CHOICE OF LAW IN INTEGRATED AND INTERCONNECTED MARKETS: A Matter of Political Economy Horatia muir Watt A case of lost innocence 2 Shifts in the public/private divide. Describing the conflict of laws as an issue of political economy can be seen as a response to the tectonic shifts currently wrought by globalisation in respect of the public/private law divide, which shapes trad itional thinking in this field. A new generation of collisions of economic regulation 6 linked to unprecedented transnational mobility of firms, goods, services and capital, challenges mainstream Continental European conceptions of choice of law as a tool geared to the resolution of purely private disputes. 7 Unchallenged throughout the major part of the twentieth century 8 the private interest paradigm which constitutes the foundations of the This essay was presented at the lus Commune Conference in Amsterdam on 28-29 Novem ber 2002 and subsequently a ga in revised. Inspiration for the title comes from a recent article by Paul B Stephan, The Political Economy of Choice of Law,, 90 Geo L/957(2002), which responds to Andrew Guzman's Choice of Law. New Foundations,,90 Geo //333(2002). A similar focus can be found in previous work by the same author, for example, Choice of Law and Its Consequences: Constitutions for Intemational Transactions, 26 BrookJ IntL211(2000 of La we. The phrase was coined by Herbert Kronke in his excellent account of "Capital Markets and the Conflict Rec Cours Acad La Haye, t 286, 249-385, 378 Defined, according to Black's Law Dictionary 7th edn, 1999, as'a social science dealing with the economic problems of government and the relationship between political policies and econom ic processes 4 Outside the Roman tradition, such a div ide has of course been more easily dismantled. Among an abundant literature, see Duncan Kennedy, The Stages of Decline of the Public/Private Distinction, 130UPaL Rev 1423(1982); Mary Anne Glendon, The Sources of Law in a Changing Legal order, 17 Creighton L Rev 663(1983 The public/private divide has served an important purpose within the Continental European tradition insulating private intemational law from political concems. This is less true in the US, where the relationship between la w and politics has been monitored by comity in the intemational arena, even serv ing as a rh bridgein this context(see Joel R Paul, "Comity in Intemational Law, Harv Int7LJ1(1991), while federalism concerns have coloured the conflict of laws with political and public interest. The div ide is, of course, constantly shifting(see H Muir Watt, " Droit public et droit prive dans les rapports internationaux(Vers la publicisation des conflits de lois), Arch philo droit, t 41, 207) The expression was coined by Jurgen Basedow, Conflicts of Econom ic Regulation, Am J Comp L 423 (1994); comp by the same author on this theme, Souvera inete territoriale et globalisation des marches. Le domaine d'application des lois contre les restrictions de concurrence, 264 Rec Cours Acad la haye 9(1997) One reads with interest the following passage in Andreas D Lowenfeld's work on International Litigation and the Quest for Reasonableness, Clarendon Press, 1996, which provides excellent food for comparative thought on this point: ' I do believe that Story was right to think of the conflict of laws as part of the law of nations, and that the term he introduced and that has ga ined currency in Great Brita in and throughout Europe is misunderstood by those who regard private international law as sharply distinct from public law or public international law. Thus my definition and approach are very different from those of Batiffoland Lagarde who define private international law as the collection of rules applicable solely to private persons in their The idea that the conflict of laws is a'recipe' for achiev ing private law policies was expressed in Francescakis' seminal Theorie du renvoi in 1957 and characterises mainstream thinking to the present day( seeCHOICE OF LAW IN INTEGRATED AND INTERCONNECTED MARKETS: A Matter of Political Economy Horatia Muir Watt1 1. A case of lost innocence:2 Shifts in the public/private divide. Describing the conflict of laws as an issue of political economy3 can be seen as a response to the tectonic shifts currently wrought by globalisation in respect of the public/private law divide,4 which shapes traditional thinking in this field.5 A new generation of ‘collisions of economic regulation’6 linked to unprecedented transnational mobility of firms, goods, services and capital, challenges mainstream Continental European conceptions of choice of law as a tool geared to the resolution of purely private disputes.7 Unchallenged throughout the major part of the twentieth century,8 the private interest paradigm which constitutes the foundations of the 1 This essay was presented at the Ius Commune Conference in Amsterdam on 28-29 November 2002 and subsequently again revised. Inspiration for the title comes from a recent article by Paul B Stephan, ‘The Political Economy of Choice of Law’, 90 Geo LJ 957 (2002), which responds to Andrew Guzman’s ‘Choice of Law: New Foundations’, 90 Geo LJ 333 (2002). A similar focus can be found in previous work by the same author, for example, ‘Choice of Law and Its Consequences: Constitutions for International Transactions’, 26 Brook J Int’l L 211 (2000). 2 The phrase was coined by Herbert Kronke in his excellent account of ‘Capital Markets and the Conflict of Laws’, Rec Cours Acad La Haye, t 286, 249-385, 378. 3 Defined, according to Black’s Law Dictionary, 7th edn, 1999, as ‘a social science dealing with the economic problems of government and the relationship between political policies and economic processes’. 4 Outside the Roman tradition, such a divide has of course been more easily dismantled. Among an abundant literature, see Duncan Kennedy, ‘The Stages of Decline of the Public/Private Distinction’, 130 U Pa L Rev 1423 (1982); Mary Anne Glendon, ‘The Sources of Law in a Changing Legal order’, 17 Creighton L Rev 663 (1983). 5 The public/private divide has served an important purpose within the Continental European tradition in insulating private international law from political concerns. This is less true in the US, where the relationship between law and politics has been monitored by comity in the international arena, even serv ing as a rhetorical ‘bridge’ in this context (see Joel R Paul, ‘Comity in International Law’, Harv Int’l L J 1 (1991)), while federalism concerns have coloured the conflict of laws with political and public interest. The divide is, of course, constantly shifting (see H Muir Watt, ‘Droit public et droit privé dans les rapports internationaux (Vers la publicisation des conflits de lois)’, Arch philo droit, t 41, 207). 6 The expression was coined by Jurgen Basedow, ‘Conflicts of Economic Regulation’, Am J Comp L 423 (1994); comp by the same author on this theme, ‘Souveraineté territoriale et globalisation des marchés. Le domaine d’application des lois contre les restrictions de concurrence’, 264 Rec Cours Acad La Haye 9 (1997). 7 One reads with interest the following passage in Andreas D Lowenfeld’s work on International Litigation and the Quest for Reasonableness, Clarendon Press, 1996, which provides excellent food for comparative thought on this point: ‘I do believe that Story was right to think of the conflict of laws as part of the law of nations, and that the term he introduced and that has gained currency in Great Britain and throughout Europe is misunderstood by those who regard private international law as sharply distinct from public law or public international law. Thus my definition and approach are very different from those of Batiffol and Lagarde, who define private international law as the collection of rules applicable solely to private persons in their international relations’ (3). 8 The idea that the conflict of laws is a ‘recipe’ for achieving private law policies was expressed in Francescakis’ seminal Théorie du renvoi in 1957 and characterises mainstream thinking to the present day (see