Adjudicative Jurisdiction and the Market for Corporate Charters

32 Pages Posted: 19 Nov 2008 Last revised: 8 Nov 2009

See all articles by Jens Dammann

Jens Dammann

University of Texas at Austin - School of Law; European Corporate Governance Institute (ECGI)

Abstract

Both in the United States and in Europe, corporations are free to choose the applicable corporate law by incorporating in the jurisdiction of their choice. However, smaller firms face a number of obstacles in exercising that choice. One such obstacle concerns the law on adjudicative jurisdiction: In the United States as well as in the European Community, corporations are exposed to third-party suits in their state of incorporation even if they have no other ties to that state.

In this Article, I argue that while the relevant rule may not matter much in the United States, it probably imposes a considerable burden on corporations in Europe. Moreover, I show that there is no convincing justification for the relevant Community law rule. It does not promise to increase the combined gains reaped by contracting parties, nor can it be expected to achieve either a substantive increase in positive externalities or a significant reduction in negative externalities. Finally, it cannot even be justified persuasively on fairness grounds.

Keywords: regulatory competition, market for corporate charters, delaware, centros, inspire art, jurisdiction, adjudication

JEL Classification: G30, H70, K12, K 22, K41, K33

Suggested Citation

Dammann, Jens, Adjudicative Jurisdiction and the Market for Corporate Charters. Tulane Law Review, Vol. 82, No. 1, 2008, Available at SSRN: https://ssrn.com/abstract=1303666

Jens Dammann (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://https://ecgi.global/users/jens-dammann

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