abuse and keep insurance costs down. Therefore, State X's law protects its plaintiffs, and State Y's law protects its defendants - the laws serve opposite purposes, but each state has an interest in its own law being applied, to advance its own purposes.
In such a case, if the interests are balanced, the law of the forum will prevail.
A false or apparent conflict occurs when the state offering the protection has no actual interest in the endorsement of that protection against the particular parties to the case. For example, some states prohibit spouses from suing one another for negligent torts, in order to prevent them from colluding in order to collect from insurance companies. Other states permit such suits, on the theory that people should be able to recover for their injuries, and possible collusion can be presented as a factor for the jury to deal with. Suppose that a couple, A and B, live in state X, which prohibits these suits, and they travel to state Y, which permits these suits. While in state Y, A negligently injures B, and upon their return to state X, B sues A in the court of state X, asserting that the law of state Y should govern. In this case, since neither party is from state Y, state Y has no interest in the application of the law to these persons.
An unprovided-for case is one in which each party is seeking to apply the law of the other state. For example, suppose State X has a law that limits recovery in a tort suit, and state Y has no such limit. A plaintiff from State X suing a defendant from State Y will want the rule of State Y to apply rather than the limit imposed by state X; the defendant will want the State X's limit to apply.
In such a case, the law of the forum will prevail.
Some courts have sought to distinguish different types of law, giving more weight to laws of foreign states that are intended to regulate conduct (e.g. prohibitions on disfavored activities), and less weight to laws of foreign states that are intended to allocate losses (e.g. tort immunity for charitable organizations; joint and several liability).

Comparative impairment test
The comparative impairment test asks which state's policies would suffer more if their law was not applied. This is similar to interest analysis, in that the interests of the state are taken into account - however, this test does not look to see which state benefits more from the application of its laws, but rather for situations in which the other state's interests will actually be harmed by the application of the laws of the forum state.

The better-rule test
Use of the "better rule" test, like renvoi, is frowned upon because it appears to be little more than a gimmick to allow a court to apply the law of its own state. The test itself presupposes that, between the laws presented by the two or more states in which the action arose, there is one set of laws which is empirically better. Because courts will almost always presume that their own state has better laws, this is effectively a device to avoid applying choice of law principles altogether.

Conflict of laws rules
The power of a state to determine the limits of the jurisdiction of its courts and the character of the controversies which shall be heard in them is subject to the restrictions imposed by the Federal Constitution.  The Contract Clause, the Full Faith and Credit Clause, and the Privileges or Immunities Clause, restrict the freedom of a state to deny access to its courts howsoever much it may regard such withdrawal of jurisdiction the adjective law of the state, or the exercise of its right to regulate the practice and procedure of its courts.  A state cannot escape its constitutional obligations by the simple device of denying jurisdiction in such cases to courts otherwise competent[i].  The Full Faith and Credit Clause—Article IV, Section 1, of the U.S. Constitution—provides that the various states must recognize legislative acts, public records, and judicial decisions of the other states within the United States.

Subject to the above constitutional restrictions, states are free to adopt such rules of conflict of laws that they choose.  The Full Faith and Credit Clause does not compel a state to adopt any particular set of rules of conflict of laws.  It merely sets certain minimum requirements which each state must observe when asked to apply the law of a sister state[ii].  Every state is empowered under the United States Constitution to establish laws, through both its judicial and its legislative arms, which are controlling upon its inhabitants and domestic affairs.  When there is a demand in the domestic forum that the operation of domestic laws be replaced by the statute of another state, the domestic forum is not bound, apart from the Full Faith and Credit Clause, to yield to the demand.  The law of neither state can, by its own force, determine the choice of law for the other[iii.]

In order to resolve the issue of conflict of laws, the court initially considers if contacts with a state are sufficient to make application of that state’s laws consistent with due process, provided such contacts are not too slight and casual.  Under the provision of the Federal Tort Claims Act which renders the United States liable for the torts of its employees, under circumstances where the United States, if a private person, would be liable to the claimant “in accordance with the law of the place where the act or omission occurred”.  Where more than one state has sufficiently substantial contact with multi-state activity, the forum state, by analysis of the interests possessed by the states involved, can constitutionally apply to the decision of the case, the law of one or another state having a sufficient interest in the multi-state activity; consequently, a state court may apply either the law of the place where the injury occurred or the law of the place where the negligence occurred[iv].

[i] Angel v. Bullington, 330 U.S. 183 (U.S. 1947)

[ii] Crider v. Zurich Ins. Co., 380 U.S. 39 (U.S. 1965)

[iii] Pink v. A. A. A. Highway Express, Inc., 314 U.S. 201 (U.S. 1941)

[iv] Richards v. United States, 369 U.S. 1 (U.S. 1962)

adapted from USLEGAL