Jurisdiction (noun). In US action films (and probably in real life, too), the minor bad guys always race for the state border. Those under pursuit for more serious, federal crimes typically head for Mexico (unless they are draft dodgers, who go north to the liberal provinces of Canada). The reason for the alleged criminals' manic directional intent? Local and state cops (inevitably a circus of buffoons with a collective poor aim) have no jurisdiction once our anti-heroes cross the virtual state line-in-the-sand, while US Federal law enforcement officials apparently cannot extend theirs across international boundaries. Thus, once in Tijuana, the naughty boys of the box are home free.
Break for the borderReinsurers have no such luxury. Inevitably their treaties contain clauses specifying the jurisdiction in which any action - be it legal or arbitrary - will take place should any dispute arise over the payment (or not) of a claim. With a jurisdiction clause in place, reinsurers have nowhere else to turn. They are hostages to following the fortunes of the judicial benches specified in their contracts. Thus disputes over policies placed in the London market typically must be heard before the English bench, which is why so many of the principles of international reinsurance jurisprudence have been based on the perceived wisdom of British judges.Jurisdiction and the wisdom of judges has another side to it - one which has given rise to the pernicious practice known as 'forum shopping'. Remember The Bridges of Madison County, the Eastwood-Streep film based on the best-selling hardcover book ever written? The Official Madison County Website talks a lot about bridges, and a little about John Wayne (who was born there), but strangely the site's 'Business Services Directory' does not mention a single plaintiffs' attorney's office. This omission is odd, since Madison County is a rather special legal jurisdiction. The American Tort Reform Association (ATRA), in its report 'Bringing Justice to Judicial Hellholes 2003', deemed Madison County to be the absolute worst jurisdiction for mass tort cases in the US (provided you are a defendant). "County judges receive three-quarters of their contributions from personal injury lawyers," ATRA stated. "Not surprisingly, Madison County saw a 2,050% increase in class action lawsuits from 1998 to 2001."These odd facts relate to quirks in the US legal system. In essence, a personal injury class-action lawsuit (for alleged asbestos injuries, perhaps) can be brought in the jurisdiction where the lawyers believe they are most likely to get the largest award (and thus the largest fee). Only the most tenuous connection between the jurisdiction and the alleged wrong is required. For example, even though the defendant's business may be in New Jersey, and despite the fact that the majority of the claimants reside in that state, if one of the plaintiffs' spouses was reading The Bridges of Madison County at the time the alleged tort occurred, the case may proceed in that (slightly Mickey Mouse) jurisdiction. Not surprisingly, many Americans back ATRA in their belief that the imbalances created by the existing balkanised US tort system pervert the course of justice. However, attempts to introduce Federal legislation that would ensure that all mass torts which exceed a certain threshold are transferred to a Federal court - where judges are presumed to be more interested in justice than wealth transfer - were scuttled late in 2003, as Democratic opponents of the legislation failed to invoke 'cloture' on the debate by a single vote, thereby letting the Class Action Fairness Act die on the Senate floor, and allowing jurisdictional nonsense to continue to dominate tort cases in the US.Jurisdiction is less of an issue in the European Union where, since the introduction of three so-called non-life directives, everyone is theoretically allowed to do anything anywhere. Yet wrinkles still slip in. The Montreal Convention, for example, is the international agreement which now governs liability of airlines. From 4 November it replaced the Warsaw Convention of 1929 - at least in some jurisdictions. The Montreal Convention raises the concept of the so-called 'fifth jurisdiction'. It allows claimants to bring legal proceedings in either the airline's legal home country, its practical home country, the country where the ticket was bought, the destination country, or now - new for 2003 - the passenger's country. This extra jurisdiction opens up the distasteful possibility that unfortunate American passengers injured while flying on a strictly local European carrier between EU countries could sue the airline in the courts of Madison County. However, since only Greece and Portugal have signed up to Montreal, the scenario seems unlikely. In the rest of Europe, four jurisdictions will have to suffice.