Which law ultimately governs the substantive issues in a diversity action in federal court?

In a diversity action in federal court, the substantive issues are governed by state law. This principle is rooted in the Erie Doctrine, stemming from the Supreme Court case Erie Railroad Co. v. Tompkins. The Erie Doctrine establishes that in federal court, when hearing a case based solely on diversity of citizenship, federal courts must apply state law to the substantive issues of the case, as opposed to federal law.

The rationale behind this is to ensure that parties in a diversity action do not receive a different outcome merely because they are in a federal forum. The goal is to respect the rights of the parties involved and to maintain consistency and predictability in legal outcomes across jurisdictions. Federal law does apply in certain procedural matters, but when it comes to substantive issues like torts, contracts, and property law, state law will dictate the applicable rules and standards.

International law and common law pertain to different scopes and applications and do not directly govern substantive issues in the context of diversity jurisdiction in federal courts. Thus, state law is the correct governing authority in diversity cases.