The Effect of Specialised Courts over Time

Abstract

This article investigates the effect of creating a specialized economic court on subsequent litigation rates, forum selection, and court performance. To do so, we utilized a quasi-experimental research design and compared court decisions under two time frames: before and after the reform, and two judicial frameworks: the specialized court vs. generalist courts. Using data from Israel, where an Economic Division within the Tel Aviv District Court was established in 2010, we find evidence that specialization fosters a speedy development of a coherent and consistent body of law. This effect is driven by speedy adjudication and by judges’ relying on each other’s past decisions to jointly develop the case law. Importantly, although increased efficiency was not exclusively related to specialization, further analysis suggests that the specialized division is more capable of managing a particularly time-consuming docket. Lastly, although the reform did not lead to the initiation of a greater number of lawsuits, it did cause a major shift in forum selection and thus the specialized division became the center of securities litigation in Israel. The quantitative methods developed in this research successfully provided a nuanced analysis of outcomes, providing a model for use by other researchers. We conclude that specialization may be especially productive in developing markets like Israel, where the use of private lawsuits to promote investor protection is relatively new and growing rapidly.

Publication
Time, Law and Change: An Interdisciplinary Study (Ranchordas S. and Roznai Y. eds.), Oxford, Hart Publishing

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