Which country's copyright laws apply? U.S.? EU? If U.S., which circuit?

Under the four factor test applied in U.S. law re: fair use:

1) Purpose / character of use: NUA could argue non-commercial (hobby, he's not trying to make money off of it), but he may be receiving money from YouTube. If so, NUA's use of zai's work would likely be viewed as commercial in nature. And since there is very little editing besides slicing and dicing, NUA's work is not very transformative.

2) Nature of work: Despite US Supreme Court precedent, the analysis of this factor can still take into account artistic merit, moral rights of artist, etc. The work is non-fictional, and zai streamed it publicly on Twitch. Overall this factor appears to favor NUA.

3) Amount, substantiality: Since these are highlight reels, the amount of the overall stream "published" that NUA appropriates is quite small compared to the overall content. Then again, NUA's use of the hightlight clips are not like using small snippets of a book to write a book review... the parts NUA is copying are "highlights" of a match / matches. zai could make a strong argument that the portions copied although quite small are the heart of the work and thus substantial. This factor likely favors zai.

4) Effect on work's value: NUA's argument would likely be that zai isn't creating highlight reels himself, so he's not harming zai's ability to exploit his own work. Then again, zai could argue that NUA's highlight reels make it less likely for viewers to tune into his Twitch stream, instead choosing to watch just the highlight reels for the "good parts." Even outside direct market substitution, zai could argue that NUA's use of portions of his work without permission harms his ability to license rights to his work to content creators like NUA who make highlight reels and other Dota related content. Again, this factor likely favors zai.

Looking at all the factors together, NUA's use of zai's work, while minimal in nature compared to the overall content zai produces and not really harming the nature of zai's work, is likely commercial in nature, is not a parody or very transformative, is probably substantial in nature though not large in amount (nor wholesale copying of entire streams), and affects zai's ability to license out his work. Not taking into consideration the TOSes of Twitch or YouTube, I believe a U.S. federal court in ruling on this would result in a victory for zai.