A Law And Economics Analysis Of Choice Of Law In Torts

Traditional tort conflicts law and academy are too rigid or uncertain to provide clear and prudent weighting criteria and evaluating measure for tort conflicts law and theory. With its clearer cost effective analysis tools, law and economics can bring us more sound and balanced basis for measuring efficiency and welfare effects on involved parties, third party, related jurisdictions and even global level of tort conflicts.Choice of law in torts can adopt rules-based mode or standards-based mode. The rules-based mode has certainty and predictability ex ante, and so its law-making costs are high, while its compliance costs and adjudication costs are low, but it is often overinclusive or underinclusive. The standards-based mode has uncertainty and unpredictability ex ante, and so its law-making costs are low, while its compliance costs and adjudication costs are high, but it can be used as clearly-defined exceptions to reduce overinclusiion or underinclusion. In general, the EU Rome II regulation is a cost effective legislation example which combined rules-based mode and proper standards considerations.Various tort conflicts approaches can be found for different multi-state torts in different jurisdictions. First, in market torts, pre-torts party autonomy can reduce both their transaction costs and their proceedings costs and even can contribute to promoting efficient competition of substantive tort laws among different jurisdiction; post-torts (even those non-market torts) party autonomy can't produce action incentives ex ante and welfare creation effects, but it can also reduce proceedings costs and bring efficient wealth redistribution effects; nonetheless party autonomy in market tort conflicts need be complemented with mandatory rules application, the third party effects exceptions and protection of disadvantaged party; default rules for market tort conflicts should adopt non-tailored rules-based mode for specific transaction torts and general contract conflicts or tort conflicts for other market transaction torts. Second, for other relational torts such as factually relational torts and legally relational torts, clearly-defined common lex personalis or existing relational (place) law can reduce accidents costs and proceedings costs with their certainty and predictability ex ante. Third, for discrete torts, economic effects of conflicts law are more complicated. From torts law and economics perspective, in certain cases, tort conflicts have incentive effects ex ante on multi-state torts prevention, which depends upon different degrees of conflict laws certainty and the specific contents of applicable laws. Compared with lex personalis of any single party, lex fori and other various modern interest analysis approaches, lex loci delicti is more certain and more predictable ex ante, which can reduce accidents costs ex ante. Where the place of conduct (locus damni) and the place of injury (locus delicti commissi) are different, the law of the place of injury rule combined with tortfeasor's reasonable foreseeability of the place of injury is more cost effective. From international trade (and investment) law and economics perspective, application of various modern American interest analysis approaches will result in discriminatory status for U.S. oversea investors compared with local investor and foreign investor from sates other than U.S., which will do harm to U.S. investors, local consumers and even global economic welfare. However, lex loci delicti rule has more economic reasons. From international litigation law and economics perspective, lex loci delicti rule can minimize judicial error costs and administration costs, and even can facilitate substantive settlements and jurisdictional bargains between parties. In addition, double actionability rule is uncertain and unpredictable both ex ante and ex post, and therefore is inefficient; punitive damage and its limitation both have complicated economic effects. Fourth, as one of specific torts, intellectual property infringement/tort conflicts law is underdeveloped until now. Traditional lex loci protectionis rule is not necessarily cost effective both in substantive law and procedural law. The lex (loci) originis can simplify judicial task and strength intellectual property protection, but its uncertainty and unpredictability ex ante will result in overprotection and overdeterrence. With reasonable limitation, party autonomy of conflicts law can also apply to intellectual property infringement. For ubiquitous infringement, party autonomy principle combined with most significant relationship principle selecting among limited connecting factors and its reasonable exceptions is cost effective. Fifth, among various modern interest analysis approaches, governmental interest analysis, comparative impairment approach, better law approach and most significant relationship approach adopted by the Restatement (Second) of Conflict of Laws (1971) all lack certainty and predictability ex ante, which brings more transaction costs ex ante and litigation costs ex post. However, in European countries, based clearly defined limited connecting factors, as exceptions of lex loci delicti rule, the most significant relationship approach can contribute case by case justice or efficiency in exceptional cases. Sixth, for various substance-oriented tort conflicts approaches, comparative regulatory advantage approach by Judge Richard A. Posner should be regarded as arguments and reasons of clear basic rule (e.g., lex loci delicti rule) and its clear exceptions (e.g., common lex personalis or the law of most significant relationship) but not as another kind of modern interest analysis approach. Applying various modern interest analysis approaches (e.g., better law approach) directly based efficiency comparison of different tort laws has some efficiency function, while selecting most efficient law from different tort laws is not cost effective. Multilateral substantive law approach adds both transaction costs ex ante for the two parties and litigation costs for courts.There exist complicated jurisdictional game among different jurisdictions in choice of law in torts, including jurisdictional competition and jurisdictional cooperation. Rules-based tort conflicts can contribute competing improvement and spontaneous cooperation of substantive tort laws among different jurisdictions, while standards-based tort conflicts will bring opportunistic inefficient competition and the prisoner's dilemma among different jurisdictions. Multistate product liability laws game among U.S. is an example of such inefficient jurisdictional game.In summary, applying law and economics theories and methods, this thesis gives a specific, deep, comprehensive and systematic law and economics analysis of tort conflicts of different kinds of multistate torts, different rules and approaches for multistate torts, formal selection between rules-based mode and standards-based mode, and jurisdictional game among different jurisdictions by competition and cooperation. Law and economics provide a better analysis of conflicts law policy with more attention to pragmatic consequence and incentive effects ex ante. However, the methods of cost-efficiency evaluation and the premise of efficiency value priority of law and economics analysis of tort conflicts have their own shortcomings and limits.