Adverse Selection and Moral Hazard in Forum Shopping: Conflicts Law as Spontaneous Order

34 Pages Posted: 22 Oct 2003

See all articles by Nita Ghei

Nita Ghei

affiliation not provided to SSRN

Francesco Parisi

University of Minnesota - Law School; University of Bologna

Abstract

In a world with multiple, overlapping jurisdictions, any given litigation could be pursued in more than one forum. Different laws can yield different outcomes. This leads to parties selecting a forum perceived as favorable to file suit. This practice, also known as forum shopping, has been much criticized, and various reforms to the law of conflicts of law have been proposed as a way to reduce this practice. The article examines the inefficiencies associated with forum selection, and the alleged shortcomings in conflicts law as it currently exists. We argue that forum selection cannot be eliminated in a world with multiple jurisdictions. Further, we argue that conflicts law has evolved, and continues to evolve, so that it tends toward correcting inefficiencies associated with the system. We draw an analogy between the system of conflicts of law and a market, where, despite the fact that the actors lack perfect information, the outcome is largely efficient. Therefore, conflicts of law might be considered to be an example of spontaneous order.

Suggested Citation

Ghei, Nita and Parisi, Francesco, Adverse Selection and Moral Hazard in Forum Shopping: Conflicts Law as Spontaneous Order. Cardozo Law Review, Vol. 25, No. 4, March 2004, George Mason Law & Economics Research Paper No. 03-42, Available at SSRN: https://ssrn.com/abstract=457500 or http://dx.doi.org/10.2139/ssrn.457500

Nita Ghei

affiliation not provided to SSRN

Francesco Parisi (Contact Author)

University of Minnesota - Law School ( email )

229 19th Avenue South
Minneapolis, MN 55455
United States

University of Bologna ( email )

Piazza Scaravilli 1
40126 Bologna, fc 47100
Italy

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