• 13 November 2009

Myth of Mess? International Choice of Law in Action

Christopher A. Whytock - University of California, Irvine School of Law

Posted in ,

Can choice of law productively contribute to global governance?  A growing body of research by law and economics scholars suggests that the answer is yes.  According to this research, well designed choice-of-law rules can both create incentives for private transnational actors to behave efficiently and foster international regulatory competition that encourages national lawmakers to enact globally efficient substantive laws.1 By applying these rules faithfully, judges can help shape transnational behavior in ways that increase global economic welfare.  In addition to these economic benefits, if judges’ choice-of-law decisions are predictable, they can enhance transnational rule of law by reducing uncertainty about which country’s laws will govern a given transnational activity, thus facilitating legal compliance.

But choice-of-law scholars tend to be very skeptical about choice of law.  The conventional wisdom is that choice of law is a mess.  It is widely believed that choice-of-law doctrine does not significantly influence judges’ choice-of-law decisions.  Instead, these decisions are said to be driven by biases in favor of domestic over foreign law, domestic over foreign litigants, and plaintiffs over defendants.  In addition, judges’ choice-of-law decisions are believed to be highly unpredictable.  If these “mess claims” are correct, it is unlikely that choice of law can make positive contributions to global governance.

My goal in Myth of Mess?  International Choice of Law in Action2 was to cast some empirical light on these divergent views concerning the global-governance implications of choice of law.  To that end, I evaluated the mess claims using statistical analysis of an original dataset of over two hundred international choice-of-law decisions by U.S. district court judges in published tort cases.  Thus, unlike much scholarship on international choice of law, the Article, to borrow Roscoe Pound’s distinction, analyzes not only choice of law in books but also choice of law in action.3 That is, it examines not only choice-of-law doctrine but also broad patterns of judges’ actual choice-of-law decisions.

My findings suggest that there is reason for measured optimism about the ability of the choice-of-law system to contribute to global governance.

 
I.
The Influence of Choice-of-Law Doctrine

Choice-of-law doctrine does appear to significantly influence the international choice-of-law decisions of U.S. district court judges in published tort cases.  Two factors that permeate choice-of-law doctrine—the territorial locus of the activity giving rise to the dispute and the nationality of the parties to the dispute—strongly affect judges’ choice-of-law decisions.  The probability that a judge will apply domestic law is highest when the locus of activity and the nationality of the parties are mostly or all domestic and lowest when they are mostly or all foreign.  Looking at these factors separately, the likelihood that a judge will apply domestic law is about twenty-five percent lower when the activity occurred mostly or entirely outside U.S. territory and about forty percent lower when the parties to the dispute are mostly or all foreign.

My findings also suggest that choice-of-law doctrine matters in the sense that different choice-of-law methodologies lead to different patterns of choice-of-law outcomes.  For example, after controlling for territoriality and nationality, the probability that a judge will apply domestic law is about twenty-five percent lower when the judge is required to apply the Second Restatement’s most-significant-relationship method (compared to all other methods as a group).  There is also evidence that interest analysis and the Lauritzen method (used in maritime cases) are individually more likely than the Second Restatement to result in the application of domestic law.

These findings do not mean that choice-of-law doctrine is the only, or even necessarily the most important, factor that influences international choice-of-law decisionmaking.  But taken together, they challenge both the widely held view that choice-of-law doctrine does not significantly influence judges’ choice-of-law decisions and the more general view that legal doctrine has only a marginal impact on judicial decisionmaking.

 
II.
Little Evidence of Bias in International Choice-of-Law Decisions

The international choice-of-law decisions of U.S. district court judges in published tort cases do not appear to be biased in the ways contemplated by the mess claims.  Judges show little or no bias in favor of domestic law.  Nor do judges appear biased in favor of domestic over foreign parties or plaintiffs over defendants:  The probability that a judge will apply domestic law does not increase when domestic law is preferred by the domestic party or by the plaintiff.  Rather, the evidence suggests that judges’ choice-of-law decisions are based largely on the legal merits rather than on judicial preferences for domestic law, domestic parties, or plaintiffs.

Interestingly, however, there is some evidence that the ideology of judges may have a significant influence on choice-of-law decisions.  In one specification of my statistical model, judges appointed by Republican presidents are less likely to apply domestic law than other judges, perhaps to discourage the forum shopping that results from more plaintiff-friendly U.S. law.

 
III.
The Predictability of Choice-of-Law Decisions

My findings also suggest that judges’ choice-of-law decisions are not so unpredictable after all.  The relatively simple statistical models presented in my Article can correctly classify approximately seventy-five percent of judges’ choice-of-law decisions.  Of more practical importance, it appears possible to anticipate these decisions more accurately than the mess claims would suggest, even without statistical methods, because transnational actors can discern with relative ease key factors influencing choice-of-law decisions, including the territorial locus of activity, the nationality of the parties, and the applicable choice-of-law doctrine.

 
IV.
Implications and Extensions

Overall, these results suggest that choice-of-law doctrine—and the domestic courts that apply it—are capable of making a positive contribution to global governance.  The findings provide a preliminary empirical foundation for law and economics theories about the global welfare consequences of the choice-of-law system by showing not only that choice-of-law doctrine can influence choice-of-law decisions but also that they are not necessarily highly unpredictable or systematically biased in the ways contemplated by the mess claims.  They also suggest that domestic courts can indeed help enhance transnational rule of law by reducing uncertainty regarding which country’s laws apply to activity with connections to more than one country.

My analysis—like prior empirical analyses of choice-of-law decisionmaking—is based on published choice-of-law decisions.  This focus is appropriate for this study because published decisions are especially important for global governance.  To extend Mnookin and Kornhauser’s well-known “shadow of the law” metaphor, cross-border activity takes place in the transnational shadow of domestic law.4 In other words, domestic court decisions, including international choice-of-law decisions, can influence the behavior of transnational actors beyond borders and beyond the parties to particular lawsuits.  But these transnational “shadow” effects are much less likely when decisions are not published for the simple reason that transnational actors are much less likely to know about those decisions.  From a governance-oriented perspective, then, published decisions deserve special analytical attention.

Can my findings nevertheless be extended to unpublished choice-of-law decisions?  Most court decisions are not published, and published decisions are not necessarily representative of unpublished decisions.  However, an exploratory analysis of the relationship between the variables included in my statistical models and some of the likely determinants of publication (such as case complexity and issue salience) suggests that such an extension is plausible.  And can my findings be extended to domestic choice-of-law decisions?  It would seem that international choice-of-law decisions may be more susceptible to parochialism than domestic choice-of-law decisions.  If that intuition is correct, then one would expect my findings regarding the lack of bias in international choice-of-law decisionmaking to apply to domestic choice-of-law decisionmaking as well.

Of course, without replicating my analysis using unpublished and domestic decisions, there can be no firm conclusions about the generalizability of my findings beyond published international decisions.  For this reason, the question mark in Myth of Mess? should be taken seriously.  Empirical analyses, such as the one presented in my Article, may be able to reduce the uncertainty of descriptive and causal inferences about choice of law but cannot eliminate that uncertainty.  There is much more to learn about choice-of-law decisionmaking, not only in transnational tort cases but also in other contexts, domestic and international.

 
Conclusion

Even without extending my findings beyond international choice-of-law decisions in published tort cases, my hope is that my Article will both reinvigorate debates over the real-world importance of choice-of-law doctrine and the role of domestic courts in global governance and will help lead toward a more nuanced understanding of the link between choice-of-law methods and choice-of-law outcomes.  More generally, I hope the Article shows that quantitative analyses of judicial decisionmaking do not inevitably lead to the conclusion that judging is driven more by political than legal factors.

My Article falls far short of demonstrating that judges’ international choice-of-law decisions increase global economic welfare and enhance transnational rule of law.  But, by offering evidence that choice-of-law doctrine does influence choice-of-law decisionmaking and that those decisions are not biased in ways posited by the mess claims, the results do offer some good news about the potential contributions of choice of law and domestic courts to global governance.  At least in international choice-of-law decisionmaking, judges appear to be doing a better job than they get credit for.dingbat

 

Acknowledgments:

Copyright © 2009 New York University Law Review.

Christopher A. Whytock is Associate Professor of Law at University of Utah, S.J. Quinney College of Law.

This Legal Workshop Editorial is based on the following Article: Christopher A. Whytock, Myth of Mess? International Choice of Law in Action, 84 N.Y.U. L. REV. 719 (2009).

  1. See generally MICHAEL J. WHINCOP & MARY KEYES, POLICY AND PRAGMATISM IN THE CONFLICT OF LAWS (2001) (discussing global economic implications of choice of law); Andrew T. Guzman, Choice of Law: New Foundations, 90 GEO. L.J. 883 (2002) (same).
  2. Christopher A. Whytock, Myth of Mess? International Choice of Law in Action, 84 N.Y.U. L. REV. 719 (2009).
  3. See Roscoe Pound, Law in Books and Law in Action, 44 AM. L. REV. 12, 15 (1910).
  4. See Robert H. Mnookin & Lewis Kornhauser, Bargaining in the Shadow of the Law: The Case of Divorce, 88 YALE L.J. 950, 951, 972-73 (1979) (describing “shadow of the law” concept in domestic context); Christopher A. Whytock, Domestic Courts and Global Governance, 84 TUL. L. REV. (forthcoming 2009-10) (manuscript at pt. II, available at http://ssrn.com/author=386558) (describing “transnational shadow of the law”).

Post a Comment (all fields are required)

You must be logged in to post a comment.