The Economic Analysis Of Civil Dispute Resolution

When a civil dispute arises, the first problem both parties face is to choose a way settle it. The society provides various mechanisms to resolve the civil disputes backgrounded on certain historical conditions, In settling them, suppose the results and deterrence unchanged, in which way it costs less among them? In other words, under what kind of condition can the efficiency reach the highest level? This paper is aimed to discuss these questions.The mechanism of civil dispute resolution is to achieve the remedy of rights, i.e. a system to achieve the right structure of substantive laws and implementation of deterrence.The rights and obligations stipulated in the substantive laws are not generated and implemented automatically which must go through certain procedures first. The primary purpose of procedure system is to promote the legal effects required in substantive laws. For example, if one’s property right has been infringed, he /she can obtain compensation and redress through the sentence. Party breaching of the contract will recover the penalty or be required to fulfill the contract and compensate the damages through arbitration and suit. The victims of traffic accident can be aided through trial to deter potential infringers. However, it costs to operate the procedure system, as well as the protection of substantive rights and the implementation of specific obligations.From the economic and social point of view, any disputes are the indication of society’s requirements’optimum state from which individual behavior deviates. Therefore, for the whole society, dispute resolution costing the irregular payment of the society is a waste of resources and a kind of additional pay, which actually could have been avoided if whole society was in the optimal state. Unfortunately, it is only an ideal assumption. The current situation of society is colorful in a dynamic equilibrium where the occurrence and settlement of disputes take place frequently. In the process of pursuing fairness and justice, the cost of it must not be ignored. To minimize the cost of the civil dispute resolution is the goal of economic analysis of it.Protection of the substantive laws’deterrence force and achievement of its legal purpose is the fundamental aim of procedural systems, i.e. the dispute resolution system. Substantive laws represent every aspect of the social code of conduct. Most of them can be complied with by perpetrators. There are also specific agencies promoting its realization. However, many of substantive laws must depend on the force beyond the litigants or the coercive power of the country in the purpose that them can be achieved. Contents of the systems prescribe the program specifications about how to draw support from others and the state coercive power. The procedure system is provided to correct people’s wrong behaviors and acts. Therefore, it is a further extension and protection of deterrence substantive laws achieve. Civil dispute resolution mechanism provides the way to gain relief,eliminate and punish the wrong acts for the infringed, so as to constitute deterrence which effectively protects rights and removes violations finally.In the view of economic analysis, providing rights and maintaining deterrence compose the proceeds of civil dispute resolution mechanism. The main method to improve the proceeds of dispute resolution mechanism is to protect the litigant’s rights and remove the infringement in accordance with the rights and obligations defined in the substantive laws. However, deterrence required in the substantive laws will be weakened and the deterrence level of it will be reduced when protection offered by the system goes wrong. In order to maximize the proceeds of dispute resolution mechanism, it is essential to maximize the possibility of eliminating any possible errors.Therefore, the practical significance in social practice is to push forward the parties’ reconciliation or timely adjudication of cases and disciplinary law violations and to improve the efficiency of handling cases. What’s more, it is to reduce the time of handling cases, avoid possible prolonged state of controversial economic relations so as to make the economic order and relations back to normality timely.It costs to resolve disputes. The management cost of resolving disputes is the running cost of it, which includes direct costs the country pays to running the mechanism of society, for example, cost of choosing and allocating judges, wages paid to legal workers and judges, money used to build courts, buy equipments and deal office affairs. Time, energy and money the parties put in to settle the disputes are included, too. Deviation cost is the cost caused by the state organs that have the responsibility of judgment or civil disputes settlement body, such as arbitration committee, who make the wrong decision. It includes not only the direct lose dispute litigant suffers, but also the unsuitable effect to later similar disputes and the negative effect to society. Achieving substantive laws’requirements with the lowest cost and the highest level of efficiency is the aim of economic analysis in substantive laws, which is also the expectation of the society and litigants.