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The world’s nations vary widely in the quality of their judicial systems. In some jurisdictions, the courts resolve commercial disputes quickly, fairly, and economically. In others, they are slow, inefficient, incompetent, biased, or corrupt. These differences are important not just for litigants, but for nations as a whole: effective courts are important for economic development. A natural implication is that countries with underperforming judiciaries should reform their courts. Yet reform is both difficult and slow. Another way to deal with a dysfunctional court system is for litigants from afflicted nations to have their commercial disputes adjudicated in the courts of other nations that have better-functioning judicial systems. We explore here the promise of such extraterritorial litigation and conclude that it is strong, particularly in light of a communications revolution that is making litigation at a distance increasingly feasible.

While available data suggests that the volume of extraterritorial litigation is presently small, a set of basic legal reforms could eventually change that situation dramatically. To create incentives for adopting those reforms, it is essential to provide jurisdictions with a strong incentive to attract foreign litigants. The best way to achieve this is to allow jurisdictions to impose higher court fees in cases between foreign litigants that do not have substantial ties to the forum state. This may require an important adjustment in the legal culture. But only by abandoning formal equality in court fees is it likely that real global equality in access to judicial services can be accomplished.

Date of Authorship for this Version

March 2008