Courts, Competition and Innovation

Abstract

In some situations, characterised by dependence and unexpected change, third parties are needed. They solve problems in relationships. Courts fulfil this need for trilateral governance, which is a fascinating but complex process. Third parties offer a miracle product, because they can solve most conflicts just by being there. Providing this miracle is difficult, though. Courts are notoriously difficult to manage. Courts compete among themselves and with countless other third parties, from informal tribunals to websites and television shows that mobilize the court of public opinion. Courts can learn from their competitors and in the process of competition. They have to, because their traditional procedures lose market share and legitimacy. In order to innovate, courts need a setting that provides stronger incentives and at the same time is a safe, open and nurturing environment. The view developed by Montesquieu in the 18th century, positioning courts as independent enforcers of laws enacted by parliaments, is still valuable. But it can also be a barrier to court innovation.