You can get a credit rating of corporations. You can get a political risk rating of countries. Now you can also get a legal risk rating of the chosen governing law and courts of a contract.
A recent treatise ranked the Big Four foundational law jurisdictions of England, New York, France, and Germany on more than a dozen criteria, such as predictability, business orientation, and debtor-creditor friendliness, as the governing law of international business transactions by using more than 70 specific key indicators. The study is contained in Philip Wood’s Governing Law Risks in International Business Transactions just published by Oxford University Press.
New York law and English law are thought to be the most commonly chosen governing laws for these transactions, such as international bond issues, syndicated bank credits, derivatives, and large long-term sales agreements. The study shows why. Those two jurisdictions are together believed to hold about 80 per cent of the international wholesale business-to-business market. They are international public utilities conferring soft and hard power. The book mentions all 320 jurisdictions of the world.
“Most lawyers are trained only in one country’s laws, but lawyers documenting international transactions need to be able to advise on the appropriate governing law as well,” said Philip Wood. “My aim was that they should be able to do that task with confidence.”
