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Enforcement of Transnational Regulation

Enforcement of Transnational Regulation

Ensuring Compliance in a Global World

Private Regulation series

Edited by Fabrizio Cafaggi

This book addresses the different mechanisms of enforcement deployed in transnational private regimes vis-à-vis those in the field of public transnational law.

Chapter 7: Privatizing the Adjudication of International Commercial Disputes: The Relevance of Organizational Form

Kevin E. Davis

Subjects: law - academic, regulation and governance


Kevin E. Davis1 1. INTRODUCTION Should profit-maximizing private firms be responsible for governing commercial transactions? In recent years several commentators have argued that profit-oriented private actors (‘for-profits’) ought to play a greater role in governing commercial transactions (Hadfield 2001, 2009).2 This presents a profound challenge to the conventional idea that law is a quintessentially public good that ought to be provided by public actors, and adds an important dimension to debates over who should govern the commercial transactions that sustain our economic life. Advocates of privatization emphasize the superior – relative to public actors – incentives and resources of for-profits operating in competitive markets. This chapter tests that claim by examining a setting in which the advantages of for-profits should be most pronounced, namely, the market for adjudication of international commercial disputes. Remarkably, forprofits do not dominate. The actors who adjudicate international commercial disputes include for-profits, not-for-profits, international organizations, publicly-sponsored courts, and hybrid organizations. The organizational diversity is striking. 1 I am grateful to Gary Bell, Franco Ferrari, Clayton Gillette and participants in the Workshop on Enforcement of Private Transnational Regulation for helpful comments and conversations, as well as to Maxwell Kardon for research assistance. All errors are my own. Financial support from the Filomen D’Agostino and Max E. Greenberg Research Fund at NYU School of Law is gratefully acknowledged. 2 For earlier treatments of this topic see Landes and Posner (1979), and other contributions to the same volume, as well as...

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