Economic Evaluation of Law - The Unidroit Foundation

Economic Evaluation of International Commercial Law Reform

This project seeks to develop standards and guidance on how to evaluate ex ante the economic impact of international commercial law reforms (EE ICLR).

Economic gains, whether micro, macro, or developmental, are usually stated to be the central and driving objective of, and justification for ICLR. Yet the evidence of such gains, the characteristics of law reform needed to produce such gains, the data and methodology to establish such gains (the core EE elements), inter alia, has not yet been subject to systematic academic work. There are few, if any, agreed international principles, standards, or parameters for assessing economic benefits in this context.

This project provides a platform for work in this and seeks to create principles, standards, and parameters, including the development of guidelines for economic impact and cost-benefit analyses of ICLR. It is an inter-disciplinary project with involvement from industry, national governments, international organisations, legal scholars and economists. It is run by the Cape Town Convention Academic Project, in partnership with the UNIDROIT Foundation, and the Aviation Working Group.

The project has three main objectives:

i. To research, collect, and assess information relating to the production of economic benefits of ICLR, centered on the core EA elements.
ii. To develop guidelines for measuring the economic impact of ICLR.
iii. To produce a framework on the economic evaluation of ICLR, which would be a resource for those involved in the creation or implementation of an ICLR instrument.

To this end, the EE Project Group, consisting of experts with legal and economic backgrounds, developed a formula (“Framework”) of five Factors covering (A) the direct impact of the new rules introduced by the law reform; (B) the impact of the new rules as a network; (C) the systemic (indirect) impact of the law reform, (D) the effective application of the new rules; and (E) the cost of creating and transitioning to the new rules:

During previous workshops, the UNIDROIT Secretariat had developed a preliminary draft Guide to the Framework for the Economic Evaluation of International Commercial Law Reform, drawing on input from the experts’ group, economics consultants, and additional research conducted by the Secretariat.

Workshops

Workshops for the project have previously been held at the University of Oxford and UNIDROIT. Executive summaries for these can be accessed from the column on the right. Over the course of these workshops, progress has been made towards the development of a comprehensive framework to conduct economic assessments of ICLR projects. A large gap was identified between theory and practice in this area, as rigorous economic analysis processes are not consistently used in regulatory decision making. At the end of the fifth workshop, the basis of the framework was produced.

The 6^th workshop of the Economic Evaluation of International Commercial Law Reform Project was held on 8 September at the seat of UNIDROIT in Rome.

Due to the COVID-19 pandemic the meeting was held in hybrid format, with 10 participants present at the Institute, 25 remote participants and over 30 remote observers. Building on the outcomes of the 5^th workshop in April 2019, the 6^thworkshop further explored the relationship between the framework’s variables and how the framework is to be applied during different phases of a commercial law reform project. Participating experts also discussed the content of the practical guide being developed alongside the framework.

Following a restricted 7^th session in March 2022, the 8^th workshop for this Project took place on 15 September 2022, in Cambridge and online. The workshop was attended by 20 experts with diverse backgrounds and benefited from presentations on ex-ante regulatory assessments given by representatives of the OECD and the European Commission. After these presentations, the discussion moved to specific aspects of the Framework for the assessment of economic impacts of international commercial law reforms, with introductory remarks by Professor Oren Sussman (University of Oxford). Aspects considered by the project group included the scoring system for the variables, distributional effects, social and environmental impact, and the confidence level of economic impact assessments. In addition, the group discussed a case study on a hypothetical ex-ante economic assessment concerning a possible Maritime Protocol to the Cape Town Convention.

The 9th workshop for this project took place on 14 and 15 February 2024 at the seat of UNIDROIT in Rome and online, with the participation of 12 participants with legal and economic backgrounds. The 9th workshop focused on further developing guidance to accompany the Framework. The workshop addressed issues and challenges in the practical application of the Framework and the Guide, particularly from an economist’s perspective. It included a comparison of an ex post economic analysis of the Cape Town Convention and the Aircraft Protocol with the approach and concepts in the EE ICLR project.

The 10th (restricted) workshop was held on 17 September 2024, in Rome and online, with 16 participants. Building on the outcomes of the 9th Workshop and two intersessional meetings, the 10th Workshop aimed at refining the Framework and developing further guidance. The workshop focused on the practical application of the Framework and the Guide from both legal and economic perspectives. The project group reviewed the changes made to the Guide, and discussed different issues related to the Framework, its uses and methodology, through two Case Studies. These featured hypothetical ex-ante economic evaluations of UNIDROIT instruments. Key issues discussed included benchmarks, externalities, causal links, economic frictions, and transaction costs. The group formally agreed to adopt the term “evaluation” in place of “assessment” and to rename the project accordingly (i.e., from “Economic Assessment of International Commercial Law Reform” to “Economic Evaluation of International Commercial Law Reform”.

Following the tenth workshop and an intersessional meeting in December 2024, the eleventh (restricted) workshop took place on 23 January 2025 at the University of Cambridge and online, bringing together 11 participants with legal and economic backgrounds. The workshop focused on finalising the Framework and the draft Guide and examined their applicability through a new Case Study on a hypothetical legislative proposal. Subject to a few last adjustments, the participants agreed to proceed with project finalisation. The next steps include a targeted consultation, with a final consultation workshop, and the official launch of the Guide by the end of 2025.

A Consultation Workshop took place June 2025, in Rome and online, with the participation of 23 participants, including academics and representatives from international organisations. During the workshop, the participants discussed comments and reviewed feedback received during the targeted consultation launched on 28 April 2025 and examined a hypothetical case study to test the Guide’s applicability. Following the workshop, the CTCAP and UNIDROIT will proceed to finalise and publish the Guide.

Resources:

Reports and summaries of the Workshops

11th Workshop – Report

10th Workshop – Report

9th Workshop – Report

8th Workshop – Report

7th Workshop – Report

6th Workshop – Report

Executive Summary – Sixth Workshop

Executive Summary – Fifth Workshop

Executive Summary – Fourth Workshop

Executive Summary – Third Workshop