While searching an applicable law for a case with foreign elements, we have to apply a choice-of-law rule at first. While applying a choice-of-law rule, we have to allocate the factual situation into the correct legal category. That is process of characterization. But what is the object of characterization? Legal relationship, substantive rule, legal question or living relationship? By observing the practice of court and the methodology of legal reasoning, we could know that the substantive situation (Sachverhalte) is the object of characterization. Under this argument, we could refine the theory of characterization.