Bezoek politieke website Lode Vereeck Prof.dr. Lode Vereeck

Harmonization of Judicial Interest Payments and Litigation in a Federal State

 Manuela Muhl and Lode Vereeck (2003)

Justice demands a timely resolution of conflicts. Rationing trials by waiting risks to depreciate the value of the disputed good. Therefore, courts rightly award compensatory judicial interest payments. But their economic impact is not well understood. Social welfare is reduced because judicial interest payments tend to boost the number of suits and diminish the likelihood of settlement. The policy dilemma is that judicial interest payments should be high enough to compensate for court delay, but low enough to deter ex ante opportunistic behavior of potential litigants. The only first-best approaches left that mimimize the erosion by time are an increase of court fees and measures to battle unduly optimism.

in: Jean-Michel Josselin and Alain Marciano (eds.), From Economic Competition to Legal Competition. New Perspectives on European Federalism, Cheltenham: Edward Elgar, p. 121-142. ISBN 1-84376-006-1

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