LAUSR

Why do countries use legal venues to solve disputes? In the absence of external enforcement, a court offers little leverage to change the underlying power distribution between states. Despite this lack of enforcement and a de facto requirement for mutual consent, 68 countries ranging in income and military capabilities have brought 134 cases to the ICJ since its inception in 1946. The literature suggests states are more likely to file cases when democratic leaders need political cover for difficult territorial concessions or when a state’s legal tradition supports the use of courts. We advance an alternative explanation that states use the ICJ to protect trade flows from disruption. The uncertainty arising from intense political disputes between countries can depress trade flows and give rise to issue linkage. Those states most vulnerable to such hold-up will seek legal venues as a means to avoid negative externalities for trade flows from the dispute. We assess this argument by analyzing how trade dependence shapes the likelihood of a state filing a case against another state in the ICJ. Using data on 190 countries from 1960 to 2013, we explain patterns of ICJ case initiation. Our findings show that countries are more likely to file ICJ cases against important trading partners than against states with low levels of shared trade. We conclude that economic interdependence changes the incentives for how states resolve their disputes.