Robin Hood Vs. King John Redistribution: How Do Local Judges Decide Cases in Brazil?

Abstract

This article discusses two opposed hypotheses to predict the behavior of judges when they have to decide a claim between parties with asymmetrical economic and political power. The first, which has broad acceptance among policy makers in Brazil, is the jurisdictional uncertainty hypothesis (Arida et al, 2005) that suggests that Brazilian judges tend to favor the weak party in the claim as a form of social justice and redistribution of income in favor of the poor. Glaeser et al. (2003) stated the second hypothesis. They suggest that the operation of legal, political and regulatory institutions is subverted by the wealthy and politically powerful for their own benefit, a situation they call King John redistribution. An empirical test was conducted analyzing judicial decisions from 16 Brazilian states, showing that a) judges favor the strongest party, b) a local powerful party has more chance to be favored than a national or foreign big company, a effect we named parochial subversion of justice and c) in Brazilian states where we have more social inequality there is higher probability that a discussed contract clause will not be maintained.

Keywords: Inequality, Subversion of Justice, Property Rights

JEL Classification: D30, K42, O17