Judicial Services for Global Commerce – Made in Germany?

Abstract

International business disputes rarely go to court, but sometimes they do.

By virtue of the internationally accepted principle of party autonomy, business partners involved in cross-border transactions are entitled to select their forum of choice for any dispute which may arise from their commercial relationship. Party autonomy entails the right to opt out of the nation state’s court systems. In fact, arbitration clauses often refer disputes to a non-state institution for commercial arbitration such as the International Court of Arbitration of the ICC in Paris.

In a choice of court agreement, however, parties may also choose between the different forums for dispute resolution provided by the nation states. In the era of economic globalization when the demand for cross-border dispute resolution services is growing, the provision of legal services for international commerce becomes big business. As a result, national business lawyers develop a natural interest in channeling international disputes to their domestic courts.

A very effective way to broaden their market share is to submit as many contracts as possible to their own national law. Once a choice of law clause, English law for example, is agreed on, a corresponding choice of court agreement comes quasi naturally, since the courts of other nations have a lack of experience in applying foreign law. Thus, when international business transactions are negotiated, the involved lawyers engage in what is appropriately described as a ‘fight for the applicable law’.

This note comments the fight for the applicable law between England and Germany.

Keywords: Judicial Services, competition, choice of law, party autonomy, arbitration courts, business courts, forum shopping, court language, commercial transactions, transnational commercial law

JEL Classification: A14, F10, F13, K33, K12, K40, K41, K42