Transnational Forum Shopping as a Trade and Investment Issue

Abstract

Plaintiffs regularly bring cases in U.S. courts seeking damages for harms that have occurred abroad, attracted by higher expected returns than are available in the jurisdiction in which the harm arose. This paper focuses on the potential distortion of trade and investment patterns that can result from implicit discrimination in the applicability of liability rules to producers or investors of different nationalities due to such forum shopping. These distortions are akin to those caused by discriminatory tariff or tax policies and can reduce global economic welfare. In appropriate cases, the welfare costs can be averted by limiting foreign tort plaintiffs to the law and forum of the jurisdiction in which their harm arose, although such a rule is not efficient in all cases. The analysis has implications for a number of areas of legal doctrine, including the doctrine of forum non conveniens, the construction of the Alien Tort Statute, and the rules governing choice of law in transnational tort cases.