U.S. federal judges – appointed for life – are often regarded as pinnacles of fairness and justice dedicated to upholding federal laws and the Constitution. But are they?
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Can personal biases sway judicial decisions even when the law is impartial? If so, how is this possible and what drives these preferences? A recent study by Prof. Srividya Jandhyala, ESSEC Business School Asia-Pacific, reveals the presence of national bias in court decisions involving international business law disputes.
There’s No Place Like Home
The Homefield Advantage is a phenomenon most commonly observed in sports, particularly baseball and American football. Coaches and players often count on the boost they get from playing on their home turf – whether it’s the comfort of familiar surroundings or the energy and support of the crowd. But this additional support isn’t just for athletes.
A recent study suggests that the Homefield Advantage extends beyond sports arenas and into U.S. federal courts, where it manifests as a better win rate for domestic companies in lawsuits against foreign companies. Courts appear to exhibit a subtle bias due to economic nationalism, or “a preference for domestic welfare enhancement at the expense of foreign interests.”
The Reality of Judicial Independence
In nations with strong judicial independence, like the United States, courts are expected to operate impartially, with federal judges interpreting laws neutrally rather than favouring any party. U.S. federal judges – appointed for life – are often regarded as pinnacles of fairness and justice dedicated to upholding federal laws and the Constitution. But are they?
New research from Prof. Srividya Jandhyala and her co-authors investigates apparent bias in judicial decision-making. By analysing data from 33 years of patent disputes, the study reveals how judges tend to favour domestic firms over foreign ones.
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Role of In-Group Bias and Judicial ideology
This subtle but significant tilt toward domestic firms in judicial rulings raises a compelling question: what drives this bias?
The researchers point to social identity theory, where in-group favouritism leads to restricting opportunities for out-group members. Judges, who are members of nation and share a collective identity, differentiate between in-group (domestic) and out-group (foreign) firms. They choose an interpretation of the law that favours domestic firms over foreign ones, even if the law itself does not discriminate between the two.
The study also uncovers another key factor – political ideology.
Conservative judges, for example, are more likely to favour domestic firms at the expense of foreign competitors. This pattern aligns with broader psychological traits associated with conservatism, such as uncertainty avoidance, resistance to change, a need for order, and heightened security concerns. These tendencies often reinforce a preference for the familiar and the in-group – domestic entities – over the ambiguity and perceived risk associated with foreign firms.
In contrast, judges with liberal political beliefs show a reduced inclination toward such biases. Liberalism, characterized by openness, inclusivity, and egalitarian values, counteracts the effects of economic nationalism. These judges are more likely to render impartial decisions, treating domestic and foreign firms with greater equity.
This interplay between ideology and judicial behavior underscores a deeper reality: even in courts designed to be impartial, personal political beliefs can subtly influence decisions.
Beyond the Bench
Prof. Srividya Jandhyala’s research reveals how economic nationalism and judicial ideology subtly sway rulings, favouring domestic firms over foreign competitors. These findings underscore the human element behind the bench, where personal beliefs and national identity can unconsciously shape decisions.
As the world grows more contested with rising nationalism, populism, and geopolitical concerns, many business disputes will end up in court.
Courts must rise to this challenge, ensuring that justice serves all parties equally — domestic and foreign alike. By embracing ideological diversity and reinforcing impartial practices, the judiciary can help level the playing field and strengthen the fairness of international business law.
Srividya Jandhyala is an Associate Professor of Management at ESSEC Business School Asia-Pacific.
This article was adapted from CoBS Insights.
