Conflict of Laws and Choice of Law

19 Pages Posted: 4 Nov 2009  

Erin A. O'Hara O'Connor

Florida State University - College of Law; Gruter Institute for Law and Behavioral Research

Larry E. Ribstein

University of Illinois College of Law (deceased); PERC - Property and Environment Research Center

Date Written: November 3, 2009

Abstract

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.

Keywords: Conflict of Laws, Choice of Law, Private International Law

JEL Classification: K33

Suggested Citation

O'Hara O'Connor, Erin A. and Ribstein, Larry E., Conflict of Laws and Choice of Law (November 3, 2009). U Illinois Law & Economics Research Paper No. LE09-030; Vanderbilt Law and Economics Research Paper No. 09-34. Available at SSRN: https://ssrn.com/abstract=1499311 or http://dx.doi.org/10.2139/ssrn.1499311

Erin A. O'Hara O'Connor

Florida State University - College of Law ( email )

425 W. Jefferson Street
Tallahassee, FL 32306
United States

HOME PAGE: http://www.law.fsu.edu/our-faculty/deans/ohara-oconnor

Gruter Institute for Law and Behavioral Research

158 Goya Road
Portola Valley, CA 94028
United States

Larry Edward Ribstein (Contact Author)

University of Illinois College of Law (deceased)

PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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