Transaction Costs and International Litigation

Abstract

The multifaceted process of globalisation has dramatically expanded international trade and investment and increased the frequency of cross border legal disputes. The volume of international litigation will continue to expand, despite the high level of risk, cost and delay that is involved. The transaction costs involved in the enforcement of the legal rights and obligations arising from international trade, investment and commerce operate as a non-tariff trade barrier. This paper argues that minimising these transaction costs is a significant, but unresolved, concomitant of the successful micro-economic reform achieved through bilateral trade agreements. In areas such as cross-border insolvency, international asset freezing orders, forum or venue disputation, transnational evidence collection, service of process and the enforcement of foreign judgements, there is scope for international cooperation between judicial officers to reduce the costs to litigants. The further reduction in the trade barriers that arise by reason of the costs of international dispute resolution may need to be addressed in trade negotiations.