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An unrestrained dog that approaches a dog on a leash is a powderkeg waiting to go off.

It is a pretty commonly understood phenomenon that dogs that are restrained on a leash or tied up are more likely to display aggression when frightened or threatened, because they cannot escape.

You commonly see this at dog parks where dogs are allowed to run off leash. If someone keeps their dog leashed, it is likely to get into snarling matches or scuffles when approached by the unleashed dogs.

I'm terribly sorry that you had an unfortunate event, but the fact that your unrestrained dog approached a leashed dog in a manner that could be construed as threatening to either the dog or the owner is what caused the problem.

Whether there is a leash law or not... dog psychology will always apply - and a leashed dog will be more aggressive toward an unleashed one.