When there is more than one state, or more than one jurisdiction (state court, federal court) with a significant relationship to the parties and circumstances involved in a lawsuit or dispute, the question may arise as to which state or jurisdiction’s laws will govern the lawsuit or dispute. The body of law that determines what law governs a dispute is called conflict of laws and consists of legal principles courts use to determine which state or jurisdiction’s law applies—unless the parties to a dispute have agreed (usually in a contract) on what law will apply.

In Illinois, as in other states, the issue of which jurisdiction's laws apply to a lawsuit or dispute is governed by the principles of 'conflict of laws' or 'choice of law.' These principles are designed to resolve questions of which state or jurisdiction's substantive law should be applied when there are competing jurisdictions connected to the parties or the circumstances of the case. Illinois courts typically use a 'most significant relationship' test to determine which state's laws should apply. This involves evaluating various factors such as the place where the injury occurred, the place where the conduct causing the injury occurred, the domicile, residence, nationality, place of incorporation, and place of business of the parties, and the location where the relationship between the parties is centered. If the parties have a valid choice of law agreement, where they have contractually agreed upon which jurisdiction's laws will govern their dispute, Illinois courts will generally honor such agreements unless they are contrary to a fundamental policy of a state with a materially greater interest than the chosen state.