The "explosion" of litigation under the Hague Convention on Civil Aspects of Child Abduction in the U.S.A., the United Kingdom and other member states has highlighted the difficulties in determining the habitual residence of a child, particularly in "borderline" cases where the child has close connections with more than one country. The drafters and most courts have made little attempt to solve this problem under the pretext that the determination is one of fact. This article examines this pretext critically and concludes that the determination should be characterised as one of law, thus facilitating purposive interpretation of the term. The main hypothesis of the article is that, whichever characterization is correct, courts are influenced by policy considerations in determining habitual residence of children in borderline cases. If the determination is treated as one of law, open discussion of these considerations is permissible and, in the author's view, desirable. The author contributes to this discussion by (1) setting out a list of relevant policy considerations; (2) analysing the appropriate scope of each consideration in the light of the objectives of the Abduction Convention (and other legislative instruments which employ the habitual residence of the child as a connecting factor), legal pinciple and caseslaw; (3) examining methods of balancing conflicting considerations and (4) testing these methods by reference to decided cases. The author concludes that the analysis of the caselaw supports her hypothesis and calls for open judicial discussion of the influence of policy considerations in these cases in order to improve the quality of decisions, which have such critical human consequences.