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Business Courts and Interstate Competition


John F. Coyle


University of North Carolina School of Law

September 15, 2011

William & Mary Law Review, Vol. 53, p. 1915, 2012
UNC Legal Studies Research Paper No. 1928108

Abstract:     
Over the past two decades, nineteen states have established specialized trial courts that hear business disputes primarily or exclusively. To explain the recent surge of interest in these courts, policy-makers and scholars alike have cited the process of inter-jurisdictional competition. Specifically, these commentators have argued that business courts serve, among other purposes, to attract out-of-state companies to expand their business, re-incorporate, or litigate their disputes in the jurisdiction that created the business court.

This Article critically evaluates each of these theories. It argues, first, that business courts do not serve to attract companies from other states because business expansion decisions in the United States are rarely driven by the high quality of the courts in a particular jurisdiction. It next argues that business courts are unlikely to attract incorporation business because their core attributes are such that they are unlikely to compete successfully with the Delaware Court of Chancery. The Article goes on to argue that while the creation of a business court may in some cases serve to divert litigation business to local lawyers, the opportunities for diversion are relatively limited.

The Article then draws upon these insights to offer a number of suggestions as to how future business courts should be designed. It suggests that states should think twice before creating business and technology courts. It notes that major institutional reforms will be required if states wish to use business courts to attract incorporation business away from Delaware. It also identifies additional steps that states might take to more effectively attract litigation business. The Article concludes by briefly evaluating the viability of several non-competition-based rationales for establishing business courts.

Number of Pages in PDF File: 69

Keywords: Courts, Dispute Resolution, Corporate Law, Commercial Law, Interjurisdictional Competition, Interstate Competition

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Date posted: September 17, 2011 ; Last revised: April 25, 2012

Suggested Citation

Coyle, John F., Business Courts and Interstate Competition (September 15, 2011). William & Mary Law Review, Vol. 53, p. 1915, 2012; UNC Legal Studies Research Paper No. 1928108. Available at SSRN: http://ssrn.com/abstract=1928108 or http://dx.doi.org/10.2139/ssrn.1928108

Contact Information

John F. Coyle (Contact Author)
University of North Carolina School of Law ( email )
Van Hecke-Wettach Hall, 160 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380
United States
919-843-9634 (Phone)
HOME PAGE: http://www.law.unc.edu/faculty/directory/coylejohnf/

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