Each essay in this dissertation analyzes an original data set to empirically investigate widely held beliefs about the enforcement of contracts in a domestic and in an international context.
Chapter 1 tests the assumption that sophisticated parties prefer arbitration over litigation in international agreements. Relying on over half a million contracts filed with the SEC between 2000 and 2016, the results suggest that arbitration clauses are less frequently adopted than clauses referring parties to the domestic court system. If they are included, arbitration clauses serve the specific purpose of strategically reducing the discretion granted to the courts enforcing the decision. Absent serious threats to enforcement, parties prefer courts over arbitration, making arbitration a second-best alternative to a well-functioning domestic judiciary.
A striking result arising out of the investigation in Chapter 1 is that most commercial contracts lack a choice-of-forum provision altogether, even though the stakes in these contracts are typically very high. Chapter 2 investigates the reasons for this omission and shows that it is the consequence of a ``sticky'' drafting process used by the representing law firms. This phenomenon leads to the widespread use of incomplete and suboptimal agreements between even the most sophisticated commercial actors. The deficiency is the result of a lack of firm-level policies on how contracts should be drafted, paired with a strong tendency for law firms to stick to existing but often deficient templates. The findings imply that default rules matter not only for the distribution, but also for the final allocation of goods, even if the parties are highly sophisticated and the transaction costs are negligible.
Chapter 3 shifts the focus from contracts between parties to contracts between states. Scholars have argued that there is little use in the treaty instrument as a modern policy tool and that the executive agreement is a more reliable commitment device that comes at a reduced cost. In contrast, Chapter 3 uses survival time analysis to demonstrate that agreements concluded in the form of a treaty are more durable than those concluded as executive agreements. The analysis suggests that this is the result of increased political costs imposed by the treaties' Advice and Consent procedure. Together, the findings imply that treaty usage signals a higher level of commitment than executive agreements. Abolishing the treaty would lock negotiators out of the possibility to indicate their intended level of compliance, potentially leading to fewer agreements with less favorable terms.
Chapter 4 addresses a long-standing debate about the relative merits of lawyers and non-lawyers as adjudicators in international dispute settlement. Some argue that lawyers would encourage predictability and coherence in jurisprudence. Others believe that non-lawyers would better protect state interests. Both sides of the debate assume that lawyers are more formalist, while non-lawyers are more instrumentalist. However, combining multiple-imputation, matching, and post-matching regression analysis, the analysis shows that panel chairs without a law degree and without much experience make a greater effort to signal adherence to formalist rules and competence in WTO jurisprudence than lawyers. The Appellate Body deems the signal credible, in turn rewarding inexperienced non-lawyers with a decrease in reversal rates. Overall, the results suggest that non-lawyers display similar (if not greater) levels of formalism as lawyers, calling into question a central reservation against non-lawyers in adjudicatory positions.
