The Social Value of the Doctrine of Res Judicata: An Economic Analysis
62 Pages Posted: 18 Nov 2018
Date Written: May 01, 2018
Res judicata, one of the most traditional features of civil procedure in Western society, stands for the general rule, usually subject to exceptions, preventing the parties from litigating the same case before a Court more than one time. The mainstream explanations for this doctrine are usually taken for granted: res judicata would save the parties' and the courts' resources, prevent inconsistent judicial decisions, and strengthen the credibility of the Justice. On the other hand, Professors Richard Posner and Bruce Hay question the importance of these justifications. This work analyzes the social desirability of res judicata from an economic standpoint. It is argued that multiple litigation of a case on the same controversy may be a socially efficient alternative in some contexts. Since these contexts are exceptional, a rule that limits the number of rounds of litigation tends to curb wasteful investments in legal disputes efficiently. To reach this conclusion, it is necessary to examine whether the parties would engage in successive litigations in the absence of preclusion. The paper offers an extensive game with perfect information and finite horizon to demonstrate that, for each set of parameter values, different equilibria arise: the plaintiff does not litigate in the first period; the plaintiff always litigates and the defendant never litigates; the plaintiff litigates a single round and the defendant never litigates; and both parties litigate in all possible rounds. As a result, it is impossible to draw general conclusions about the parties' behavior, should res judicata be abolished. The paper concludes in support of the view that the rule of res judicata enhances deterrence and works as an efficient cost-savings device in the justice system.
Keywords: Economic Analysis of Law, Civil Procedure, Res Judicata, Law and Economics, Game Theory
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