Conflict of Laws and Choice of Law
Erin A. O'Hara O'Connor
Vanderbilt University - Law School; Gruter Institute for Law and Behavioral Research
Larry E. Ribstein (Deceased)
University of Illinois College of Law; PERC - Property and Environment Research Center
November 3, 2009
U Illinois Law & Economics Research Paper No. LE09-030
Vanderbilt Law and Economics Research Paper No. 09-34
In this revised entry for a new edition of Elgar’s Encyclopedia of Law and Economics we discuss the law and economics of conflict of laws and choice of law, focusing on the law in the US. We first consider choice of law when the parties have not effectively chosen their governing law by contract. We address four questions: (1) Why do courts ever apply anything other than the law of the forum? (2) If a court sometimes applies foreign law, is a rule-based or more modern standard-based approach to its choice preferable? (3) Why have so many states abandoned rule-based approaches in favor of standard-based ones? and (4) Is there any real practical difference between the First Restatement and modern approaches? We then discuss costs and benefits of enforcing parties’ contractual choice of law provisions. We conclude that permitting parties to choose the governing law that best fits their transactions and future private disputes can enhance jurisdictional competition and help restore predictability to the conflict of laws problem. When states nevertheless wish to insist on the application of their own governing law, they should state that explicitly in statutes.
Number of Pages in PDF File: 19
Keywords: Conflict of Laws, Choice of Law, Private International Law
JEL Classification: K33
Date posted: November 4, 2009
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