Globalizing commercial litigation

Cornell Law Review

Volumn 94, Issue 1, 2008, Pages 1-72

  Dammann, Jens ^a   Hansmann, Henry ^b  

^a UNIVERSITY OF TEXAS   (United States)

^b YALE UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 57649186596     PISSN: 00108847     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (483)

1. See infra Part I.
2. See infra Part I.
3. See infra Part I.
4. See infra Part V.
5. For example, certain courts in New York, Connecticut, and Delaware fall into this category. See, e.g., N.Y. State Sup. Ct., N.Y. County-Civil Branch E-Filing, http:// www.nycourts.gov/supctmanh/e-filing.htm (last visited Sept. 25, 2008);
6. Conn. Judicial Branch, Welcome to E-Filing, http://wwwjud.ct.gov/ external/super/e-services/efile/ (last visited Sept. 25, 2008) ;
7. Chancellor of the Court of Chancery, Admin. Directive of the Chancellor of the DEL. Court of Chancery, Amended No. 2003-1, eFile Admininistrative Procedures, Oct. 10, 2003, available at http://courts.delaware.gov/Rules/PAD2003-1.pdf;
8. cf. FED. R. CIV. P. 5(d) (3) (allowing courts to adopt rules permitting or requiring papers to be filed by electronic means).
9. See MEGHAN DUNN & REBECCA NORWICH, REPORT OF A SURVEY OF VIDEOCONFERENCEING IN THE COURTS OF APPEALS 1 (2006) (on file with authors) (noting that "[videoconferencing is used for conducting oral arguments in the Second, Third, Eighth, Ninth, and Tenth Circuits").
10. Rule 43(a) of the Federal Rules of Civil Procedure allows the use of videoconferencing technology for witness testimony "for good cause shown in compelling circumstances and upon appropriate safeguards." FED. R. CIV. P. 43(a). State courts are also making increasing use of videoconferencing technology.
11. Cf., e.g., Carrie A. O'Brien, The North Carolina Business Court: North Carolina's Special Superior Court for Complex Business Cases, 6 N.C. BANKING INST. 367, 383 n.125 (2002) (noting that pretrial hearings at the North Carolina Business Court can be held using videoconferencing technology);
12. Hugh Calkins, Something About Technology: Videoconferencing Revisited, 20 ME. B.J. 76, 76-78 (2005) (describing the use of videoconferencing technology by Maine courts);
13. Lisa L. Granite, Special Report: Legal Tech 2006: Technology Gradually Filtering into Pennsylvania's Courtrooms, 28 PA. LAW., Nov.-Dec. 2006, at 40, 42 (noting that "[t]wenty-three counties have either videoconferencing equipment or Web cameras (these can be used for videoconferencing and are often more cost-effective) in at least one courtroom"). The Social Security Administration now routinely uses videoconferencing to conduct hearings in which a presiding administrative law judge is connected to the claimant and his lawyer, as well as any witnesses and experts, all of whom are in a remote hearing room that is often located in a different state. Interview with Roy P. Liberman, Administrative Law Judge, Office of Disability Adjudication and Review, Social Security Administration, in New Haven, Conn. (Sept. 17, 2008). Similarly, courts in other countries use videoconferencing for judicial purposes. For example, in the United Kingdom, the Access to Justice Act of 1999 specifically provides that courts can use videoconferencing for civil hearings if the parties consent. Access to Justice Act, 1999, c. 22 (Eng.);
14. see also HER MAJESTY'S CTS. SERV., VIDEO CONFERENCING IN COURTS, http://www.hmcourts-service.gov.uk/infoabout/video-conferencing/index.htm (last visited Sept. 25, 2008).
15. Convention on Choice of Court Agreements, June 30, 2005, 44 I.L.M. 1294 [hereinafter Hague Convention], available at http://www.hcch.net/index- en.php?act=conventions.text&cid=98.
16. See id. art. 1(1).
17. See infra Part VI.C.
18. Competition among courts is much more problematic in those cases in which the plaintiff can choose the forum unilaterally. In particular, this creates the risk that courts will compete by catering to plaintiffs rather than by improving the quality of their services. Cf. Daniel Klerman, Jurisdictional Competition and the Evolution of the Common Law, 74 U. CHI. L. REV. 1179, 1181 (2007) (arguing that, historically, English courts "competed by making the law more favorable to the plaintiffs").
19. The paradigm is Delaware's Chancery Court, which is widely praised as a forum for corporate law cases. See, e.g., Lucian Arye Bebchuk & Allen Ferrell, A New Approach to Take-over Law and Regulatory Competition, 87 VA. L. REV. 111, 146 (2001) ("The Delaware Chancery Court, for instance, is renowned for its expertise in corporate law matters.");
20. Brett H. McDonnell, Two Cheers for Corporate Law Federalism, 30 J. CORP. L. 99, 106 (2004) (noting that an "important advantage" of Delaware as a state of incorporation "is its Chancery Court, which can move quickly and has specialized expertise");
21. Leo E. Strine, Jr., "Mediation-Only " Filings in the Delaware Court of Chancery: Can New Value Be Added by One of America's Business Courts?, 53 DUKE L.J. 585, 588 (2003) ("The State of Delaware's investment in a Chancery Court and a Supreme Court that can act with the speed and expertise to meet the business community's needs is an important element of service it provides to its corporate domiciliaries and their stockholders.").
22. See, e.g., Robert Kossick, The Rule of Law and Development in Mexico, 21 ARIZ. J. INT'L & COMP. L. 715, 717 (2004) (noting that in Mexico "the judiciary has been more independent in theory than in fact");
23. Kenneth W. Dam, China as a Test Case: Is the Rule of Law Essential for Economic Growth 18, 23 (Univ. of Chi. Law Sch., John M. Olin Law & Econ. Working Paper No. 275, 2006), available at http://ssrn.com/ abstract=880125 (noting corruption, lack of judicial independence, and poor training of judges in China).
24. See, e.g., Ethan S. Burger, Corruption in the Russian Arbitrazh Courts: Will There Be Significant Progress in the Near Term?, 38 INT'L LAW. 15, 22 (2004) (stating that corruption is a "significant problem").
25. See, e.g., Bryan Bertram, Note, Building Fortress India: Should a Federal Law Be Created to Address Piracy Concerns in the United States-Indian Business Process Outsourcing Relationship?, 29 B.C. INT'L & COMP. L. REV. 245, 258 (2006) (claiming that Indian courts are "exceedingly slow");
26. Priti H. Doshi, Note, Copyright Problems in India Affecting Hollywood and "Bollywood", 26 SUFFOLK TRANSNAT'L L. REV. 295, 308 n.59 (2003) (noting that Indian courts are "exceedingly slow and backlogged") ;
27. Tracy S. Work, India Satisfies Its fones for Arbitration: New Arbitration Law in India, 10 TRANSNAT'L LAW. 217, 224 (1997) (claiming that Indian courts are "often expensive, uncertain, and riddled with procedural delay").
28. See, e.g., Kossick, supra note 12, at 715-17 (describing judicial proceedings in Mexico as "highly formalistic").
29. See sources cited supra notes 12-15.
30. Simeon Djankov et al., Courts, 118 Q.J. ECON. 453, 494-500 (2003);
31. cf. EUROPEAN COMMISSION FOR THE EFFICIENCY OF JUSTICE (CEPEJ), EUROPEAN JUDICIAL SYSTEMS 89 (2006) (showing that the percentage of cases still pending after three years varies considerably across European countries), available at http://www.coe.intA/dgl/legalcooperation/cepej/evaluation/2006/CEPEJ- 2006-eng.pdf.
32. Daniel Kaufmann et al., Governance Matters VI: Aggregate and Individual Governance Indicators for 1996-2006, at 88-90 (World Bank Policy Research Working Paper 4280, July 2007, available at http://papers.ssrn. com/sol3/papers.cfm?abstract-id=999979). The rule of law index seeks to capture "the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, the police, and the courts, as well as the likelihood of crime and violence."
33. Id. at 4. Observations run from -2.53 for Somalia to 1.96 for Switzerland, with Mexico at -0.49, India at 0.17, Italy at 0.37, and the U.S. at 1.57.
34. Id.
35. For a critical view of the rule of law index, see Kevin E. Davis, What Can the Rule of Law Variable Tell Us About Rule of Law Reforms?, 26 MICH. J. INT'L L. 141, 148-51 (2004) (raising various objections about the International Country Risk Guide, one of the sources upon which the World Bank's rule of law index relies);
36. cf. Frederique Dahan and John Simpson, Secured Transactions in Central and Eastern Europe: European Bank for Reconstruction and Development (EBRD) Assessment, 36 UCC L.J. 77, 87-102 (2004) (exploring variations in the amount of a debt that can be recovered, and the time to recovery, in the courts of a sample of developing countries). Survey data gathered by Stefan Vogenauer on preferences in cross-border transactions is also instructive: 70% of those surveyed said they were trying to avoid certain forums in cross-border transactions. Stefan Vogenauer, Civil Justice Systems in Europe: Implications for Choice of Forum and Choice of Contract Law 29 (2008) (unpublished manuscript) (on file with authors). Among the five most important considerations in avoiding certain forums were the degree of corruption, the speed of dispute resolution, and, more generally, the quality of courts and judges.
37. Id. at 31. These results, too, hint at real differences in the quality of judiciaries across countries.
38. Djankov et al., supra note 17, at 497;
39. see also Istat.it, Territorial Information System on Justice, Movement of the judicial examination proceedings in first instance and main indicators of functionality at the court (absolute values and quotients), Court of Appeals Values, Year 2004, http://giusuziaincifre.istat.it/Nemesis/jsp/ dawinci.jsprq-p101-001001 1000&an=2004&ig=2&ct=272&id=1A-14A (last visited Feb. 27, 2007) (2.4 years on average required to dispose of a civil claim in Italian courts of general jurisdiction). Complaints about the speed of Italian courts are legion.
40. See, e.g., Jennifer M. Anglim, Crossroads in the Great Race: Moving Beyond the International Race to Judgment in Disputes over Artwork and Other Chattels, 45 HARV. INT'L L.J. 239, 282 (2004) (noting the often "slow-moving dockets" of Italian courts);
41. Kimberly A. Moore & Francesco Parisi, Rethinking Forum Shopping in Cyberspace, 77 CHI.-KENT. L. REV. 1325, 1355 n.20 (2002) (reporting that Italian courts have a "reputation for slow case resolution");
42. Larry Coury, Note, C'est What? Saisie! A Comparison of Patent Infringement Remedies Among the G7 Economic Nations, 3 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 1101, 1147 (2003) (observing that Italy is "notorious for a slow adjudication process").
43. DOUGLASS C. NORTH, INSTITUTIONS, INSTITUTIONAL CHANGE AND ECONOMIC PERFORMANCE 54 (1990).
44. While macro-level empirical studies provide strong evidence that credible thirdparty enforcement of contracts by the state enlarges the forms taken by financial intermediation-for example, permitting broader use of equity as opposed to debt financing- they have not established a significant causal relationship between contract enforcement and economic development in general. See, e.g., Daron Acemoglu & Simon Johnson, Unbundling Institutions, 113 J. POL. ECON. 949, 988-89 (2005). Some microanalytic studies give reason to believe, however, that such a relationship exists, at least for particular types of societies in particular stages of development.
45. For an extensive and thoughtful review of the empirical literature, see Michael Trebilcock & Jing Leng, The Role of Formal Contract Law and Enforcement in Economic Development, 92 VA. L. REV. 1517, 1524-80 (2006).
46. Important individual studies and assessments include Kathryn Hendley et al., Law Works in Russia: The Role of Law in Interenterprise Transactions, in ASSESSING THE VALUE OF LAW IN TRANSITION ECONOMIES 56, 88 (Peter Murrell ed., 2001) (finding that legal enforcement mechanisms - particularly the new economic courts-add value to the Russian economy) ;
47. Katharina Pistor et al., Law and Finance in Transition Economies, 8 ECON. TRANSITION 325, 356 (2000) (concluding that "legal effectiveness," including contract enforcement, plays a critical role in promoting financial market development in transition economies);
48. Lars P. Feld & Stefan Voigt, Economic Growth and fudicial Independence: Cross Country Evidence Using a New Set of Indicators 23 (CESifo Working Paper Series No. 906, 2003), available at http:// ssrn.com/abstract-395403 (finding that while de jure judicial independence does not have any clear impact on economic growth, de facto judicial independence positively influences real GDP growth per capita in a sample of fifty-seven countries);
49. Tullio Jappelli et al., Courts and Banks: Effects of Judicial Enforcement on Credit Markets 18 (Ctr. for Stud, in Econ. & Fin., Univ. di Salerno, Working Paper No. 58, 2002) (finding that improvements injudicial efficiency improve the availability of credit across Italian provinces and in a cross-country sample);
50. cf. Dam, supra note 12, at 46 (considering the "Chinese experience [to be] . . . consistent with [the] view that considerable development is possible without strong legal institutions but sustainable growth to higher per capita levels requires considerable development of legal institutions");
51. Kenneth W. Dam, The Judiciary and Economic Development 1 (Univ. of Chi. Law Sch., John M. Olin Law & Econ. Working Paper No. 287, 2006), available at http://ssrn.com/abstract=892030 (noting wide agreement among economists and lawyers that "the judiciary is a vital factor ... in economic development").
52. Cf Edgardo Buscaglia & Pilar Domingo, Impediments to Judicial Reform in Latin America, in THE LAW AND ECONOMICS OF DEVELOPMENT 291, 298-309 (Edgardo Buscaglia et al. eds., 1997) (analyzing obstacles to judicial reform in Latin America);
53. Fen Osier Hampson, Can Peacebuilding Work?, 30 CORNELL INT'L L.J. 701, 713 (1997) (noting the "slow pace of judicial reform in El Salvador");
54. Jeffrey Kahn, Note, Russian Compliance with Articles Five and Six of the European Convention of Human Rights as a Barometer of Legal Reform and Human Rights in Russia, 35 U. MICH. J.L. REFORM 641, 645-46 (2002) (calling judicial reform in Russia "agonizingly slow");
55. ANNA M. KUZMIK, RECENT DEVELOPMENTS, Rule of Law and Legal Reform in Ukraine: A Review of the New Procuracy Law 34 HARV. INT'L L.J. 611, 616 (1993) (describing judicial reform in Ukraine as "difficult");
56. Michael Knox, Comment, Continuing Evolution of the Costa Rican Judiciary, 32 CAL. W. INT'L L.J. 133, 141 (2001) (noting political obstacles to judicial reform in Latin America).
57. Commentators often describe the benefit of being able to choose the most suitable court as an advantage of forum selection clauses. E.g., Rochelle C. Dreyfuss, The Sixth Abraham L. Pomerantz Lecture, Forums of the Future: The Role of Specialized Courts in Resolving Business Disputes, 61 BROOK. L. REV. 1, 37 (1995);
58. Celia R. Taylor, Comment, National Iranian Oil Co. v. Ashland Oil, Inc.: All Dressed Up and Nowhere to Arbitrate, 63 N.Y.U. L. REV 1142, 1152 (1988).
59. Effective enforcement of contracts may even have a broad beneficial effect on corporate ownership and control. Ronald Gilson has recently argued that the strong prevalence of family-owned firms in developing countries may owe as much-or more-to weak contract law as to weak shareholder protection in corporate law. Ronald J. Gilson, Controlling Family Shareholders in Developing Countries: Anchoring Relational Exchange, 60 STAN. L. REV. 633 (2007).
60. Absent effective legal enforcement of contracts, family ownership of firms "substitutes for law . . . as a means to assure that parties perform their contractual obligations." Id. at 636. Thus, "establishing and sustaining a reputation by performing . . . obligations to trading partners" must be seen as an investment in the firm's reputation that "will pay off over the corporation's infinite life."
61. Id. at 641. However, that investment "will not be made unless it is also to the advantage of the short-lived individuals who actually make the corporation's decisions."
62. Id. Family ownership is a way of solving this problem: "Because of intrafamily inheritance and family ties, the current generation of decision makers . . . treats the next generation's utility as the equivalent of their own, so there is no temporal distortion of incentives to invest in reputation."
63. Id. at 643. Apart from its explanatory power regarding corporate ownership structures, Gilson's thesis also has an important implication for the value of an efficient contracting environment. With better contractual enforcement available, corporations need no longer rely upon family ownership to bond their contracts, allowing more diverse, efficient, and equitable patterns of ownership to emerge.
64. Cf. Nita Ghei & Francesco Parisi, Adverse Selection and Moral Hazard in Forum Shopping: Conflicts Law as a Spontaneous Order, 25 CARDOZO L. REV. 1367, 1391 (2004) (noting, in passing, that permitting alternative forums increases competition among the states).
65. See infra Part VIII.
66. We address the unavoidable comparison to regulatory competition in corporate law infra Part III.D.
67. DEL. CODE ANN. tit. 10, § 341 (1999).
68. DEL. CONST, art. IV, § 10.
69. Indeed, commentators have long argued that the absence of a jury is part of what makes the Chancery Court attractive to litigants. E.g., Jill E. Fisch, The Peculiar Role of the Delaware Courts in the Competition for Corporate Charters, 68 U. CIN. L. REV. 1061, 1077 (2000);
70. Marcel Kahan & Ehud Kamar, Price Discrimination in the Market for Corporate Law, 86 CORNELL L. REV. 1205, 1212 (2001) [hereinafter Kahan & Kamar, Discrimination];
71. Marcel Kahan & Ehud Kamar, The Myth of State Competition in Corporate Law, 55 STAN. L. REV. 679, 708 (2002) [hereinafter Kahan & Kamar, Myth];
72. Stephen J. Massey, Chancellor Allen's Jurisprudence and the Theory of Corporate Law, 17 DEL. J. CORP. L. 683, 704 (1992).
73. Theodore Eisenberg & Geoffrey P. Miller, Do Juries Add Value?: Evidence from an Empirical Study of Jury Trial Waiver Clauses in Large Corporate Contracts, 4 J. EMPIRICAL LEGAL STUD. 539 (2007) (examining a sample of 2,816 contracts filed with the SEC as exhibits in Form 8-K filings).
74. Compare John H. Langbein, The German Advantage in Civil Procedure, 52 U. CHI. L. REV. 823, 824 (1985) (invoking the German experience as an argument in favor of restricting the parties' role in fact-gathering),
75. with RonaldJ. Allen et al., The German Advantage in Civil Procedure: A Plea for More Details and Fewer Generalities in Comparative Scholarship, 82 NW. U. L. REV. 705, 716-735 (1988) (advancing various counterarguments).
76. Cf. Djankov et al., supra note 17, at 456 (finding that "ceteris paribus higher procedural formalism is a strong predictor of longer duration of dispute resolution" and that "[h]igher formalism . . . predicts lower enforceability of contracts, higher corruption, as well as lower honesty, consistency, and fairness of the system" while finding "no evidence that formalism secures justice").
77. See, e.g., Moshe Bar Niv & Zvi Safra, On the Desirability of Appellate Courts, 2 REV. L. & ECON. 381, 382, 381-96 (2006) (concluding "that it is unnecessary to impose judicial systems which enable appeals in all civil litigation").
78. Cf. Charles M. Cameron & Lewis A. Komhauser, Decision Rules in a Judicial Hierarchy, 161 J. INSTITUTIONAL & THEORETICAL ECON. 264 (2005) (arguing that given certain assumptions, a three-tier judicial hierarchy is superior to a two-tier judicial hierarchy at rectifying errors).
79. Cf. Deborah A. DeMott, Beyond Metaphor: An Analysis of Fiduciary Obligation, 1988 DUKE L.J. 879, 881 (calling the Chancery Court "the most prominent corporate law court");
80. Massey, supra note 30, at 705 (pointing to the Chancery court's "prominence as a forum for the adjudication of corporate law issues");
81. Theodore Eisenberg & Geoffrey Miller, Ex Ante Choices of Law and Forum: An Empirical Analysis of Corporate Merger Agreements, 59 VAND. L. REV. 1975, 1987 (2006) (finding, based on a sample of merger agreements filed with the SEC, that "Delaware . . . leads as a litigation forum choice").
82. See, e.g., Dreyfuss, supra note 23, at 4;
83. Fisch, supra note 30, at 1077;
84. Kahan & Kamar, Myth, supra note 30, at 708.
85. See, e.g., Curtis Alva, Delaware and the Market for Corporate Charters: History and Agency, 15 DEL. J. CORP. L. 885, 903 (1990);
86. Fisch, supra note 30, at 1077-78;
87. cf. Kahan & Kamar, Discrimination, supra note 30, at 1212 (noting that the Chancery Court's docket "consists mostly of corporate claims").
88. See, e.g., Fisch, supra note 30, at 1078;
89. Kahan & Kamar, Discrimination, supra note 30, at 1212;
90. Kahan & Kamar, Myth, supra note 30, at 708.
91. See infra Part VILA (describing New York's role as a leading forum for commercial litigation within the United States).
92. The Eisenberg & Miller analysis of choice of forum in a sample of commercial contracts, discussed infra Part VILA, in fact shows substantial variance in choice of law across different types of contracts.
93. See Theodore Eisenberg & Geoffrey P. Miller, The Right to New York: An Empirical Study of Choice of Law and Choice of Forum Clauses in Publicly-Held Companies' Contracts 20-21 tbl.3 (N.Y.U. Ctr. for Law & Econ., Law & Econ. Research Paper Series Working Paper No. 08-13, 2008), available at http://papers.ssrn.com/sol3/papers.cfm?abstract-id=1114808 (showing the percentage of different types of contracts that chose Delaware law, New York law, California law, or some other state law). Although those authors do not report directly on the matter, the contracts they survey presumably show similar variance in choice of forum because choice of forum generally tracks choice of law in their sample.
94. Id. at 35-36 tbl.12 (showing how choice of forum correlates with choice of law).
95. Similarly, shopping for substantive law is more likely to be efficient in those situations in which the affected parties work together to choose the applicable law. Erin A. O'Hara & Larry E. Ribstein, Rules and Institutions in Developing a Law Market: Views from the U.S. and Europe 8 (111. Law & Econ. Research Paper Series, Research Paper No. LE08-010, 2008), available at http://papers.ssrn.com/sol3/papers.cfm?abstract-id=1100277.
96. As our Article was being prepared for the press, we encountered a pre-publication draft of LARRY RIBSTEIN & ERIN O'HARA, THE LAW MARKET (forthcoming, Oxford University Press 2009) (on file with authors). That book deals broadly with the virtues of expanding freedom for parties to choose another jurisdiction's substantive law to govern their affairs. Although our focus here is, in contrast, on access to other jurisdictions' courts and procedural law, their themes and ours are complementary, and their analysis parallels ours at a number of points.
97. For example, some have correcdy observed that choice of law clauses may lead to inefficient outcomes if the bargaining process is flawed because of problems of informational asymmetry. See, e.g., Erin A. O'Hara & Larry E. Ribstein, From Politics to Efficiency in Choice of Law, 67 U. CHI. L. REV. 1151, 1186 (2000).
98. See Lee Goldman, My Way and the Highway: The Law and Economics of Choice of Forum Clauses in Consumer Form Contracts, 86 NW. U. L. REV. 700, 716 (1992).
99. See generally George A. Akerlof, The Market for "Lemons": Quality Uncertainty and the Market Mechanism, 84 Q.J. ECON. 488, 489-90 (1970) (illustrating the problem of adverse selection by reference to a used car market).
100. Cf. Richard Craswell, Taking Information Seriously: Misrepresentation and Nondisclosure in Contract Law and Elsewhere, 92 VA. L. REV. 565, 586-87 (2006) (describing how a market for lemons can result if consumers have imperfect information about the content of standard-form contracts).
101. See Zivilprozessordnung [ZPO] [Code of Civil Procedure] Dec. 12, 2005, Bundesgesetzblatt [BGBl.] 3202, as amended, § 38 ZPO (imposing a general ban on forum selection clauses in contracts with nonmerchants with only a few narrowly drawn exceptions, e.g. if neither party is subject to general jurisdiction in Germany). This rule applies only where the chosen court is a German court. If, by contrast, the chosen court is that of another member state of the European Community, then the more liberal European Community law on forum selection clauses applies.
102. See Case C-412/98, Group Josi Reinsurance Co. SA v. Universal General Ins. Co. (UGIC), 2000 E.C.R. I-5925, ¶ 57 (holding that the application of the pertinent European Community rules "is, in principle, dependent solely on the criterion of the defendant's domicile being in a Contracting State").
103. See, e.g., Carnival Cruise Lines v. Shute, 499 U.S. 585, 593-94 (1991) (holding, in an admiralty case, that forum selection clauses are not generally invalid but subject to judicial scrutiny for fairness - even if included in a consumer contract); Caspi v. Microsoft Network, 732 A2d 528, 531 (N.J. Super. Ct. 1999) (holding that a forum selection clause is not per se invalid if included in a consumer contract).
104. For example, European countries tend to be less generous when it comes to contingent fees. Under German law, such arrangements have traditionally been considered void. See, e.g., Bundesgerichtshof, 12/4/1996, 40 NJW [Neue Juristische Wochenschrift] 3203, 3204 (1987);
105. Bundesgerichtshof, 2/28/1963, 16 NJW [Neue Juristische Wochenschrift] 1147, 1147 (1963);
106. Bundesgerichtshof, 6/19/1980, 33 NJW [Neue Juristische Wochenschrift] 2407, 2408 (1980). As of July 1, 2008, contingent fee arrangements are permitted, but only within narrow limits. See Gesetz zur Neuregelung des Verbots der Vereinbarung von Erfolgshonoraren [Act Modifying the Prohibition of Contingent Fee Arrangements], June 12, 2008, BGBl. I, at 1001 (F.R.G.) (providing that contingent fees can be agreed upon only in individual cases and only if the client would, because of his economic situation, reasonably abstain from going to court in the absence of a contingent fee agreement). French law is somewhat more generous, allowing agreements under which the lawyer is entitled to a supplemental fee if he wins the case.
107. See Jens C. Dammann, Freedom of Choice in European Corporate Law, 29 YALE J. INT'L L. 477, 501 (2004). United Kingdom law also provides a limited degree of flexibility by allowing arrangements under which a lawyer who wins a case can double the fee that she would otherwise have been entitled to.
108. See id.
109. See infra Part V.A.
110. E.g., William M. Landes & Richard A. Posner, Adjudication as a Private Good, 8 J. LEGAL STUD. 235, 238 (1979) (suggesting that the creation of precedents is a positive externality of adjudication). Scholars have empirically shown that precedents matter to the outcome of legal proceedings.
111. See Stefanie A. Lindquist & Frank B. Cross, Empirically Testing Dworkin's Chain Novel Theory: Studying the Path of Precedent, 80 N.Y.U. L. REV. 1156, 1205 (2005) (concluding "that precedent has some constraining effect on judicial decisions").
112. Cf. Massey, supra note 30, at 705 (noting that the Delaware Chancery Court's focus on corporate law cases has allowed the Court to "acquire a greater expertise in matters of corporate law than judges on courts with greater diversity of jurisdiction").
113. In their empirical analysis of commercial contracts, Eisenberg and Miller find that choice of forum and choice of law are strongly correlated. See Eisenberg & Miller, supra note 41, at 35-36 tbl.12.
114. An example from corporate law may illustrate this point: More than half of all publicly traded corporations are incorporated in Delaware. Del. Div. of Corps., Dep't of State, Why Choose Delaware As Your Corporate Home?, http://www.corp.delaware.gov (last visited Sept. 25, 2008). Accordingly, the number of publicly traded corporations profiting from Delaware precedents is particularly high. Similarly, at least within the United States, New York has emerged as the leading law for commercial contracts. See infra Part VTI.A. Consequently, case law produced by New York courts in the area of commercial law will be of particular benefit to many merchants.
115. Cf. Demetrios G. Kaouris, Note, Is Delaware Still a Haven for Incorporation, 20 DEL. J. CORP. L. 965, 1004 (1995) ("Courts [in other states] can elect to follow Delaware precedents, and have often done so.");
116. cf. also Cohen v. Mirage Resorts, Inc., 62 P.3d 720, 726 n.10 (Nev. 2003) (noting that "[b]ecause the Legislature relied upon the Model Act and the Model Act relies heavily on New York and Delaware case law, we look to the Model Act and the law of those states in interpreting the Nevada statutes").
117. See infra Part III.B.2.
118. ALBERT O. HIRSCHMAN, EXIT, VOICE, AND LOYALTY: RESPONSES TO DECLINE IN FIRMS, ORGANIZATIONS, AND STATES 26-29 (1970), available at http://quod.lib.umich.edu/cgi/t/text/text-idx?c=acls;;idno-heb04043.
119. A similar criticism has been raised against so-called bilateral investment treaties (BITs). Such treaties often provide foreign investors with a number of legal guarantees that are to protect them against opportunism on the part of the home state. For example, BITs often provide that foreign investors will be able to resolve contractual disputes with the host states through international commercial arbitration. Ronald J. Daniels, Defecting on Development: Bilateral Investment Treaties and the Subversion of the Rule of Law in the Developing World 1-2 (Draft Mar. 23, 2004), available at http://www.unisi.it/lawandeconomics/stile2004/daniels.pdf. According to Daniels, BITs have "have systematically subverted the evolution of robust rule of law institutions in the developing world.
120. " Id. at 2.
121. "This subversion," he argues, "is the result of a complex dynamic in which foreign investors rationally refrain from championing good and generalized rule of law reforms in the developing state, preferring instead to protect their interests by relying on the BIT rule of law enclave." Id.
122. In tort cases, the parties often lack a prior contractual relationship and hence cannot select a foreign forum ex ante and will often have difficulty reaching an agreement regarding the forum ex post. And, as we have observed, even in some contracts cases -specifically those contracts, such as consumer contracts, in which strong informational asymmetries are to be expected - the law is well advised not to allow the free use of forum selection clauses. Cf. infra Part III.A.1 (addressing the problem of informational asymmetries).
123. This is true for the United States. See Rhonda Wasserman, The Subpoena Power: Pennoyers Last Vestige, 74 MINN. L. REV. 37, 39 (1989) (noting that states uniformly refuse to exercise extraterritorial subpoena power). The same is true internationally. The relevant rules can be found in The Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, opened for signature March 18, 1970, 23 U.S.T. 2555, 847 U.N.T.S. 231. Within the European Union, the situation is more complex. There, the issue is governed by the Council Regulation (EC) No. 1206/2001, Cooperation Between the Courts of the Member States in the Taking of Evidence in Civil or Commercial Matters, 2001 O.J. (L 174) 1 [hereinafter Regulation 1206/2001]. According to that regulation, a court in one member state (the requesting court) can request the court of another member state to take evidence, and the requested court cannot, as a general rule, refuse to honor that request.
124. Id. arts. 1, 10, 2001 O.J. (L 174) at 3, 5.
125. Where necessary, the requested court even has to use coercive measures to fulfill the request. Id. art. 13 2001 O.J. (L 174) at 6.
126. As regards the European Union, Regulation 1206/2001 follows this approach at least in part. For example, the requested court will not execute a request for the hearing of a person when the law of the member state of the requested court grants a right to refuse to give evidence and the person concerned invokes that right. Regulation 1206/ 2001, supra note 60, art. 14, 2001 O.J. (L 174) at 6. Similarly, the requested court will only apply coercive measures to the extent that such measures are provided for by the law of the member state where the requested court is located.
127. Id. art. 13, 2001 O.J. (L 174) at 6.
128. Cf Linda S. Mullenix, Another Choice of Forum, Another Choice of Law: Consensual Adjudicatory Procedure in Federal Court, 57 FORDHAM L. REV. 291, 303 (1988) (stressing that choice of forum has implications for sovereignty because "[t]he notion of forum access, regulated by subject matter jurisdiction, is a fundamental governmental attribute intricately tied to the power and authority of the state");
129. cf. also William W. Park, Illusion and Reality in International Forum Selection, 30 TEX. INT'L L.J. 135, 200 (1995) (noting, implicitly, that a statute allowing choice of court clauses would further erode the sovereignty of national courts)
130. With respect to substantive corporate law, commentators have made a similar argument See, e.g., Kent Greenfield, Democracy and the Dominance of Delaware in Corporate Law, 67 LAW & CONTEMP. PROBS. 101, 101 (2004) ("Even if Delaware's dominance is a race to the top resulting in a corporate law framework that efficiendy serves the interests of shareholders it is still illegitimate.") .
131. See infra Part IV.D.
132. See infra Part V.B.
133. See, e.g., Lucian Arye Bebchuk & Assaf Hamdani, Vigorous Race or Leisurely Walk: Reconsidering the Competition over Corporate Charters, 112 YALE L.J. 553, 553 (2002) (noting that "[i]n the United States, most corporate law issues are left for state law").
134. See, e.g., id. (pointing out that "corporations are free to choose where to incorporate and thus which state's corporate law system will govern their affairs").
135. The relevant cases are Case C-167/01, Kamer van Koophandel en Fabrieken voor Amsterdam v. Inspire Art Ltd., 2003 E.C.R. I-10155; Case 208/00, Überseering BV v. Nordic Constr. Co. Baumanagement GmbH (NCC), 2002 E.C.R. I-9919;
136. Case 212/97, Centros Ltd. v. Erhvervs-og Selskabsstyrelsen, 1999 E.C.R. I-1459. For an analysis of these cases and their importance to the freedom to choose the applicable corporate law, see Dammann, supra note 49, at 484-86;
137. Christian Joerges, The Challenges of Europeanization in the Realm of Private Law: A Plea for a New Ilegal Discipline, 14 DUKE J. COMP. & INT'L L. 149, 173-83 (2004).
138. See Dammann, supra note 49, at 479 n.9 (listing member states that applied the law of the jurisdiction where the corporation's "real seat" was located rather than the law of the state of incorporation).
139. Cf, e.g., ROBERTA ROMANO, THE GENIUS OF AMERICAN CORPORATE LAW 16 (1993) (asserting that state competition "benefits rather than harms shareholders");
140. Roberta Romano, Competition for Corporate Charters and the Lesson of Takeover Statutes, 61 FORDHAM L. REV. 843, 847 ("While state competition is an imperfect public policy instrument, on balance it benefits investors.").
141. E.g., Lucian Arye Bebchuk & Allen Ferrell, Federalism and Corporate Law: The Race to Protect Managers from Takeovers, 99 COLUM. L. REV. 1168, 1199 (1999) ("There are strong theoretical reasons to expect that state competition will work to produce a body of corporate law that excessively protects incumbent managers. The development of state take over law, we have argued, is consistent with this view.");
142. Lucian A. Bebchuk, Letting Shareholders Set the Rules, 119 HARV. L. REV. 1784, 1812 (2006) ("Overall, there is a strong basis for concluding that state law has been and continues to be distorted in management's favor.").
143. 71' As regards the United States, see the sources cited supra note 69.
144. With respect to the situation in Europe, see Dammann, supra note 49, at 542 (arguing that "free choice is . . . [a] desirable policy choice for the European Community").
145. See, e.g., Lucian Arye Bebchuk, The Case for Increasing Shareholder Power, 118 HARV. L. REV. 833, 862-65 (2005) (describing ways in which directors can obtain the consent of shareholders to charter amendments that benefit directors at the expense of shareholders).
146. Cf. Thomas H. Lee, The Safe-Conduct Theory of the Alien Tort Statute, 106 COLUM. L. REV. 830, 833 (2006) (noting that litigation under the Alien Tort Statute has included "suits by aliens against other aliens for torts committed abroad without any apparent connection to the United States");
147. Jeffrey Rabkin, Note, Universal fustice: The Role of Federal Courts in International Civil Litigation, 95 COLUM. L. REV. 2120, 2123-55 (1995) (analyzing the question to what extent federal courts have jurisdiction over torts committed outside U.S. territory).
148. See, e.g., Diane F. Orentlicher, Whose Justice? Reconciling Universal Jurisdiction with Democratic Principles, 92 GEO. L.J. 1057, 1064-1134 (2004) (explaining how the prosecution of criminal acts committed in another country can be reconciled with the principle of democracy);
149. Hari M. Osofsky, Note, Domesticating International Criminal Law: Bringing Human Rights Violators to Justice, 107 YALE L.J. 191, 193-226 (1997) (analyzing the extent to which human-rights violations that occurred outside the United States can be prosecuted under domestic U.S. criminal law);
150. Beth Van Schaack, Note, The Crime of Political Genocide: Repairing the Genocide Convention's Blind Spot, 106 YALE L.J. 2259, 2272-91 (1997) (arguing that national courts may exercise universal jurisdiction over the crime of genocide).
151. The extent to which other good reasons are available for extraterritorial litigation in torts or for the prosecution of extraterritorial crimes is a question that lies beyond the scope of this article.
152. United Nations Convention on Contracts for the International Sale of Goods, Apr. 11, 1980, S. EXEC. DOC. NO. 98-9, 1489 U.N.T.S. 3.
153. International Institute for the Unification of Private Law, UNIDROIT Principles of International Commercial Contracts 2004, available at http://www.unidroit.org/english/ principles/contracts/main.htm. On the role of these principles, see Michael Joachim Bonell, The CISC, European Contract Law and the Development of a World Contract Law, 56 AM. J. COMP. L. 1, 16-26 (2008) (explaining the relevance of the UNIDROIT Principles) ;
154. Alec Stone Sweet, The New Lex Mercatoria and Transnational Governance, 13 J. EUR. PUB. POL'Y 627, 633 (noting that the UNIDROIT Principles purport to be a comprehensive code for international commerce).
155. Regarding their practical importance, see Bonell, supra, at 21 (noting that "recent experience shows that in practice, parties more and more often agree on the UNIDROIT principles as the law governing their contract").
156. See infra Part VII.A.
157. Fred Konynenburg et al., Shipping Dispute Resolution Forums: Competition and Cooperation, H.K. LAW., NOV. 2006, at 78, 78 (noting that "London has enjoyed a traditional preeminence as an arbitration and court forum [in shipping dispute resolution], due to its imperial roots in the international shipping industry and commodity markets").
158. United Nations Convention on Contracts for the International Sale of Goods, Apr. 11, 1980, S. EXEC. DOC. NO. 98-9, 1489 U.N.T.S. 3.
159. See Supreme Court of N.H. v. Piper, 470 U.S. 274, 288 (1985) (concluding that a rule imposing an in-state residency requirement as a precondition for admission to the New Hampshire bar violated the Privileges and Immunities Clause).
160. Furthermore, at least within the United States, admission to the bar of another jurisdiction is relatively simple. A law school graduate does not need a degree from an instate law school, as long has her law school is ABA-approved. In many jurisdictions, admission to the local bar is possible widiout taking the bar exam as long as the candidate has practiced for a sufficient amount of time in another U.S. state. Moreover, even if a candidate must take the bar exam in order to be admitted to the bar, that hurdle should not be overestimated. Although the bar exam typically has a state law component, the relatively limited length of bar review courses (typically no more than two months), as well as the usually relatively high bar passage rates among first-time exam takers, suggest the bar exam is not an insurmountable hurdle for attorneys.
161. See Jens Dammann & Matthias Schündeln, The Incorporation Choices of Privately Held Corporations 5 (The Univ. of Tex. Sch. of Law, Law and Econ. Research Paper 119, 2007) (finding that only about half of those closely held firms that have more than 1000 employees are incorporated in the state where their primary place of business is located and that "of those that are incorporated elsewhere, about 80% are incorporated in Delaware").
162. Cf. Henry Hansmann, Corporation and Contract, AM. L. & ECON. REV. 1, 14-15 (2006) (arguing that states are superior to arbitrators at providing norms in part because they are more likely to adjust these norms to changing circumstances in a manner that is not biased toward any of the parties involved).
163. Theodore Eisenberg & Geoffrey P. Miller, The Flight from Arbitration: An Empirical Study of Ex Ante Arbitration Clauses in Publicly-Held Companies' Contracts 29 (Cornell Legal Studies Research Paper Series, Paper No. 06-023, 2006), available at http://ssrn.com/abstract= 927423. Interestingly, arbitration clauses appear to be more prevalent in consumer contracts which are, of course, beyond the scope of this analysis.
164. See Theodore Eisenberg, Geoffrey P. Miller & Emily Sherwin, Arbitration's Summer Soldiers: An Empirical Study of Arbitration Clauses in Consumer and Nonconsumer Contracts, 41 MICH. J.L. REFORM 871, 876, 881 (2008) (examining a sample of 26 consumer contracts from large public corporations and finding that three quarters provided for mandatory arbitration).
165. The construction of the sample, which Eisenberg and Miller explore in several essays, is most thoroughly described in The Right from Arbitration: An Empirical Study of Ex Ante Arbitration Clauses in Publicly-Held Companies'Contracts. Eisenberg & Miller, supra note 85, at 18-20.
166. Id. at 21-23.
167. Computed from figures in Theodore Eisenberg & Geoffrey Miller, The Market for Contracts 10, 17, 19 (N.Y.U. Ctr. for Law & Econ., Law & Econ. Research Paper Series Working Paper No. 06-45, 2006), available at http://ssrn.com/abstract=938557.
168. Cf. Andrew T. Guzman, Arbitrator Liability: Reconciling Arbitration and Mandatory Rules, 49 DUKE L.J. 1279, 1281 (2000) (asserting that "most international contracts now contain an arbitration clause, making arbitration, rather than court proceedings, the most common form of dispute resolution for these transactions");
169. id. at 1281 n.3
170. (citing Andreas F. Lowenfeld, Can Arbitration Coexist with Judicial Review? A Critique of LaPine v. Kyocera, ADR CURRENTS, Sept. 1998, at 1, 15 n.28, which provides an estimate that as much as 90% of certain types of large international transactions include arbitration clauses).
171. CHRISTIAN BOHRING-UHLE ET AL., ARBITRATION AND MEDIATION IN INTERNATIONAL BUSINESS 107-10 (2d ed. 2006).
172. Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38 (entered into force with regard to the United States on December 29, 1970).
173. A list of the nations that are bound by the convention is available on the website of the United Nations Commission on International Trade Law (UNCITRAL), Status: 1958-Convention on the Recognition and Enforcement of Foreign Arbitral Awards, http://www.uncitral.org/uncitral/en/uncitral-texts/ arbitration/NYConvention-status.html (last visited Sept. 7, 2008).
174. See Linda Silberman, International Arbitration: Comments from a Critic, 13 AM. REV. INT'L ARB. 9, 10-11 (2002) (stressing that with respect to predictability, "court adjudication and arbitration might well look more balanced" if international law guaranteed the enforcement of choice of forum clauses in the same way that it now guarantees the enforcement of arbitration clauses).
175. Extensive references to the large literature on the relative advantages of arbitration and courts - albeit a literature that is scarce on systematic data-are provided in Eisenberg & Miller, supra note 85, at 2-9.
176. BOHRING-UHLE ET AL., supra note 90, at 108 (reporting that a majority of survey respondents find arbitration less predictable than courts);
177. cf. David E. Bloom, Empirical Models of Arbitrator Behavior Under Conventional Arbitration, 68 REV. ECON. & STAT. 578, 585 (1986) (analyzing 55 arbitration decisions and finding a "systematic tendency" of conventional arbitrators to "split-the-difference between the parties' final offers with litde additional systematic reference to the facts of the cases");
178. Robert A. Baruch Bush, Dispute Resolution Alternatives and the Goals of Civil Justice: Jurisdictional Principles for Process Choice, 1984 WIS. L. REV. 893, 989 n.204 (1984) ("To the extent the arbitrator follows a certain set of rules and makes them known, he decreases his business, since those who would stand to lose under his rules would never agree to use his services.");
179. G. Richard Shell, Res Judicata and Collateral Estoppel Effects of Commercial Arbitration, 35 UCLA L. REV. 623, 633 (1988) ("Research on this subject suggests that arbitrators do indeed 'split the difference' between the conflicting demands of the parties, though it is impossible to say with what frequency this occurs.");
180. Silberman, supra note 93, at 11 (claiming that a "basic flaw of international arbitration" is "its almost 'lawless' character as regards national law");
181. John V. O'Hara, Comment, The New Jersey Alternative Procedure for Dispute Resolution Act: Vanguard of a "Better Way"?, 136 U. PA. L. REV. 1723, 1743 (1988) (noting that "arbitrators frequently compromise on decisions rather than resolve the underlying dispute between the parties");
182. Michael A. Scodro, Note, Arbitrating Novel Legal Questions: A Recommendation for Reform, 105 YALE L.J. 1927, 1948 (1996) (noting that "arbitration's exclusive focus on the resolution of the claim at issue may result in a compromise solution where a court would have resolved the claim more absolutely").
183. See, e.g., Henry S. Farber & Max H. Bazerman, The General Basis of Arbitrator Behavior: An Empirical Analysis of Conventional and Final-Offer Arbitration, 54 ECONOMETRICA 819, 822 (1986) ("[O] ne possible motivation for arbitrators is that they attempt to make awards that maximize the probability they will be hired in subsequent cases.... The process by which arbitrators are selected for cases varies across settings, but it is generally true that both parties have a limited veto power.... Clearly, selection procedures such as this provide the incentive for the arbitrator to avoid making awards that are unacceptable to either party.");
184. O'Hara, supra note 95, at 1743 ("Considering that the parties normally select the arbitrators, and that the arbitrators only derive income when they work, it does not require much imagination to realize that an arbitrator has a strong interest in keeping everyone as happy as possible. The best method of accomplishing this is compromise; thus, in the typical arbitration, neither side is as likely to prevail as in the 'winner-take-all' style of adjudication.");
185. cf. Bloom, supra note 95, at 578 ("[I]t might be the case that arbitrators often make decisions by reaching a mechanical compromise between the parties' final offers, without paying much attention to the merits of the case. This might be an optimal strategy for arbitrators who want to project an image of fairness so they are hired again by the parties.").
186. Cf. Jill I. Gross, McMahon Turns Twenty: The Regulation of Fairness in Securities Arbitration, 76 U. CIN. L. REV. 493, 503 (2008) (noting that "judicial review of arbitration awards is extremely narrow") ;
187. Silberman, supra note 93, at 11 (noting "the lack of a genuine appeal" in arbitration proceedings).
188. See generally Daniel M. Kolkey, Attacking Arbitral Awards: Rights of Appeal and Review in International Arbitrations, 22 INT'L LAW. 693, 695-714 (1988) (discussing the pertinent rules in several countries including the United States and England).
189. Silberman, supra note 93, at 11 ("By and large, arbitration remains confidential and even though one can now access published decisions by arbitrators, it would be unusual to find any dialogue about the underlying legal issues decided in an arbitration.").
190. On the importance of ensuring the enforcement of contractual commitments, see, e.g., Alan Schwartz & Robert E. Scott, Contract Theory and the Limits of Contract Law, 113 YALE L.J. 541, 557-66 (2003) (explaining the conditions under which legal enforcement of contractual promises is necessary for welfare maximization).
191. See, e.g, 2 E. ALLAN FARNSWORTH, FARNSWORTH ON CONTRACTS § 7.9, at 286-87 (2004) ("Judges are fond of asserting that... the '"plain and ordinary meaning" doctrine is at the heart of contract construction.'" (quoting Apponi v. Sunshine Biscuits 652 F 2d 643, 647 (6th Cir. 1981))).
192. E.g., S. Rd. Assocs. v. IBM, 826 N.E.2d 806, 809-10 (N.Y. 2005);
193. Greenfield v. Philles Records, Inc., 780 N.E.2d 166, 170 (N.Y. 2002).
194. E.g., Froines v. Valdez Fisheries Dev. Ass'n, 75 P.3d 83, 88 (Alaska 2003); Alyeska Pipeline Serv. Co. v. O'Kelley, 645 P.2d 767, 771 n.l (Alaska 1982); Stuhmer v. Centaur Sculpture Galleries, 871 P.2d 327, 330 (Nev. 1994); Hilton Hotels Corp. v. Butch Lewis Prods., 808 P.2d 919, 921 (Nev. 1991).
195. E.g., Walls v. Bank of Prattville, 575 So. 2d 1081, 1083 (Ala. 1991);
196. Dore v. Arnold Worldwide, Inc., 139 P.3d 56, 59-60 (Cal. 2006);
197. Royal Banks of Mo. v. Fridkin, 819 S.W.2d 359, 362 (Mo. 1991);
198. C.R. Anthony Co. v. Loretto Mall Partners, 817 P.2d 238, 242-43 (N.M. 1991).
199. E.g., S. Rd. Assocs., 826 N.E.2d at 809;
200. Vt. Teddy Bear Co. v. 538 Madison Realty Co., 807 N.E.2d 876, 879 (N.Y. 2004);
201. Signature Realty, Inc. v. Tallman, 814 N.E.2d 429, 430 (N.Y. 2004);
202. Greenfield, 780 N.E.2d at 170.
203. E.g., S. Rd. Assocs., 826 N.E.2d at 810;
204. Kass v. Kass, 696 N.E.2d 174, 180 (N.Y. 1998);
205. W.W.W. Assocs. v. Giancontieri, 566 N.E.2d 639, 642 (N.Y. 1990).
206. E.g., S. Rd. Assoes., 826 N.E.2d at 810;
207. Greenfield, 780 N.E.2d at 170;
208. Kass, 696 N.E.2d at 180;
209. W.W.W. Assocs., 566 N.E.2d at 642.
210. W. W. W. Assocs, 566 N.E.2d at 642
211. (quoting EDITH L. FISCH, FISCH ON NEW YORK EVIDENCE § 42, at 22 (2d ed. 1977)).
212. See, e.g., Gregg A. Paradise, Note, Arbitration of Patent Infringement Disputes: Encouraging the Use of Arbitration Through Evidence Rules Reform, 64 FORDHAM L. REV. 247, 248 ( 1995).
213. See, e.g., Stefano E. Cirielli, Arbitration, Financial Markets and Banking Disputes, 14 AM. REV. INT'L ARB. 243, 244-45 (2003);
214. Paradise, supra note 108, at 248.
215. See BOHRING-UHLE ET AL., supra note 90, at 109 fig.4 (noting that only 41% of respondents considered arbitration to be "generally less expensive" as opposed to 43% of respondents that found arbitration "generally not less expensive");
216. cf. Silberman, supra note 93, at 9 (expressing skepticism vis-à-vis the proposition that arbitration is cheaper for the parties than adjudication).
217. See BOHRING-UHLE ET AL., supra note 90, at 110 fig.5 (noting that although 67% of survey respondents consider arbitration to be "generally faster," 21% believe arbitration to be "generally not faster," and 8% consider it "faster only compared to litigation in particular countries").
218. See Sweet, supra note 77, at 642-43 (describing the judicialization of international arbitration).
219. See generally Edward Brunet, Replacing Folklore Arbitration with a Contract Model of Arbitration, 74 TUL. L. REV. 39, 52-61 (1999) (describing the supply of "judicialized arbitration");
220. Richard C. Reuben, Process Purity and Innovation: A Response to Professors Stempel, Cole, and Drahozal, 8 NEV. L.J. 271, 277 (2007) (noting that "[i]n some contexts, such as securities and complex commercial cases, arbitration has become highly formalized, with routine discovery and motion practice, the application of substantive legal rules, and written and reasoned awards").
221. Beyond the difficulties, noted here, that arbitration faces in mimicking the attributes of courts, there is the fact that "the more arbitration mimics litigation, the more costly the system will become to run." Sweet, supra note 77, at 642.
222. Cf. Mitchell L. Bach & Lee Applebaum, A History of the Creation and Jurisdiction of Business Courts in the Last Decade, 60 Bus. LAW. 147, 152-202 (2004) (describing the commercial divisions and business programs set up in various U.S. states).
223. The aims of the business programs and commercial divisions that U.S. jurisdictions have created over the course of the last decade typically include better case management and the avoidance of delays. Cf. id. at 152-53 (noting that the goals behind the creation of New York's Commercial Division "included expediting cases, reducing expense, creating consistency in case management, and creating judicial expertise in business and commercial matters");
224. cf. also Stephen B. Burbank & Linda J. Silberman, Civil Procedure Reform in Comparative Context: The United States of America, 45 AM. J. COMP. L. 675, 676 (1997) ("Litigation reform efforts in the United States have sounded a consistent theme of the need to reduce expense and delay.").
225. See The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972) (holding that forum selection clauses are enforceable unless enforcement is unreasonable) ;
226. see also In re Fireman's Fund Ins. Cos., 588 F.2d 93, 95 (5th Cir. 1979) (holding that a forum selection clause is enforceable unless shown to be unreasonable, unfair, or unjust).
227. This is true, first, for the courts of the jurisdiction that the parties have selected. E.g., Capital Group Cos. v. Armour, C.A. No. 422-N, 2004 Del. Ch. LEXIS 159, at *23 (Del. Ch. Oct. 29, 2004) (holding that a court will generally enforce a forum selection clause unless it denies one of the parties their day in court or places them at a substantial and unfair disadvantage);
228. Aon Corp. v. Utley, 863 N.E.2d 701, 707 (111. App. Ct. 2006) (holding that a forum selection clause will be enforced unless it deprives one of the parties of their day in court).
229. But see Vanier v. Ponsoldt, 833 P.2d 949, 959 (Kan. 1992) (insisting on the need for a "reasonable relationship" between the transaction and the selected forum);
230. In re Marriage of Yount, 122 P.3d 1175, 1179 (Kan. Ct. App. 2005) (same);
231. Aylward v. Dar Ran Furniture Indus., 87 P.3d 341, 344 (Kan. Ct. App. 2004) (same). Courts that are asked to dismiss the case because a different forum has been chosen typically enforce forum selection clauses also.
232. See, e.g., Exparte Soprema, Inc., 949 So. 2d 907, 912 (Ala. 2006) (holding that an outbound forum selection clause will be enforced unless unfair or unreasonable);
233. Société Jean Nicolas et Fils, J.B. v. Mousseux, 597 P.2d 541, 543 (Ariz. 1979) (holding that in the absence of fraud, Arizona courts will enforce a forum selection clause if the parties fairly bargain for it, it is reasonable, and it does not deprive a litigant of his day in court) ;
234. Parsons Dispatch, Inc. v. John J. Jderue Truck Broker, Inc., 199 S.W.3d 686, 690 (Ark. Ct. App. 2004) (holding that a forum selection clause will be enforced unless "unreasonable and unfair");
235. Terry v. Student Transp. of Am., No. 557488, 2001 Conn. Super. LEXIS 3664, at *5 (Conn. Super. Ct. Dec. 14, 2001) (holding that a forum selection clause is enforceable unless unreasonable);
236. Dexter Axle Co. v. Baan USA, Inc., 833 N.E.2d 43, 48 (Ind. Ct. App. 2005) (holding that a forum selection clause is enforceable if "reasonable and just under the circumstances" and "no evidence of fraud or overreaching" is shown);
237. Prezocki v. Bullock Garages, Inc., 938 S.W.2d 888, 889 (Ky. 1997) (holding that clause is enforceable unless "unfair or unreasonable");
238. Forrest v. Verizon Commc'ns., Inc., 805 A.2d 1007, 1010 (D.C. 2002) (holding that a forum selection clause is enforceable unless unreasonable).
239. Even in states that consider "outbound" forum selection clauses invalid, courts sometimes deem these clauses relevant to the application of the forum non conveniens doctrine. E.g., Davenport Mach. & Foundry Co. v. Adolph Coors Co., 314 N.W.2d 432, 437 (Iowa 1982);
240. see also Roberta Romano, Empowering Investors: A Market Approach to Securities Regulation, 107 YALE L.J. 2359, 2411 (1998) (noting that "most states enforce forum selection clauses").
241. See, e.g., Life of Am. Ins. Co. v. Baker-Lowe-Fox Ins. Mktg., 873 S.W.2d 537, 539 (Ark. 1994);
242. Olinick v. BMG Entm't, 42 Cal. Rptr. 3d 268, 274 (Cal. Ct. App. 2006).
243. But see e.g., Terry, 2001 Conn. Super. LEXIS 3664, at *8, *12 (declaring the forum non conveniens standard inapplicable in forum selection-clause cases);
244. Aon Corp., 863 N.E.2d at 708 (finding that the defendant had waived forum non conveniens arguments by agreeing to a forum selection clause).
245. See, e.g., Olinick, 42 Cal. Rptr. 3d at 274 (noting that "[c]laims that the previously chosen forum is unfair or inconvenient are generally rejected"
246. (quoting Berg v. MTC Elec. Techs., 71 Cal. Rptr. 2d 523, 529-30 (Cal. 4th 1998)).
247. As regards federal courts, the forum non conveniens doctrine has largely been replaced with 28 U.S.C § 1404(a). Under that provision, a federal district court may, "[f]or the convenience of parties and witnesses[,] . . . transfer any civil action to any other district where it might have been brought." 28 U.S.C. § 1404(a) (2000). However, the court will typically refuse to invoke this power to override the parties' choice in the presence of a valid forum selection clause. Cf. Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (holding that a forum selection clause is a "significant factor that figures centrally in the . . . calculus") ;
248. In re Ricoh Corp., 870 F.2d 570, 573 (11th Cir. 1989) (noting that a forum selection clause is "rarely . . . outweighed by other 1404(a) factors").
249. U.S. CONST. art. IV, § 1. No public policy exemption to the Full Faith and Credit Clause exists.
250. See McKnett v. St. Louis & S.F. Ry. Co., 292 U.S. 230, 233 (1934).
251. E.g., Bd. of Pub. Works v. Columbia Coll., 84 U.S. (17 Wall.) 521, 528 (1873).
252. E.g., Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473 n.14 (1985);
253. Phoenix Leasing v. Kosinski, 707 A.2d 314, 316 (Conn. App. Ct. 1998).
254. All U.S. states except California, Indiana, Massachusetts, and Vermont have adopted the Uniform Enforcement of Foreign Judgments Act (UEFJA), 13 pt. I U.L.A. 155 (1986).
255. See Nat'l Conf. of Comm'rs on Unif. St. Laws, A Few Facts About the Uniform Enforcement of Foreign Judgments Act, http://www.nccusl.org/Update/ uniformact-factsheets/uniformacts-fs-uefja.asp (last visited Sept. 6, 2008).
256. Under the UEFJA, the procedure prescribed for the enforcement of sister-state judgments is very simple. First, the judgment creditor must file an authenticated copy of the foreign judgment in a domestic court. UNIF. ENFORCEMENT OF FOREIGN JUDGMENTS ACT § 2.
257. This requires the judgment creditor to pay a filing fee in the state in which the enforcement action will take place. However, these fees are modest in most states. In Texas, for example, the judgment creditor usually has to pay a flat fee of $50. See TEX. CIV. PRAC. & REM. CODE ANN. § 35.007(a) (Vernon 2008) (declaring that the fee to be paid is the regular fee for filing suit) ;
258. TEX. GOV'T CODE ANN. § 51.317 (Vernon 2005) (setting the regular filing fee at $50).
259. Once the copy has been filed, the foreign judgment has the same effect as a judgment of the court in which it is filed. UNIF. ENFORCEMENT OF FOREIGN JUDGMENTS ACT § 2.
260. Admittedly, the judgment debtor can seek to vacate or stay the judgment on the ground that the foreign judgment is not entided to full faith and credit. Id. However, such an attack is governed by the same procedures and rules that govern an attack on the judgment of a domestic court.
261. Id. Moreover, the burden of proof in such an action is borne by the judgment debtor.
262. Id. § 4.
263. Council Regulation No. 44/2001, On Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, 2001 O.J. (L 12) 1 (EC) [hereinafter Council Regulation].
264. See id. art. 23(1), 2001 O.J. (L 12) at 8.
265. ,26 Hannah L. Buxbaum, Forum Selection in International Contract Litigation: The Role of Judicial Discretion, 12 WILLAMETTE J. INT'L L. & DISP. RESOL. 185, 208 (2004) (observing that where parties have negotiated a forum in advance, "as between courts in Europe, there is no role for discretionary dismissal in contract cases").
266. i27 See Council Regulation, supra note 124, art. 23(1), 2001 O.J. (L 12) at 8.
267. Admittedly, even this seemingly clear framework has one important loophole. Either party can breach the agreement by filing suit in a member state other than the one designated in the forum selection clause. The court in which the suit was filed, in violation of the forum selection clause, has to respect the forum selection clause and must therefore rule the suit to be inadmissible. However, under the Council Regulation, if proceedings involving the same cause of action are brought in the courts of different member states, any court but the one first seized has to stay its proceedings until the court that was seized first has determined whether it has jurisdiction. Id. art. 27, 2001 O.J. (L 12) at 5.
268. Accordingly, the European Court of Justice has made it clear that the court selected via a forum selection clause has to stay proceedings brought there until the court first seized in the matter has declared that it has no jurisdiction. Case C-116/02, Erich Gasser GmbH v. MISAT Srl., 2003 E.C.R. 1-14693 ¶ 54 (holding that "Article 21 of the Brussels Convention [now article 27 of the Council Regulation] must be interpreted as meaning that a court second seised whose jurisdiction has been claimed under an agreement conferringjurisdiction must nevertheless stay proceedings until the court first seised has declared that it has no jurisdiction"). For an analysis and criticism of this case, see, e.g., ADRIAN BRIGGS, AGREEMENTS ON JURISDICTION AND CHOICE OF LAW 221-23 (2008) (stressing the potential for abuse that the Gasser decision creates).
269. The resulting delay will often be unwelcome to the party that wishes to adhere to the forum selection clause. Regarding the more flexible approach that U.S. law takes with respect to this issue, see, e.g., Ralf Michaels, Two Paradigms of Jurisdiction, 27 MICH. J. INT'L L. 1003, 1062 (2006) (describing the various options that the contractually designated court has when the plaintiff breaches the forum selection agreement by bringing suit in another court).
270. Moreover, the grounds for denying recognition, while slighdy more numerous than under U.S. law, are very limited. Council Regulation, supra note 124, arts. 34-35, 2001 O.J. (L 12) at 10 (providing that grounds for non-recognition include: irreconcilability with an existing judgment from any member state's courts; certain cases of deficient jurisdiction; in the case of default judgments, inadequate service of process; or a manifest conflict with the public policy of the state where enforcement is sought).
271. A simpler procedure can apply in those cases in which the claim is uncontested, e.g., because the debtor has never objected to the claim in the course of the court proceedings. The enforcement of uncontested claims is governed by EC Regulation No. 805/2004. See Parliament & Council Regulation No. 805/2004, Creating a European Enforcement Order for Uncontested Claims, 2004 O.J. (L 143) 15 (EC). According to that regulation, the court that adjudicated the case can, under certain conditions, certify uncontested judgments using a so-called "European Enforcement Order." Id. art. 6, 2004 O.J. (L 143) at 18-19.
272. Once a judgment has been thus certified, it "shall be recognised and enforced in the other Member States without the need for a declaration of enforceability and without any possibility of opposing its recognition." Id. art. 5, 2004 O.J. (L 143) at 18.
273. Obviously, this regulation, although it may be useful in practice, is only a limited step toward a better legal framework for extraterritorial litigation. This is because potential litigants do not know in advance whether their claims will remain uncontested and therefore cannot be sure that they will
274. At the Regulation's core is the rule that "[a] judgment given in a Member State in the European Small Claims Procedure shall be recognised and enforced in another Member State without the need for a declaration of enforceability and without any possibility of opposing its recognition." Id. art. 20, 2007 O.J. (L 199) at 7.
275. However, in order to qualify for the small claims procedure, the value of the claim must not exceed €2,000 "at the time when the claim form is received by the court or tribunal with jurisdiction, excluding all interest, expenses and disbursements." Id. art. 2, 2007 O.J. (L 199) at 4.
276. Council Regulation, supra note 124, art 38(1), 2001 O.J. (L 12) at 11.
277. Id. art. 39(1), 2001 O.J. (L 12) at 11.
278. Id. art. 40(1), 2001 O.J. (L 12) at 11.
279. Id. art. 41(1), 2001 O.J. (L 12) at 11.
280. Id. art. 41, 2001 O.J. (L 12) at 11.
281. Rather, the judgment debtor can appeal the decision only to declare the foreign judgment enforceable. Id. art. 43(1), 2001 O.J. (L 12) at 11.
282. And, as in the United States, the grounds for appeal are very limited. The Council Regulation specifically prohibits domestic courts from reviewing the foreign judgment as to its substance. Id. art. 45(2), 2001 O.J. (L 12) at 11.
283. Instead, the reviewing court may refuse to enforce a judgment only if one of a limited number of specified defects is present. Id. art. 45(1), 2001 O.J. (L 12) at 11;
284. see also id. arts. 34, 35, 2001 O.J. (L 12) at 10 (listing grounds for non-enforcement).
285. Id. art. 52, 2001 O.J. (L 12) at 12.
286. For example, in Germany, a flat fee of €200 is levied if no appeal is brought. Gerichtskostengesetz [GKG-KV] [Court Costs Act], May 5, 2004, Bundesgesetzblatt [BGBl] I 718, as amended, Anhang 1 (Kostenverzeichnis) No. 1510.
287. The judgment creditor must produce "a copy of the judgment which satisfies the conditions necessary to establish its authenticity." Council Regulation, supra note 124, art. 53(1).
288. The judgment creditor must also provide the court with a specific "certificate," which is a standardized form to be filled out by a court or other competent authority in the state where the judgment was issued. Id. art. 53(2), 2001 O.J. (L 12) at 12.
289. The domestic court can demand a certified translation of the relevant documents, diough it is not required to do so. Id. art. 54(2), 2001 O.J. (L 12) at 12.
290. Id. Annex II, 2001 O.J. (L 12) at 19.
291. Reinhold Geimer, Anh. III AVAG, in ZIVILPROZESSORDNUNG [CODE OF CIVIL PROCEDURE], 2829 (Richard Zöller ed., 25th ed. 2005).
292. Cf. Francisco Ramos Romeu, Litigation Under the Shadow of an Exequatur: The Spanish Recognition of U.S. Judgments, 38 INT'L LAW. 945, 951 n.38 (2004) (noting that it takes "less than six months" to have a judgment from another Brussels Regulation member state declared enforceable in Spain).
293. The United States is not bound by any multilateral conventions regarding the recognition of foreign judgments. Louise Ellen Teitz, Both Sides of the Coin: A Decade of Parallel Proceedings and Enforcement of Foreign Judgments in Transnational Litigation, 10 ROGER WILLIAMS U. L. REV. 1, 6 (2004).
294. With respect to bilateral treaties, the situation is more complex. The United States has concluded treaties on Friendship, Commerce, and Navigation (FNC) with various countries. See, e.g., Treaty of Friendship, Commerce and Navigation, U.S.-F.R.C, Oct. 29, 1954, 7 U.S.T. 1839;
295. Treaty of Friendship, Commerce and Navigation, U.S.-Japan, Apr. 2, 1953, 4 U.S.T. 2063;
296. Treaty of Friendship, Commerce and Navigation, U.S.-Isr., Aug. 23, 1951, 5 U.S.T. 550.
297. Among other things, these treaties typically provide that the nationals of each contracting party shall enjoy equal access to the other contracting party's courts of law. Treaty of Friendship, Commerce and Navigation, U.S.-F.R.G., arts. 3-5, Oct. 29, 1954, 7 U.S.T. 1839;
298. Treaty of Friendship, Commerce and Navigation, U.S.-Japan, arts. 3-5, Apr. 2, 1953, 4 U.S.T. 2063;
299. Treaty of Friendship, Commerce and Navigation, U.S.-Isr., arts. 3-5, Aug. 23, 1951, 5 U.S.T. 550.
300. The Third Circuit and the Eleventh Circuit have interpreted these provisions to require that U.S. courts accord foreign judgments the same treatment as sister state judgments. Daewoo Motor Am. v. GMC, 459 F.3d 1249, 1259 (11th Cir. 2006) ("Under The Treaty of Friendship, Commerce and Navigation Between the United States of America and The Republic of Korea . . . a Korean judgment is elevated to the status of a sister state judgment.");
301. Choi v. Kim, 50 F.3d 244, 248 (3d Cir. 1995) (same);
302. Vagenas v. Continental Gin Co., 988 F.2d 104, 107 (11th Cir. 1993) (holding that the FNC treaty between the United States and Greece "mandates foreign country judgments be treated the same as sister state judgments").
303. These decisions seem to imply that U.S. courts must recognize and enforce foreign judgments under the same rules governing the recognition and enforcement of sister state judgments. Cf. Russell J. Weintraub, How Substantial Is Our Need for a Judgments-Recognition Convention and What Should We Bargain Away to Get it?, 24 BROOK. J. INT'L L. 167, 167-68 (1998) (mentioning the FNC treaties as an exception to the rule that the United States has not entered into treaties calling for the recognition and enforcement of foreign judgments).
304. We are skeptical, though, whether the U.S. Supreme Court, which has not yet ruled on the matter, would embrace such a view. It is not obvious that a nation's promise to grant nondiscriminatory access to its own courts can be interpreted as a promise to recognize and enforce foreign judgments. Cf. Linda Silberman, Comparative Jurisdiction in the International Context: Will the Proposed Hague Judgments Convention Be Stalled?, 52 DEPAUL L. REV. 319, 321 (2002) ("The United States is not a party to any bilateral judgments convention.").
305. Other countries have shown themselves more willing to use bilateral treaties and multilateral conventions to govern the recognition of foreign judgments. For example, the members of the European Free Trade Association (EFTA)-Norway, Switzerland, Liechtenstein, and Iceland - are not part of the European Community and therefore are not subject to the Council Regulation discussed supra text accompanying note 124. In 1988, however, three of the four EFTA countries, namely Switzerland, Norway, and Iceland, as well as the member states of the European Community concluded the so-called Lugano Convention, the content of which almost literally matches that of the Council Regulation. Compare Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, Sept. 16, 1988, 28 I.L.M. 620, with Council Regulation, supra note 124, 2001 O.J. (L 12) 1.
306. It is especially noteworthy, in this context, that the U.S. Supreme Court has indicated that it has considerable reservations regarding the reasonableness of forum selection clauses in which two U.S. parties designate a foreign court as the forum for their dispute. See The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 17 (1972) ("We are not here dealing with an agreement between two Americans to resolve their essentially local disputes in a remote alien forum. In such a case, the serious inconvenience of the contractual forum to one or both of the parties might carry greater weight in determining the reasonableness of the forum clause.").
307. The enforcement of U.S. judgments in foreign countries is a case in point. In some countries, courts recognize U.S. judgments relatively easily. For example, German courts will generally recognize and enforce U.S. judgments that do not involve punitive damages. See e.g., Wolfang Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 BERKELEY J. INT'L L. 175, 200 (2005).
308. By contrast, Belgian courts will only do so after reviewing the relevant judgments on the merits. See Nicole van Crombrugghe, Belgium, in PROCEDURES TO ENFORCE FOREIGN JUDGMENTS 9, 13 (Paul J. Omar ed., 2002);
309. The Committee on Foreign and Comparative Law, Survey on Foreign Recognition of U.S. Money Judgments, 56 THE RECORD 378, 399 (2001), available at http://www.nycbar.org/Publications/record/ summer01.pdf [hereinafter Committee, Survey];
310. Ray Y. Chan, Note, The Enforceability of Annulled Foreign Arbitral Awards in the United States: A Critique of Chromalloy, 17 B.U. INT'L L.J. 141, 189 n.249 (1999).
311. Even assuming that a court of another jurisdiction will eventually recognize and enforce a U.S. judgment, there is the question of how much delay will result. There, too, the situation differs drastically from country to country. For example, one commentator has estimated that having a U.S. money judgment declared enforceable takes six months to one year in Spain. Romeu, supra note 140, at 951 n.38.
312. In South Africa, it reportedly takes between one and two years to enforce a U.S. judgement. Committee, Survey, supra, at 409;
313. cf. Silberman, supra note 141, at 321
314. ("[Enforcement of U.S. judgments abroad is often resisted . . . ."). For a survey of the law governing the recognition and enforcement of foreign judgments in various countries, see RONALD A. BRAND, ABA SECTION OF INTERNATIONAL LAW, ENFORCING FOREIGN JUDGMENTS IN THE UNITED STATES AND UNITES STATES JUDGMENTS ABROAD 53-192 (1992);
315. NTERNATIONAL EXECUTION AGAINST JUDGMENT DEBTORS passim (Dennis Campbell ed., 1993).
316. Hague Convention, supra note 7.
317. See generally Andrea Schulz, The 2005 Hague Convention of Choice of Court Clauses, 12 ILSAJ. INT'L & COMP. L. 433, 435-41 (2006) (summarizing the provisions of the Hague Convention);
318. Louise Ellen Teitz, The Hague Choice of Court Convention: Validating Party Autonomy and Providing an Alternative to Arbitration, 53 AM. J. COMP. L. 543, 550-56 (2006) (same).
319. For a discussion of the best way to implement the Hague Convention in the United States, see Stephen B. Burbank, Federalism and Private International Law: Implementing the Hague Choice of Court Convention in the United States, 2 J. PRIVATE INT'L L. 287 (2006).
320. The Hague Convention applies to exclusive choice of forum agreements in civil and commercial matters-agreements that designate "the courts of one Contracting State or one or more specific courts of one Contracting State to the exclusion of the jurisdiction of any other courts." Hague Convention, supra note 7, art. 3(a).
321. With respect to the validity and effect of forum selection clauses, the Hague Convention distinguishes between the two following situations. The first situation is that in which one of the parties brings suit in the courts of the state chosen in the parties' agreement. In such a case, the validity of the forum selection clause is determined according to the law of that state. Moreover, the Convention specifically provides that, if the forum selection clause is valid according to the law of the chosen state, the courts of that state may not decline to exercise their jurisdiction on the ground that the dispute should be decided in a court of another State. Id. art. 5(1).
322. In other words, assuming the choice of forum clause is valid, there is no rule, such as the forum non-conveniens doctrine, that would allow the court to decline to hear the case. The second situation is that in which the plaintiff ignores the forum selection clause and brings suit in a jurisdiction other than the one designated in the contract. In that case, the validity of the forum selection clause still has to be judged according to the law of the state of the contractually selected court. Accordingly, the court the plaintiff seizes in violation of the forum selection clause must suspend or dismiss the case if the forum selection clause is valid according to the law of the state of the contractually selected court. Id. art. 6(a).
323. While a number of exceptions to this rule are available, none are unreasonable. In particular, a court in which suit is brought, in violation of the forum selection clause, does not have an obligation to dismiss the case if (a) one of the parties lacked the capacity to conclude the agreement under the law of the state of the court seized, (b) giving effect to the agreement would lead to a manifest injustice or would be contrary to the public policy of the state of the court seized, (c) the choice of forum agreement cannot reasonably be performed for exceptional reasons beyond the control of the parties, or (d) the contractually selected court has refused to hear the case. Id. art. 6.
324. Once the contractually selected court has handed down a judgment, the Convention generally requires the authorities in other jurisdictions to recognize and enforce the judgment. Id. art. 8.
325. There are very few exceptions to this rule. See id. art. 9 (listing situations in which other jurisdictions can refuse recognition and enforcement).
326. However, one country that was not involved in negotiating the Convention was Mexico, and it has since acceded to the Convention. See Hague Conference on Private International Law, Status Table 37: Convention of 30 June 2005 on Choice of Court Agreements, http://www.hcch.net/index-en.php?act= conventions.status&cid=98 (last visited Sept. 7, 2008).
327. Hague Convention, supra note 7, art. 1(1).
328. Id. art. 1(3).
329. Id. art. 1(2).
330. See id.
331. Under the text of the Convention, a court should only deny the international character of a case if "all other elements to the dispute" are connected with the state where the parties reside. Id.
332. On the one hand, the word "element" is certainly broad enough to encompass a choice of law clause. On the other hand, the apparent purpose of the provision in question is to ensure that the chosen court is under no obligation to hear a case that is completely internal to a third country and that the courts of that third country are not prevented from hearing the case. In other words, the provision at issue purposefully restrains the freedom of the parties to select a court of their choice. If the choice of a foreign legal system were enough to turn a case into an international one, this restriction would lose much of its practical importance. Consequendy, there is considerable tension between the plain meaning of the provision at issue and its purpose. Moreover, the resulting ambiguity cannot be resolved by looking to the preparatory works because they are no clearer than the text. On the contrary, the Draft Report on an earlier version contains the following passage: The objection to the reference to "the relationship of the parties and all elements relevant to the dispute" is its vagueness. For example, if the parties designated a foreign system of law as the governing law of the contract, would this mean that all elements of the dispute were no longer connected with the same State? Hague Conf. on Private Int'l Law, Prelim. Draft Convention on Exclusive Choice of Court Agreements, Explanatory Report: Prelim. Doc. No. 25 of March 2004, Drawn up for the Attention of the Special Comm'n of April 2004 on Jurisdiction, Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters para. 85 (Masato Dogauchi & Trevor C. Hardey eds., March 2004), available at http://www.hcch.net/upload/wop/jdgm-pd25e.pdf. In other words, the drafters were fully aware of the vagueness of the Convention with respect to the issue at hand yet abstained from clarification.
333. See supra text accompanying note 86.
334. Eisenberg & Miller, supra note 41, at 27 tbl.8.
335. Id. at 19 tbl.2.
336. Id. at 34 tbl.11.
337. Id. at 27.
338. See supra text accompanying notes 100-07.
339. 15S Cf. Bach & Applebaum, supra note 114, at 152-60 (describing the creation of the commercial division and the motives behind that reform);
340. Eisenberg & Miller, supra note 88, at 39-44 (describing the role of the Commercial Division in explaining New York's popularity as a forum for litigation).
341. Under § 5-1401(1) of New York's General Obligations Law, the parties can select New York law to govern their contract, even in the absence of a reasonable relationship to New York, if the contract involves at least $250,000. N.Y. GEN. OBLIG. LAW §5-1401 (Mc-Kinney 2001).
342. Further, the parties can litigate in New York if they have submitted to the jurisdiction of New York and chosen New York law to govern their contract, provided, however, that the proceeding relates to a contract involving at least $1,000,000. Id. § 5-1402.
343. Delaware law takes a similar approach. It gives the parties to a contract the right to agree to the application of Delaware law if they are subject to the jurisdiction of Delaware courts and can be served with process. Any party to a contract that chooses Delaware law and in which the parties have submitted to the jurisdiction of Delaware's courts may bring suit in Delaware. However, Delaware law restricts the scope of application of these rules to contracts involving at least $100,000. DEL. CODE ANN. tit. 6, § 2708 (2007).
344. We included only those cases for which a Request for Judicial Intervention has already been filed. Cf. N.Y. COMP. CODES R. & REGS. tit. 22, § 202.6(a) (2007) ("At any time after service of process, a party may file a request for judicial intervention."). The Request for Judicial Intervention is a procedural device, a filed form through which the matter enters the court system database and is generally a precondition to the matter being assigned to a Justice of the Supreme Court. To identify the cases filed in New York courts as well as the parties involved, we relied on "WebCivil Supreme," the official database that the New York court system provides. WebCivil Supreme, http://iapps.courts.state.ny.us/webcivil/FCASMain (last visited Aug. 31, 2008). Our dataset includes all cases (1) that were filed in 2006, (2) that were handled by one of the judges who worked for the commercial division in 2006, and (3) in which the two parties shown in the database were clearly recognizable as legal entities. A party was deemed to be clearly recognizable as a legal entity if its name contained the words "company," "corporation," "incorporated," "limited," "association," or abbreviations or translations thereof. The total number of cases fitting these criteria was 431. (This relatively low number is explained by the fact that the database sometimes appears to enter only part of the name of the parties and appears to leave out elements that are necessary to identify the entity type.) To determine the place of incorporation as well as the principal place of business, we have relied on a number of different databases in the following order:
345. New York State Dep't of State, Div. of Corps., Corp. & Business Entity Database, available at http://appsext8.dos.state.ny.us/corp- public/corpsearch.entity-search-entry (last visited Sept. 7, 2008);
346. Corporation Filings on Lexis, http://www.lexis.com/research (follow "Public Records"; then follow "Corporation Filings") (last visited Sept. 7. 2008) (contains filing information from secretaries of state across the United States). In addition, because the Delaware data is not available on Lexis, we accessed Delaware information using the database provided by the Delaware Division of Corporations., Del. Dep't of State, Div. of Corps., Gen. Info. Name Search, available at https://sos-res.state.de.us/tin/ GIName Search.jsp (last visited Sept. 7, 2008);
347. Hoover's Company Records on Lexis, http://www.lexis.com/research (follow "Find a Source"; then enter "Hoover's" into the search field) (last visited Sept. 7, 2008);
348. Standard and Poor's Corporate Register on Lexis, http://www.lexis.com/ research (follow "Find a Source"; then enter "Standard and Poor's") (last visited Sept. 7, 2008).
349. Other company databases available on Lexis (e.g., U.S. Business Directory).
350. Admittedly, this data has an important limitation: the judges of the Commercial Division often have dockets that include non-commercial cases as well. Hence, the mere fact that a Commercial Division judge has handled a case does not necessarily indicate that the Commercial Division handled the case. However, we have also examined the case-type classifications provided by the New York court system's case database. These case-type classifications are typically taken from the Request for Judicial Intervention forms, so the information contained therein may not always prove to be accurate. Keeping this in mind, an analysis of the relevant case-type data shows that seventy-five cases were explicidy classified as Commercial Division cases. Out of these seventy-five cases, only one case could be shown to involve two parties that were neither incorporated nor headquartered in New York, whereas the other seventy-four cases involved at least one party that was incorporated or headquartered in New York.
351. A pilot program was initiated in 1993. Bach & Applebaum, supra note 114, at 152.
352. Due to the success of diat pilot program, the Commercial Division was created in 1995. Id. at 153.
353. The Commercial Division was expanded in 1998 and again in 2002. Id. at 154.
354. Cf. Robert Daines, The Incorporation Choices of IPO Firms, 77 N.Y.U. L. REV. 1559, 1571 (2002) (noting that Delaware's market share of IPO charters amounts to 56%).
355. See infra Part X.A.1.
356. Loi portant le Code de droit international privé [Law Containing the Code of Private International Law], art. 23(1)-(5), July 16, 2004, Le Moniteur belge 57344, 57348 (July 27, 2004), art. 23(1)-(5).
357. The relevant proceedings are governed by sections 1025-34 of the Code Judiciaire. Loi portant le Code de droit international privé, July 16, 2004, art. 23(3). While official statistics are available for the number of decisions handed down in such procedures, these statistics do not distinguish between exequatur and other proceedings. See SERVICE PUBLIC FÉDÉRAL JUSTICE, LES STATISTIQUES ANNUELLES DES COURTS ET TRIBUNAUX. ANALYSE DES STATISTIQUES DE LA PERIODE 1999-2005, at 18 (2006) (on file with authors).
358. See CODE JUDICIAIRE, art. 1031 (Belg.)
359. Decisions handed down in exequatur proceedings amounted to 0.1% of all civil court of appeal decisions in 2005. SERVICE PUBLIC FÉDÉRAL JUSTICE, supra note 166, at 16.
360. In the same year, the total number of decisions handed down by the civil branches of the courts of appeal was 18,420. Id. at 3. It follows that less than 19 decisions must have been rendered in exequatur proceedings.
361. In Germany, the total number of proceedings seeking enforcement of a foreign judgment in 2004 was below 8,883. STATISTISCHES BUNDESAMT, FACHSERIE 10 REIHE 2.1: RECHTSPFLEGE ZIVILGERICHTE 2004, at 20, 46 (2006) (on file with authors).
362. This number includes not just proceedings to enforce foreign judgments but also proceedings involving other titles that are not automatically enforceable. It is telling that the 8,883 proceedings in question constitute less than 0.3% of the overall total of 3,155,482 enforcement proceedings. Id. at 12.
363. And, as in the case of Belgium, these 0.3% include cases in which the parties are from different countries, meaning that extraterritorial litigation in purely domestic cases must be extremely rare. 170 The court responsible for declaring judgments from other member states enforceable is the corte d'appello. Council Regulation, supranote 124, Annex II, at 1, 2001 O.J. (I 12) at 19.
364. Unfortunately, no statistics seem to be available regarding the exact number of relevant proceedings. This said, in the judicial year 2005-06, the number of decisions granting or denying recognition to foreign judgments must have been below 12,716, because that is the number of decisions not falling into any other of the listed categories. See Ministero della Giustizia, Movimento dei procedimenti civili - Anno guidiziario 2005/2006: Dati nazionali, http://www.giustizia.it/statistiche/statistiche-dog/2006/agcivile/nazionaleciv. xls (last visited Sept. 7, 2008). Given that the overall number of civil proceedings filed in courts of general jurisdiction alone exceeded one million, see id., it is clear that the vast majority of parties are litigating locally.
365. See supra Part VII.
366. In the extreme, host states might permit origin-state lawyers to litigate in host-state courts without demonstrating knowledge of host-state substantive law in cases where parties chose the origin state's law-something that governments might achieve by providing foreigners with limited admission to host-state courts if they can demonstrate familiarity with host-state procedural law.
367. Cf, e.g., Teemu Ruskola, Colonialism Without Colonies: On the Extraterritorial Jurisprudence of the U.S. Court for China (June 19, 2008) (unpublished manuscript, on file with authors) (analyzing the role of the "United States Court for China," which sat in Shanghai, had civil and criminal jurisdiction over U.S. citizens in China, and was abolished only in 1943).
368. For a dramatic illustration of the perceptions underlying extraterritorial courts, see In re Ross, 140 U.S. 453, 463 (1891) (noting diat in the past "[t]he intense hostility of the people of Moslem faith . . . particularly to Christians . . . and . . . the barbarous . . . punishments inflicted in those countries, and the frequent use of torture to enforce confession from parties accused [made it] . . . a matter of deep interest to Christian governments to withdraw the trial of their subjects . . . from the arbitrary and despotic action of the local officials").
369. See supra Part VII.A.
370. See supra note 159.
371. On the fact that U.S. courts are subsidized with state funds, see infra note 185.
372. E.g., Lucian Arye Bebchuk, Federalism and the Corporation: The Desirable Limits on State Competition in Corporate Law, 105 HARV. L. REV. 1435, 1443 (1992);
373. Roberta Romano, Law as a Product: Some Pieces of the Incorporation Puzzle, 1 J.L. ECON. & ORG. 225, 240-41 (1985).
374. See infra Part VI.C.
375. See Maurice A. Hartnett, III, The History of the Delaware Court of Chancery, 48 BUS. LAW. 367, 370 (1992) (calling Delaware "a nationally recognized forum for the trial of corporate litigation") ;
376. Yan Leychkis, Of Fire Ants and Claim Construction: An Empirical Study of the Meteoric Rise of the Eastern District of Texas as a Preeminent Forum for Patent Litigation, 9 YALE J.L. & TECH. 193, 229 (2006) (noting that the Delaware Chancery Court "has become a preeminent forum for corporate litigation");
377. William H. Rehnquist, The Prominence of the Delaware Court of Chancery in the State-Federal Joint Venture of Providing Justice, 48 BUS. LAW. 351, 354 (1992) (noting the "national preeminence [of the Delaware state-court system] in the field of corporation law");
378. of. ROMANO, supra note 69, at 41 (reporting that twenty-nine out of a sample of thirty-five shareholder lawsuits that involved Delaware law and could have been filed either in Delaware or in federal courts were filed in Delaware).
379. DEL. SUP. CT. R. 12(a);
380. EL. CH. CT. R. 170(d).
381. Cf. Kahan & Kamar, Myth, supra note 30, at 697-98
382. (estimating that Delaware's lawyers earned an additional $227 million in 2001 as a result of Delaware's preeminence in the charter market and noting, by way of comparison, that "[a]ll of Delaware's additional legal business is thus equivalent to that of a single large non-New York law firm"). In the same year, Delaware took in around $586 million in franchise taxes. U.S. Census Bureau, State Gov't Tax Collections: 2001 (Revised April 2003), http://www.census.gov/govs/statetax/0108destax.html (last visited Sept. 7, 2008).
383. Altruistic motives may be part of the reason why the United Kingdom still maintains the Privy Council, which functions as the highest court of appeal for certain Commonwealtii countries. For a description of the role of the Privy Council, see Stefan Voigt et al., Improving Credibility by Delegating Judicial Competence-The Case of the Judicial Committee of the Privy Council, 82 J. DEV. ECON. 348, 355-58 (2007). Of course, another potential explanation lies in the desire to create a certain uniformity of law across Commonwealth countries-a uniformity from which the United Kingdom, too, stands to profit.
384. It is generally recognized that the quality of Delaware's judiciary is an important factor in attracting corporations to Delaware. See, e.g., Bebchuk & Hamdani, supra note 65, at 580-81 (pointing out that Delaware's institutional infrastructure, including its Chancery Court, "is an important component of the quality of the system offered by Delaware");
385. McDonnell, supra note 11, at 106 (noting that the Chancery Court constitutes an "important advantage of Delaware" in the market for corporate charters) ;
386. cf. Ehud Kamar, A Regulatory Competition Theory of Indeterminacy in Corporate Law, 98 COLUM. L. REV. 1908, 1911 (1998) (noting that the proficiency of Delaware courts is widely acknowledged to be a competitive advantage).
387. Further, there is widespread agreement that franchise taxes are the main incentive for Delaware to compete for corporate charters. For example, for the year 2001, Marcel Kahan and Ehud Kamar have estimated that the additional revenues that Delaware lawyers received as a result of Delaware's leading position in the charter market amounted to around $227 million. Kahan & Kamar, Myth, supra note 30, at 684 n.24 (noting that "most private firms incorporate in their respective home states or seek an alternative organizational form").
388. By contrast, the income that the state of Delaware derived from franchise taxes in the same year was around $600 million. U.S. Census Bureau, Del. State Gov't Tax Collections: 2001 (Revised April 2003), http://www.census.gov/ govs/statetax/0108destax.html (last visited Sept. 7, 2007).
389. See, e.g., Abraham Bell & Gideon Parchomovsky, Of Property and Federalism, 115 YALE L.J. 72, 115 n.158 (2005);
390. Arturo Bris et al., Who Should Pay for Bankruptcy Costs?, 34 J. LEGAL STUD. 295, 330 n.18 (2005) (pointing out that "[i]n the real world, the government subsidizes the court system");
391. Edward Brunet, Questioning the Quality of Alternate Dispute Resolution, 62 TUL. L. REV. 1, 51 (1987) ("Courts are subsidized . . . .");
392. Larry A. DiMatteo, A Theory of Efficient Penalty: Eliminating the Law of Liquidated Damages, 38 AM. BUS. L.J. 633, 689 (2001) ("The court system is subsidized by society.");
393. William S. Dodge, The Case of Punitive Damages in Contracts, 48 DUKE L.J. 629, 675 (1999) (referring to "the publicly subsidized court system");
394. Christopher R. Drahozal, Arbitration Costs and Contingent Fee Contracts, 59 VAND. L. REV. 729, 736 (2006) (pointing out that the court system is subsidized by the government);
395. Michael H. LeRoy, Getting Nothing for Something: When Women Prevail in Employment Arbitration Awards, 16 STAN. L. & POL'Y REV. 573, 583 (2005) ("The public subsidizes courts.");
396. Frederick L. Miller, Arbitration Clauses in Consumer Contracts: Building Barriers to Consumer Protection, 78 MICH. B.J., March 1999, at 302, 303 ("Courts are subsidized . . . .");
397. Jaime Pieras, Jr., Commentary, Judicial Economy and Efficiency Through the Initial Scheduling Conference: The Method, 35 CATH. U. L. REV. 943, 943-44 (1986) (referring to "[o]ur present system of subsidized courts, in which the fees paid by the litigants do not cover the cost of the service provided to them");
398. Eric J. Conn, Note, Hanging in the Balance: Confidentiality Clauses and Postjudgment Settlements of Employment Discrimination Disputes, 86 VA. L. REV. 1537, 1575 n.118 (2000) (noting that courts "are subsidized by public revenues").
399. Indeed, one scholar has pointed out that one of the functions of the law on jurisdiction is to protect states from having to subsidize foreign litigants. See Michael Whincop, Three Positive Theories of International Jurisdiction, 24 MELB. U. L. REV. 379, 383 (2000) ("States subsidize litigation by funding the justice system . . . . Thus, the law on jurisdiction functions to ration access to that system where the costs to the state of trying a suit are high.").
400. See, e.g., Mathias Reimann, Liability for Defective Products at the Beginning of the Twenty-First Century: Emergence of a Worldwide Standard?, 51 AM. J. COMP. L. 751, 816 (2003) (noting that "[i]n most other countries, beginning a lawsuit is much more cosdy" than it is in the United States).
401. Cf. Robert Dingwall & Emilie Cloatre, Vanishing Trials?: An English Perspective, 2006 J. DISP. RESOL. 51, 67 (2006) (noting that "successive U.K. governments have, since the early 1980s, determined that the full costs of providing a civil justice system should be met by its users through court fees" and that "[t]his policy appears to
402. Christopher R. Drahozal, Enforcing Vacated International Arbitration Awards: An Economic Approach, 11 AM. REV. INT'L ARB. 451, 465 (2000) (noting that "governments ordinarily subsidize court systems, with the plaintiff paying only a small filing fee").
403. E.g., Frank B. Cross, Institutions and Enforcement of the Bill of Rights, 85 CORNELL L. REV. 1529, 1597 n.402 (2000);
404. Landes & Posner, supra note 51, at 236.
405. Delaware charges all publicly traded corporations the same highly remunerative franchise fees, regardless of whether their headquarters are located in- or out-of-state and thus avoids discrimination based on the location of the corporation's headquarters. This practice of making a profit on in-state as well as out-of-state consumers of Delaware corporation law might not be workable if there were more publicly traded corporations head-quartered in Delaware.
406. New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 273 (1988).
407. Id. at 277;
408. W. Oil & Gas Assoc., v. Cory, 726 F.2d 1340, 1342 (9th Cir. 1984).
409. E.g., Reeves, Inc. v. Stake, 447 U.S. 429, 436 (1980) (sale of cement).
410. See, e.g., Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 810 (1976) (holding that under a plan to pay a bounty for the destruction of vehicles formerly titled in that state, Maryland discriminated between in- and out-of-state processors of scrap vehicles).
411. Area, Energy Co., 486 U.S. at 277.
412. Thoughtful analysis might, however, support the conclusion that adjudication involves several functions, some more governmental than others. In particular, if contracts are involved, deciding who is "in the right"-basic dispute resolution-is arguably not a distinctly governmental activity; arbitrators can easily do it too. On the other hand, enforcement is ultimately something that only the state, with its monopoly on force, can do effectively. Thus, arbitrators must rely on courts to enforce their decisions. When a foreign court decides a domestic contract dispute, the foreign court is acting like an arbitrator, largely limiting its role to declaring which party is in the right. Hence, one might argue, the foreign court is not acting in its distinctive governmental capacity. Rather, the courts of the origin state must enforce the judgment, and origin-state courts are performing a distinctly governmental function.
413. However, even if states are thought to act as market participants when providing judicial forums for the adjudication of commercial disputes because of the growing private dispute resolution industry, it still does not necessarily follow that discrimination against out-of-state litigants would be permissible. The Supreme Court has long held that the Commerce Clause bars discrimination against nonresidents in user fees. See, e.g., Nw. Airlines v. County of Kent, 510 U.S. 355, 369 (1994) (government-owned airport);
414. Aero Mayflower Transit Co. v. Bd. of R.R. Comm'rs, 332 U.S. 495, 501-03 (1947) (state highway);
415. Guy v. City of Baltimore, 100 U.S. 434, 443 (1880) (state waterway).
416. Professor Dan T. Coenen suggests that user fee jurisprudence be treated as an exception to the market participant doctrine. See Dan T. Coenen, State User Fees and the Dormant Commerce Clause, 50 VAND. L. REV. 795, 840-41 (1997).
417. According to this view, user fee jurisprudence is properly understood as meaning that even if the state is acting as a market participant, it may not impose discriminatory user fees for the use of the "infrastructure of interstate trade." Id. at 805-23, 840. Under this interpretation, one might consider courts functionally part of the infrastructure for interstate trade and hence barred from charging foreigners differentiated fees.
418. Although the Supreme Court has never ruled directly that the dormant Commerce Clause does not bar discrimination in tuition against out-of-state students at public educational institutions, "[t]here are . . . strong indications that the Court would find no commerce clause problem if the question were squarely presented." Coenen, supra note 196, at 806 n.60 (collecting lower federal court cases upholding tuition discrimination against Commerce Clause challenges and Supreme Court cases upholding tuition discrimination against other constitutional challenges).
419. Or. Waste Sys., Inc. v. Dep't of Envtl. Quality, 511 U.S. 93, 101 (1994).
420. Id. at 102 (quoting W. Live Stock v. Bureau of Revenue, 303 U.S. 250, 254 (1938)) (second alteration in original).
421. Id. at 103 (citing Armco, Inc. v. Hardesty, 467 U.S. 638, 643 (1984)).
422. Id. at 104.
423. E.g., Kathryn Lee Boyd, the Inconvenience of Victims: Abolishing Forum Non Conveniens in U.S. Human Rights Litigation, 39 VA. J. INT'L L. 41, 87 n.15 (1998);
424. Robert C. Casad, Personal Jurisdiction in Federal Question Cases, 70 TEX. L. REV. 1589, 1617 (1992);
425. James P. George, Parallel Litigation, 51 BAYLOR L. REV. 769, 836 (1999);
426. Walter W. Heiser, Forum Selection Clauses in State Courts: Limitations on Enforcement after Stewart and Carnival Cruise, 45 FLA. L. REV. 361, 372 n.63 (1993).
427. See, e.g., George, supra note 202, at 821 (pointing out that "forum non conveniens allows a forum to dismiss an action that is significandy inconvenient for a defendant"); Heiser, supra note 202, at 394 (noting that the forum non conveniens doctrine "permits a court to decline to exercise its jurisdiction if the forum chosen by the plaintiff is a seriously inconvenient place to conduct the litigation").
428. Broderick v. Rosner, 294 U.S. 629, 642-43 (1935) (noting that a state "may in appropriate cases apply the doctrine of forum non conveniens").
429. The consensus is that the argument is not valid. See, e.g., Mitchell N. Berman, Commercial Speech and the Unconstitutional Conditions Doctrine: A Second Look at "The Greater Includes the Lesser," 55 VAND. L. REV. 693, 710 n.60 (2002) (citing commentators).
430. Of course, that does not mean that the argument is not frequendy or presumptively sound: if the state has constitutional audiority to regulate in a particular way, it usually will have authority to enact a similar but less intrusive or less onerous regulation. But, as other scholars have argued, the conclusion is particularly apt to be mistaken in those cases in which a seemingly less intrusive measure fails to be justified by the factors that justify the more far-reaching measure. Cf. id. at 795-96 (suggesting that "a power to widihold legal audiority to engage in a particular sort of commercial transaction entails the power to permit such transactions on the condition that the participants not promote the transaction in specified ways, so long as the purpose for imposing the speech-restrictive condition is the same as the purpose the state would have for barring the transaction entirely, and so long as imposing the speech-restrictive condition does not unduly harm interests of the speech's audience").
431. Cf. Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947).
432. Id. at 508-09.
433. See supra Part VII.A.
434. W. & S. Life Ins. Co. v. State Bd. of Equalization, 451 U.S. 648, 653 (1981).
435. See infra Part IX.C.
436. Federal legislation allowing differentiated court fees presumably would not violate the Equal Protection Clause. When federal law discriminates between U.S. residents and non-residents, it does not implicate any of the constitutionally significant suspect classifications. Moreover, the desire to create a workable market for judicial services would presumably qualify as a sufficient reason for the discrimination.
437. Mo. Pac. R.R. Co. v. Clarendon Boat Oar Co., 257 U.S. 533, 535 (1922);
438. accord McKnett v. St. Louis & S.F. R.R. Co., 292 U.S. 230, 233 (1934) (holding that states are required "to accord to citizens of other states substantially the same right of access to its courts as it accords to its own citizens").
439. Toomer v. Witsell, 334 U.S. 385, 398-99 (1948);
440. see also Lunding v. N.Y. Tax Appeals Tribunal, 522 U.S. 287, 298 (1998)
441. ("[A] State may defend its position by demonstrating that '(i) there is a substantial reason for the difference in treatment; and (ii) the discrimination practiced against nonresidents bears a substantial relationship to the State's objective.'" (quoting Supreme Court of N.H. v. Piper, 470 U.S. 274, 284 (1985))).
442. In Toomer, the Court ruled that a State may charge residents and non-residents different license fees only if there is "a reasonable relationship between the danger represented by non-citizens, as a class, and the severe discrimination practiced upon them." 334 U.S. at 399.
443. Failure to make a profit might be hard to justify as a "danger" sufficient to justify such discrimination. Id.
444. E.g, Phila. Fire Assoc, v. New York, 119 U.S. 110, 117 (1886);
445. Liverpool Ins. Co. v. Massachusetts, 77 U.S. (10 Wall.) 566, 573 (1870);
446. Paul v. Virginia, 75 U.S. (8 Wall.) 168, 177 (1868).
447. Treaty Establishing the European Community (consolidated version), Dec. 29, 2006, art. 12, 2006 O.J. (C 321 E) 37, 48 [hereinafter EC Treaty].
448. E.g., Case C65/03, Comm'n v. Belgium, 2004 E.C.R. 1-6427 ¶ 28.
449. The Court of Justice has repeatedly dealt with discriminatory national provisions in the area of civil procedure, but these cases did not concern discriminatory court fees. See, e.g., Case C323/95, Hayes v. Kronenberger GmbH, 1997 E.C.R. 1-1711 ¶ 2 (furnishing of security for court costs and attorneys' fees);
450. CASE C43/95, Data Delecta Aktiebolag v. MSL Dynamics Ltd., 1996 E.C.R. 1-4661 ¶ 3 (furnishing of security for cost of legal proceedings);
451. Case C398/92, Mund & Fester v. Hatrex Int'l Transp., 1994 E.C.R. 1-467 ¶ 2 (seizure orders);
452. Case C20/92, Hubbard v. Hamburger, 1993 E.C.R. 1-3777 ¶¶ 3-4 (furnishing of security for court costs).
453. This is true, first, for the general prohibition of discrimination on grounds of nationality enshrined in article 12 of the EC Treaty. See, e.g., Case C29/95, Eckehard Pastoors & Trans-Cap GmbH v. Belgium, 1997 E.C.R. 1-285 ¶¶ 18-19 (noting that national legislation discriminating based on residence, although having "the same practical result as discrimination on grounds of nationality," is not sufficient for a court to hold legislation incompatible with the general prohibition of discrimination and that for a court to find a violation "it would also be necessary for the legislation in question to be incapable of being justified by objective circumstances");
454. Mund & Fester, 1994 E.C.R. 1-467 ¶¶ 14-17
455. (noting that the general prohibition of discrimination on grounds of nationality "forbids not only overt forms of discrimination based on nationality, but also all covert forms of discrimination," but holding that a violation of the prohibition of discrimination occurs only in those cases where "the provision in question [is] not . . .justified by objective circumstances"). Within the context of the fundamental freedoms, the treaty makes clear that even overdy discriminating measures are sometimes justifiable. See, e.g., EC Treaty, supra note 216, art. 30, 2006 O.J. (321 E) at 53 (listing grounds that justify restrictions of the free movement of goods). Moreover, concerning those measures that do not overdy discriminate on the basis of nationality, the Court of Justice of the European Communities has held that such measures can be justified by objective circumstances.
456. See, e.g., Case C204/90, Bachmann v. Belgium, 1992 E.C.R. 1-249 ¶¶ 9, 28 (finding de-facto discrimination, yet concluding that the national measure at issue is nonetheless justified).
457. The leading case on discriminatory fees is Gravier v. City of Liège, in which a student of French nationality who sought to study at a Belgian University objected to a rule under which he was to pay an enrollment fee although no equivalent fee was demanded from students of Belgian nationality.
458. Case 293/83, GRAVIER V. CITY OF LIÈGE, 1985 E.C.R. 593. Despite the fact that public education was subsidized by the Belgian taxpayers and the Belgian government invoked the need to compensate for this burden, the Court held that a rule that imposes a fee on foreign students but fails to impose the same fee on students that are citizens of the relevant member-state amounted to an illegal discrimination on the basis of nationality.
459. Id. ¶ 26;
460. see also Case C-147/03, Comm'n v. Austria, 2005 E.C.R. ¶-5969 ¶ 75 (holding that despite Austria's claim that the resulting free-rider problems would overburden its educational system, Austria must grant all individuals with a secondary education diplomas the same access to higher and university education, regardless of whether they earned their secondary education diploma in Austria or in another country).
461. See Case C209/03, The Queen v. London Borough of Ealing, 2005 E.C.R. 1-2119 ¶¶ 56-57.
462. In this case, the Court upheld a U.K. residency requirement for government-subsidized student loans, reasoning that without the residency requirement, the subsidies could become an unreasonable burden and reduce the overall level of assistance granted by the state. Id. At the same time, the Court stressed that the government could not deny loans to students who had been residing in the U.K. long enough to achieve the relevant level of integration into U.K. society-even if they had lived there only in their capacity as students.
463. This is particularly true for the general prohibition of discrimination on grounds of nationality that is enshrined in article 12 of the EC Treaty. See Case 313/86, O. Lenoir v. Caisse d'allocations familiales des Alpes-Maritimes, 1988 E.C.R. 5391 ¶¶ 14-15 (making it clear that the principle of non-discrimination applies to Community legislation).
464. In addition, though, it should be noted that the so-called fundamental freedoms (the free movement of goods, the free movement of workers, the free movement of capital, tile freedom of establishment, and the freedom to provide services) are also interpreted to contain prohibitions of discrimination. This matters because the free movement of goods has long been held to apply not only to measures taken by member states, but also to acts of the European Community. E.g., Case C169/99, Hans Schwarzkopf GmbH & Co. KG v. Zentrale zur Bekämpfung unlauteren Wettbewerbes eV, 2001 E.C.R. 1-5901 ¶ 37;
465. Case C284/95, Safety Hi-Tech Sri v. S. & T. Sri., 1998 E.C.R. 1-4301 ¶ 63; Case C51/93, Meyhui NV v. Schott Zwiesel Glaswerke AG, 1994 E.C.R. 1-3879 ¶ 23; Case 15/83, Denkavit Nederland BV v. Hoofdproduktschap voor Akkerbouwprodukten, 1984 E.C.R. 2171 ¶ 15.
466. Cf. MIGUEL POIARES MADURO, WE, THE COURT: THE EUROPEAN COURT OF JUSTICE & THE EUROPEAN ECONOMIC CONSTITUTION 77-78 (1998);
467. TAKIS TRIDIMAS, THE GENERAL PRINCIPLES OF EC LAW 98-109 (1999) (analyzing differences in the standards of scrutiny).
468. See, e.g.. Treaty of Friendship, Commerce and Navigation, U.S.-F.R.G., Oct. 29, 1954, 7 U.S.T. 1839;
469. Treaty of Friendship, Commerce and Navigation, U.S.-Japan, Apr. 2, 1953, 4 U.S.T. 2063;
470. Treaty of Friendship, Commerce and Navigation, U.S.-Isr., Aug. 23, 1951, 5 U.S.T. 550.
471. See, e.g., Treaty of Friendship, Commerce and Navigation, U.S.-F.R.G., art. VI (1), Oct. 29, 1954, 7 U.S.T. 1839, 1845 (imposing a duty to grant "national treatment with respect to access to the courts of justice").
472. See Case T-333/00, Rougemarine SARL v. Comm'n, 2002 E.C.R. 11-2983 ¶ 38.
473. E.g., Zobel v. Williams, 457 U.S. 55, 74 (O'Connor, J., concurring);
474. Donald E. Degnan & Mary Kay Kane, The Exercise of Jurisdiction Over and Enforcement of Judgments Against Alien Defendants, 39 HASTINGS L.J. 799, 814 n.67 (1988);
475. J. Andrew Kent, A Textual and Historical Case Against a Global Constitution, 95 GEO. L.J. 463, 510-11 (2007);
476. Laurence H. Tribe, Comment, Saenz Sans Prophecy: Does the Privileges and Immunities Clause Portend the Future-or Reveal the Structure of the Present, 113 HARV. L. REV. 110, 193 n.353 (1999);
477. cf. Paul v. Virginia, 75 U.S. (8 Wall.) 168, 177 (1868) ("The term citizens as there used applies only to natural persons, members of the body politic, owing allegiance to the State . . . .").
478. Accordingly, the Supreme Court has repeatedly held that the states "cannot by legislation place burdens upon commerce with foreign nations or among the several States." Sherlock v. Ailing, 93 U.S. 99, 102 (1876);
479. see also Smith v. Alabama, 124 U.S. 465, 473-74 (1888).
480. E.g., Barclays Bank PLC v. Franchise Tax Bd., 512 U.S. 298, 310-11 (1994);
481. cf. J.T. Hutchens, Note, The Market-Participant Exception and the Dormant Foreign Commerce Clause, 5 CARDOZO PUB. L. POL'Y & ETHICS J. 445, 445 (2007) (noting that "the Court has imposed the strictures of the Dormant Commerce Clause on state regulation of foreign trade").
482. The Supreme Court has held that that the protection afforded to international commerce is even "broader than the protection afforded to interstate commerce." Kraft Gen. Foods v. Iowa Dep't of Revenue & Fin., 505 U.S. 71, 79 (1992). Similarly, the Court has invoked the need for federal uniformity to explain why, when it comes to foreign rather than interstate commerce, "a State's power is further constrained." Barclays Bank PLC, 512 U.S. at 311.
483. In particular, there seems little risk that, to avoid higher court fees, contracting parties will inefficiendy try to create artificial contacts with the desired host state-for example, by opening an office in the host state or negotiating their contract there. Because few commercial contracts end up in court, the expected cost of higher court fees should generally be modest by comparison widi the costs of the tactics necessary to avoid them. Moreover, host states could render such efforts even more unattractive by disregarding contacts widi the state that were created with the sole aim of avoiding court fees.