Courts

The Tragedy of the Judiciary: An Inquiry into the Economic Nature of Law and Courts, 2019

This Article explores the economic nature of law and courts as an explanation for the world's endemic court congestion problem. The economic theory of goods and services is used to demonstrate that law has a dual nature-coercion and compliance-and that law as coercion is actually a club good that requires a complementary good to be useful, courts. But because courts are private goods in nature, the bundled product will behave as a private good. However, the unrestricted implementation of access-to-justice policies with the objective of increasing the people's access to courts will transform the bundled product into a common pool resource. The counterintuitive result of this transformation is that granting unrestricted access to justice might actually prevent people from accessing their rights-the tragedy of the judiciary. Two policy implications are explored: The importance of legal certainty for the tragedy mitigation, and the potentially adverse selection problem resulting from court congestion.

2002

In cooperation with Lex Mundi member law firms in 109 countries, we measure and describe the exact procedures used by litigants and courts to evict a tenant for non-payment of rent and to collect a bounced check. We use these data to construct an index of procedural formalism of dispute resolution for each country. We find that such formalism is systematically greater in civil than in common law countries. Moreover, procedural formalism is associated with higher expected duration of judicial proceedings, more corruption, less consistency, less honesty, less fairness in judicial decisions, and inferior access to justice. These results suggest that legal transplantation may have led to an inefficiently high level of procedural formalism, particularly in developing countries.

Berkeley Program in Law Economics, 2007

In recent decades, many countries around the world have institutionalized judicial councils of some sort. These institutions are designed to maintain an appropriate balance between judicial independence and accountability. However, they differ in attributes and competences across the world. Our paper has two aims. First, we provide an economic theory of the formation of judicial councils and identify some of the dimensions along which they differ. Second, we test the extent to which different designs of judicial council affect judicial quality. We find that there is little relationship between councils and quality. We also offer a positive explanation for why judicial councils nevertheless remain attractive institutions. Finally, we discuss several experiences from the perspective of our theory.

After describing the closely related concepts of judicial independence and independent judicial review of policy, the essay offers an overview of four issues. (1)Reasons for establishing an independent judiciary, including its ability to resolve problems of information asymmetry between citizens – principals and public officials – agents, transform constitutional declarations to credible commitments and provide a mechanism of political insurance. (2) Mechanisms for appointing judges and the jurisdiction of courts. (3) Modelling the role of the judiciary as an additional veto player in games of collective decision making and policy implementation. (4) The judiciary an explanatory variable and its effect on economic variables of interest like economic growth and the size of government. 1 Definition Judicial independence means that courts enforce the law and resolve disputes without regard to the power and preferences of the parties appearing before them (La Porta et al, 2004). Its theoretical antecedents are traced to the Enlightenment and its application in practice dates to the US Constitution. Judicial independence is an indispensable part of the rule of law. The rule of law requires that laws apply equally to both ordinary citizens and public officials, and that they protect the rights of individuals against the power of the state in both the political and economic spheres. In this respect the rule of law and judicial independence are inextricably linked with liberal democracy. The literature on the topic is enormous and cuts across different disciplines including law, economics, politics and sociology. It is not possible to do justice to this scholarship in the confines of the present essay; rather its aim is to present a summary of the main issues. First, it considers the rationale of judicial independence and the closely related judicial review. Second, it looks at the institutional arrangements for judicial independence. Third, it considers how independent courts are modelled in the collective choice framework. Fourth, it discusses some evidence on the effects of judicial independence on economic variables of interest. These issues are analytically treated as separate but are best understood in relation to each other. 2 Rationale for judicial independence A Judicial independence and related concepts

SSRN Electronic Journal, 2006

No degree of substantive law improvement-even world "best practice" substantive law-will bring the Rule of Law to a country without effective enforcement. 1 A sound judiciary is key to enforcement. No doubt some technical laws can be enforced by administrative means, but a Rule of Law, in the primary economic sense of protecting property and enforcing contracts, requires a judiciary to resolve disputes between private parties. And protection against the state itself is made easier where the judiciary can resolve a controversy raised by a private party against the state based on constitutional provisions or parliamentary legislation. One conclusion widely agreed upon, not just in the economic literature but also among lawyers and legal scholars, is therefore that the judiciary is a vital factor in the Rule of Law and more broadly in economic development. A number of studies show some of the positive benefits of strong effective judiciaries. The degree of judicial independence is correlated with economic growth. 2 Better performing courts have been shown to lead to more developed credit markets. A stronger judiciary is associated with more rapid growth of small firms as well as with larger firms in the economy. 3 Economic studies show that within individual countries the relative competence of provincial and state courts affects comparative economic competitiveness: α The author would like to thank Maria Dakolias of the United Kingdom Department of Constitutional Affairs for her assistance and insight. He would also like to thank the John M. Olin Foundation,

SSRN Electronic Journal

Investor-state dispute settlement (ISDS) gives rise to a particular phenomenon where international tribunal judges the fairness of the domestic courts of a state. The Australian courts in the Philip Morris case came close to being 'judged'. In light of the recent criticism surrounding ISDS, particularly the inconsistency of tribunal determinations, the question thus arises whether this system promotes the rule of law. This article evaluates whether a permanent international investment 'court', such as that proposed by the EU and Canada, contributes to consistency and the rule of law. In particular, this article identifies certain adequacies and inadequacies of that system. This article concludes that, while consistent standards at the international level may act as a catalyst by providing the necessary foundation, its evolutionary potential to be a 'public' court in the true sense is somewhat limited.

2011

Abstract Scholars widely agree that long-term economic growth requires a legal system providing for rule of law, contract enforcement and impersonal exchange. In this paper, we address a piece of this broad issue by studying the question, what is law? Drawing on other work (Hadfield & Weingast 2011), we argue that law has developed its distinctive structure, at least in part, to coordinate beliefs among diverse individuals and thus improve the efficacy of decentralized rule enforcement systems.

2013

1983

The objectives of private and public judges ROBERT D. COOTER' Judges in th.e public court Systcrns of che United States are insulated from the usuaJ pressures of the workplace. because i,~conle a11d pron,otion are unrelated lo measurable pcrfonnance. Consequently , economists have 11ot had n1uch success in creating 3 theory to c-xplain the objectives of public judges. By co11trast, son1e private judges have to attract business, so they arc exposed to the same market pressures as anyone who sells a service. This paper develops a theory of the market for private judges and relates it to the objectives of public j udges. TI1e 1 nain theoretical conclusion is that income-maximi1Jng pri\'ate judges make decisions which are Pareto efficient with respec• t to the litigants (pair-wise efficient), and the judge di\'ides the stakes to reflect how hard the parties bargain over choice of a private judge. The exact auount of the division of the stakes is developed by using the Bayesian-Nash concept o f bargaining equilibrium. The prestige of public judges is related to the implicit demand for their services, so public judges apparently shai:e some of the objectives of private judges. The main difference is that competition compels private judges to consider • Proff'Nl)r of Law, Uniwr5ity o(c.lifomia at BNlr.eley • 108 the effects of their decisions upon Che actual litigants exclusively, whereas public judges can gi-..•e weight to third parties. The 1nain policy conclusion is that private judges should be allowed, or encouraged, to decide disputes which are tn1ly private in the sense that the effects of the decision do 1\ot reach beyond the disputants, but public judges should have exclusive responsibility for cases such as class actioos whose effecLS are diffuse. Rent-a-j udge The long delays involved in bringing disputes lo trial in public courts have sonletitnes c1u.lScd people to seek pri\•ate alternatives. A recent innovation involves private trials with the same legnl force as public trials. 1 Jn California , the parties to the dispute 1 nust agree upon the choice of a judge. who is scl<:eled from a li$t of retired public judges approved by the courts. The private tri:.tl, which is closed to the public) 1 11ay be conducted in a less font)al style than a public trial. but public law is applied to deciding lhe case. Once decided, the outco,ne is reported to the public courts and Lhc decision is gi\•en the force of law. T he t ight to appeal is retained, T\ot waived. ln brief, private adjudication in California is alrnost the same as public adjudication, except that (1) there is no delay in comn1encing trial, (2) the trial is not pubJjc, and (3) the disputants select the judge and pay hhn. Suppose that a retired judge wants to n1aximize his incon1e fro,n deciding, private cases. The price which he can charge for resolving disputes depends upon the demand for his services. The demand for his services depe11ds upon the frequency with which both parties to a dispu te agree that they wa,n him to hear their case. The question to be answered is, "\Vhat method fo r deciding cases would maxinlize the den1and from pairs of disputants, each with opposed interests and veto power over choice o[ a judge?" 111 o rder to describe the judge's best strategy, I need to explain what cause.~ a dispute to be tried rather than settled: ~fuch of the existing Uterature has focused upon a s.urficient I.

Revista Derecho del Estado

En los últimos años, el régimen de inversión extranjera ha sido objeto de un creciente número de críticas del público. Las sumas significativas de dinero en juego y el posible impacto de los laudos en los poderes regulatorios del Estado han puesto al actual Sistema de Resolución de Controversias entre Inversores y el Estado bajo la lupa. En respuesta a ello, la Unión Europea ha propuesto una reforma de gran alcance mediante la introducción de un Sistema de Corte de Inversiones (sci). El nuevo sistema constituye un mecanismo innovador de resolución de controversias internacionales destinado a remediar los problemas centrales que acarrea el sistema actual, mediante la combinación de elementos tradicionales del arbitraje con rasgos judiciales. En este contexto, el presente escrito pretende analizar si el nuevo enfoque de la Unión Europea constituye una mejora efectiva del actual mecanismo de resolución de controversias de inversiones y del futuro del régimen de inversión internacional....