The Impact of International Financial Centers

Just as there is a global market for cell phones and wheat, there is also a global market for law. That may seem strange to many people, since they don't think about buying law the same way they think about buying goods and other types of services, but law is as much the subject of a global market as those are. Indeed, many things we do in day-to-day life include laws from outside the communities where we live and work. If you have a credit card, you've likely agreed that the law of a state other than the one you live in governs any disputes that you have with the bank that issued it (often South Dakota). If you own stock in a Fortune 500 company, your rights as a shareholder are likely governed by Delaware law, where most large US public companies are incorporated. If your 401(k) plan includes a fund that invests in corporate bonds, the fund's rights (and so yours) are likely governed by New York law. Foreign legal systems probably affect your life as well. Many hospitals in the United States are insured through insurance companies incorporated in the Cayman Islands, a British Overseas Territory in the Caribbean that is better known to most people for its beaches and scuba diving than for providing insurance to health care providers. The extended warranty you bought on an appliance could be funded through a Turks & Caicos Islands company, another British Overseas Territory. And any insurance policy you buy from a US insurer is likely reinsured through a Bermuda-based (yet another British Overseas Territory!) reinsurer.