The diamond industry has rejected state law in favor of private governance.

Evidence

Unlike the situation in many other industries, however, diamond industry disputes are resolved not through the courts and not by the application of legal rules announced and enforced by the state. The diamond industry has systematically rejected state-created law. In its place, the sophisticated traders who dominate the industry have developed an elaborate, internal set of rules, complete with distinctive institutions and sanctions, to handle disputes among industry members. — Lisa Bernestein, Opting out of the Legal System, 7

Categorization

• ADDENDUM: Parallels the theme of alternative governance and extralegal exchange systems; connects to how communities opt out of formal institutions, a complement to the grafted/sacrifice pieces’ interest in informal social ordering.

Related

• Diamond industry norms persist regardless of national legal systems. (similarity 0.83)
• Similar private diamond norms persist across countries with different legal systems, suggesting market efficiency. (similarity 0.82)
• Transaction costs do not explain the diamond trade’s extralegal contracts. (similarity 0.80)
• Pre-arbitration conciliation resolves most diamond-industry disputes. (similarity 0.80)
• Transaction costs alone cannot explain the diamond industry’s rejection of legal contracts (similarity 0.79)
• Diamond industry’s private law succeeds by enforcing judgments faster than courts. (similarity 0.79)
• The diamond trade sustains an extralegal contractual regime through private arbitration and reputational enforcement. (similarity 0.79)