Why did rigid territorial choice-of-law rules create uncertainty in some cases?

Rigid territorial choice-of-law rules created uncertainty because their mechanical application often failed to serve the interests of justice or account for the specific nuances of a case. While these rules were designed to be predictable, their inflexibility meant they frequently overlooked important aspects of a dispute, such as when a tort occurred fortuitously abroad or when a contract was formed in a state unrelated to the parties' primary business activities.1

To escape these rigid outcomes, courts and parties began using "escape devices," such as the recharacterization of facts—for example, recasting a contract issue as a tort issue or vice versa. This practice of recharacterization, particularly in the United States, led to a period of significant legal uncertainty as courts struggled to determine which law should govern specific issues when different characterizations produced conflicting results.1

Furthermore, modern approaches like the Restatement (Second) of Conflict of Laws, while intended to be more flexible, also introduced uncertainty because they do not rank their criteria by priority, allowing different courts to assign varying weights to factors and leading to divergent outcomes.2