Showing papers on "Principal (commercial law) published in 2008"

The Nature and Authority of Precedent

Abstract: Neil Duxbury examines how precedents constrain legal decision-makers and how legal decision-makers relax and avoid those constraints. There is no single principle or theory which explains the authority of precedent but rather a number of arguments which raise rebuttable presumptions in favour of precedent-following. This book examines the force and the limitations of these arguments and shows that although the principal requirement of the doctrine of precedent is that courts respect earlier judicial decisions on materially identical facts, the doctrine also requires courts to depart from such decisions when following them would perpetuate legal error or injustice. Not only do judicial precedents not 'bind' judges in the classical-positivist sense, but, were they to do so, they would be ill suited to common-law decision-making. Combining historical inquiry and philosophical analysis, this book will assist anyone seeking to understand how precedent operates as a common-law doctrine.

Delegation and incentives

Abstract: This article analyzes the relation between authority and incentives. It extends the standard principal-agent model by a project selection stage in which the principal can either delegate the choice of project to the agent or keep the authority. The agent’s subsequent choice of effort depends both on monetary incentives and the selected project. We find that the consideration of effort incentives makes the principal less likely to delegate the authority over projects to the agent. In fact, if the agent is protected by limited liability, delegation is never optimal.

Is OSHA Unconstitutional

Abstract: Under the Occupational Safety and Health Act, the Secretary of Labor is authorized to issue whatever standards are reasonably necessary or appropriate to provide safe or healthful places of employment. More than any other provision in federal regulatory law, this language is subject to a plausible nondelegation challenge, because it seems to ask the Secretary to choose among a wide array of intelligible principles for standard-setting. The constitutional challenge raises serious and unresolved questions for both regulatory policy and administrative law. In answering those questions, courts have three principal alternatives. The most aggressive approach would be to invalidate the statute in the hopes of encouraging, for the first time, sustained legislative deliberation about the proper content of occupational safety and health policy. The most modest approach, rooted in the Avoidance Canon, would be to construe the statutory language to produce floors and ceilings on agency action; that approach would require the Secretary to ban significant risks while forbidding the Secretary from regulating trivial or de minimis risks and also requiring the Secretary to show that any regulations are feasible. The third and preferable approach, also rooted in the Avoidance Canon, would be to construe the statute so as to require the agency to engage in a form of cost-benefit balancing. Such a construction would have the advantage of promoting greater transparency and accountability at the agency level. At the same time, it would raise difficult questions about the precise nature of such balancing in the context of occupational safety policy and also about legal constraints on agency assessment of both costs and benefits. Because of the distinctive nature of workplace safety, the best approach would give the agency considerable flexibility on questions of valuation while also permitting serious attention to distributional factors.

Fairness to Rightness: Jurisdiction, Legality, and the Legitimacy of International Criminal Law

Abstract: This paper investigates the legitimacy of international criminal trials and defends them against objections grounded in the principle of legality. The argument begins with the observation that the center of gravity in international criminal tribunals lies in the trials themselves more than the punishments inflicted. Such often-discussed aims as giving victims a voice or creating a historical record of mass atrocities are goals of the trial process, not the punishment. Often, it is the spectacle of a former leader brought before a court for politically-motivated atrocities that captures the public imagination; the trial itself has a theatrical or didactic component. That is not an objection to the trials, if they are conducted fairly. But the use of the trial as political theater puts pressure on its fairness. This paper argues that the aim of the trials is norm projection: trials are expressive acts broadcasting the news that mass atrocities are, in fact, heinous crimes and not merely politics by other means. The trials are meant to project the message that atrocities are crimes, not political deeds that exist "beyond good and evil," a vision that underlies traditional amoralist concepts of raison d'tat or Kriegsraison. The second principal thesis of the paper is that the legitimacy of the tribunals comes from the fairness of their procedures and punishments, not their political pedigree. The legal and political arguments for the jurisdictional authority of international bodies to establish tribunals are only partly satisfactory, and insufficient on their own to legitimize the tribunals. Tribunals bootstrap themselves into legitimacy by the quality of justice they deliver; their rightness depends on their fairness. The clearest example is the Nuremberg Tribunal. Established by victorious allies with jurisdiction only over the Axis powers, it had to prove that it was no show trial, and the clearest evidence was the acquittals it produced. The final sections of the paper address the concern that international tribunals characteristically violate the principle of legality, in two ways: they are generally established only after the crimes they try are committed, and they sometimes read the law broadly, from a victim-centered point of view, rather than narrowly, as the legality-based rule of lenity in criminal law would require. The paper argues that the two motivating arguments behind the principle of legality - concern about fair notice, and concern about despotic abuse of the power to punish - are less compelling in international criminal law than they are in domestic law. As for the fair-notice rationale: the more horrendous the deeds, the less fairness requires formal notice of potential criminal liability. As for the government abuse rationale: : there is simply much less danger of government abuse in international criminal law than in domestic legal systems, because ICL arises from weak, decentralized institutions rather than strong, concentrated ones. Skeptics point to the free-floating, cosmopolitan character of the tribunals in order to attack their legitimacy. But exactly the same facts demonstrate that the worry about abuses of the legal process by holders of state power is not a powerful one.

Too Many Things to Do: How to Deal with the Dysfunctions of Multiple-Goal Agencies

Abstract: All federal agencies must cope with the challenges of trying to achieve success on the multiple goals laid out for them by Congress, the President, or the public at large. Recent economics and political science literature provides a theoretical framework that helps explain why agencies might succeed in achieving some goals and fail in achieving others: Agencies will systematically underperform on goals that are hard to measure and that conflict with the achievement of other, more measurable goals. While agencies in theory might be able to improve their ability to measure performance through technological and organizational innovation, in many cases agency missions, historical inertia, and the professional orientation of agency staff will interfere with innovation. Principals (such as Congress) have various options to address this problem. Some options focus on changing the agency itself: (1) having the principal take back decision-making authority from the agency; (2) splitting agencies into components that pursue different goals; or (3) mandating that the agency innovate in developing information about undervalued goals. All of these intra-agency efforts have their limitations: Principals only have so much time and energy to make decisions themselves; splitting agencies is often not feasible; and agencies may be resistant to external cultural change. Another range of options involves having another agency monitor the decision-making agency to ensure minimal compliance with performance on one or more goals. This could include having one agency comment on the decision-making agency's performance on an undervalued goal (the agency as lobbyist model) or could extend to having another agency make legally binding determinations about whether the decision-making agency has met minimum standards for that undervalued goal (the agency as regulator model). The more stringent the inter-agency monitoring is, the more effective regulation might be at achieving minimum compliance with undervalued goals, but with the consequence of greatly increasing transaction costs such as litigation. Thus, principals will not only have to trade off agency performance among multiple goals, but will also have to trade off among the various solutions they might try to use to address the problems of multiple-goal agencies.

What is the Rule of Recognition (and Does it Exist)

Abstract: One of the principal lessons of The Concept of Law is that legal systems are not only comprised of rules, but founded on them as well. As Hart painstakingly showed, we cannot account for the way in which we talk and think about the law - that is, as an institution which persists over time despite turnover of officials, imposes duties and confers powers, enjoys supremacy over other kinds of practices, resolves doubts and disagreements about what is to be done in a community and so on - without supposing that it is at bottom regulated by what he called the secondary rules of recognition, change and adjudication. Given this incontrovertible demonstration that every legal system must contain rules constituting its foundation, it might seem puzzling that many philosophers have contested Hart's view. In particular, they have objected to his claim that every legal system contains a rule of recognition. More surprisingly, these critiques span different jurisprudential schools. Positivists such as Joseph Raz, as well as natural lawyers such as Ronald Dworkin and John Finnis, have been among Hart's most vocal critics. In this essay, I would like to examine the opposition to the rule of recognition. What is objectionable about Hart's doctrine? Why deny that every legal system necessarily contains a rule setting out the criteria of legal validity? And are these objections convincing? Does the rule of recognition actually exist? This essay has five parts. In Part One, I try to state Hart's doctrine of the rule of recognition with some precision. As we will see, this task is not simple, insofar as Hart's position on this crucial topic is often frustratingly unclear. I also explore in this part whether the United States Constitution, or any of its provisions, can be considered the Hartian rule of recognition for the United States legal system. In Part Two, I attempt to detail the many roles that the rule of recognition plays within Hart's theory of law. In addition to the function that Hart explicitly assigned to it, namely, the resolution of normative uncertainty within a community, I argue that the rule of recognition, and the secondary rules more generally, also account for the law's dexterity, efficiency, normativity, continuity, persistence, supremacy, independence, identity, validity, content and existence. In Part Three, I examine three important challenges to Hart's doctrine of the rule of recognition. They are: 1) Hart's rule of recognition is under- and over-inclusive; 2) Hart cannot explain how social practices are capable of generating rules that confer powers and impose duties and hence cannot account for the normativity of law; 3) Hart cannot explain how disagreements about the criteria of legal validity that occur within actual legal systems, such as in American law, are possible. In Parts Four and Five, I address these various objections. I argue that although Hart's particular account of the rule of recognition is flawed and should be rejected, a related notion can be fashioned and should be substituted in its place. The idea, roughly, is to treat the rule of recognition as a shared plan which sets out the constitutional order of a legal system. As I try to show, understanding the rule of recognition in this new way allows the legal positivist to overcome the challenges lodged against Hart's version while still retaining the power of the original idea.

Agent permeability, principal delegation and the European Court of Human Rights

Abstract: A growing body of international relations literature examines the delegation of state authority to international organizations. Delegation is a conditional grant of authority from a principal to an agent in which the latter is empowered to act on behalf of the former. This paper explores the effect of agent permeability to interested third parties on the efficacy of control mechanisms established by principals. Our central argument is that higher levels of agent permeability are likely to lead to higher levels of agent autonomy. Because of this, principals who face a potentially permeable agent are likely to delegate more cautiously—partially, in stages, or with clear limits. We illustrate our argument with a case study of the European Convention of Human Rights and its two principal institutions, the Commission and the Court. We find that principals (contracting states) historically delegated quite cautiously to the Court, clearly concerned about the Court's autonomy. Court behavior in its first two decades reassured principals while increasing the Court's permeability. Over time, that increased permeability increased Court autonomy in conjunction with the Court's growing visibility and experience.

Applicable Law In Investor-State Arbitration

Abstract: Investor-State arbitration has seen tremendous growth in the last decade. Most of the cases are administered by the World Bank Group's International Centre for Settlement of Investment Disputes (ICSID) under its constituent Convention or Additional Facility Rules. The principal provisions of the Convention on applicable law are in Article 42(1). The formula "rules of law" rather than "the law" applicable to the merits has since also been adopted for such other instruments as the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration. The bilateral investment treaty (BIT)concerned, in five of the 20 cases, specifically provided that the BIT, general international law principles and host State law should be applied by tribunals constituted in investor-State proceedings under the BIT.Keywords:applicable law; bilateral investment treaty (BIT); ICSID; International Commercial Arbitration; Investor-State arbitration; UNCITRAL

Where are Limited Liability Companies Formed? An Empirical Analysis

Abstract: We empirically study the incorporation choices or, more accurately: formation choice, of limited liability companies. Most of the firms in our large sample of more than 64,000 limited liability companies are formed in the state where their principal place of business is located (the PPB state). As their size increases, however, firms become more likely to be formed outside that state, with Delaware emerging as the primary destination for those that are not formed in the PPB state. In particular, of those firms that have 1,000 or more employees, roughly half are formed outside their home state, and of the latter, more than 80% are formed in Delaware. We show that substantive law matters to the formation choices of closely held limited liability companies. More specifically, limited liability companies appear to be migrating away from those states that offer lower levels of protection for minority investors: We find statistically significant evidence that firms are less likely to be formed in their PPB state if the latter offers relatively lenient rules on managerial liability or if it allows companies to be dissolved via a less than unanimous resolution of the members.

Exploring Explanations of State Agency Budgets: Institutional Budget Actors or Exogenous Environment?

Abstract: Budgetary incrementalism argues that three institutional actors—agencies, executive budget offices, and legislative committees—dominate budget outcomes. The complexity and interdependency of public programs expands this expectation to include the influence of exogenous budget factors. Findings from a survey of state agency heads reveal that budget environments do influence state agency budget outcomes. However, the institutional budgetary participants, especially governors and legislatures, envisioned in classical incrementalism retain their principal and primary influence on state agency budgets. A significant departure from classical incrementalism is that agencies are not as influential as previously depicted.

Cartels, Agency Costs, and Finding Virtue in Faithless Agents

Abstract: Although price-fixing conspiracies are inherently unstable, many cartels manage to endure, often for long periods. Many successful cartels have hierarchical structures made up of high-level executives (principals) and lower-level managers (agents). For these cartels, agency cost theory could provide some insights as to how to destabilize them from within. Agency costs exist when a faithless agent pursues her own interests instead of those of the principal. Although agency costs are generally considered inefficient, when the principal's goals are undesirable, the acts of a faithless agent can be beneficial. Because one traditional approach to reducing agency costs is to align the interests of the principal and agent, this Article argues that antitrust policy should maximize agency costs in cartels by decoupling these interests through several interrelated strategies. First, antitrust law should increase the severity and probability of criminal punishment of individuals who participate in price fixing. Second, antitrust law should reward individuals who expose cartel activity by providing them immunity from all criminal and civil liability and by paying antitrust bounties to such faithless agents. Finally, antitrust law should be structured so that employees of a cartel firm will not trust their employers to protect them should the cartel be exposed. This Article discusses how antitrust law can perform this decoupling function while minimizing any negative consequences of creating distrust within firms. TABLE OF CONTENTS INTRODUCTION I. CARTEL STABILITY II. CARTELS AND THE SOCIAL BENEFITS OF AGENCY COSTS A. Agency Costs, Faithless Agents, and Unworthy Principals B. Agency Relationships Within Cartels C. Examples of Faithless Agents in Cartels D. The Wisdom of Targeting Agents E. Aligned Interests: Cartel Employees' Incentives To Be Faithful Agents III. DECOUPLING INTERESTS FROM THE AGENT'S PERSPECTIVE A. Punishing the Faithful Agent B. Rewarding the Faithless Agent 1. Individual Leniency Program 2. Private Liability 3. Antitrust Bounties C. Rewarding Disloyal Principals D. Educating the Agents 1. Antitrust Education and Overcoming Social Norms Within Cartels 2. Education as a Decoupling Device a. Penalties b. Firms' Incentives To Sell Out Employees c. Individual Leniency Policy d. Probability of Detection 3. How To Educate Agents a. Antitrust Compliance Programs b. Presentations at Trade Association Meetings IV. DECOUPLING INTERESTS FROM THE PRINCIPAL'S PERSPECTIVE: GETTING EMPLOYERS TO DISTRUST EMPLOYEES A. The Risk of Faithless Agents Increases Cartel Costs B. Preemptive Confession by Cartel Firms V. THE POTENTIAL DOWNSIDES OF CREATING DISTRUST WITHIN FIRMS A. Distrust and Inefficiency B. False Accusations of Price Fixing CONCLUSION INTRODUCTION Federal antitrust authorities had long suspected that the world's two leading auction houses--Christie's and Sotheby's--were engaging in illegal collusion, but they lacked proof. (1) The auction houses had traditionally made the bulk of their money by charging a buyers' commission, whereby the successful bidder in each auction would pay a premium to the auction house above and beyond the winning bid. (2) Historically, each rival competed to lure sellers who had attractive, high-end items to use its auction services, in the hope that such items would lead to frenzied bidding and, consequently, higher commissions from buyers. But in 1995, both auction houses ceased their fierce competition when each announced a new policy of non-negotiable sellers' commission rates. (3) Federal officials suspected collusion, but their investigation yielded insufficient evidence. All seemed lost until Christie's did the previously unimaginable: It presented the authorities with a cache of approximately 500 pages of documents, mainly handwritten notes, from its former CEO that detailed his illegal meetings with his counterpart at Sotheby's and outlined a criminal conspiracy between the firms even greater in scope than previously suspected. …

Moral Hazard With Unawareness

Abstract: The article introduces unawareness of actions into the standard moral hazard model in contract theory. We allow the contracting party (the principal or the agent) to be unaware of his or the other party's actions. The principal may also have an incorrect belief about the awareness of the agent. We provide a solution concept where the principal contemplates the incentive scheme according to his conjecture of the agent's mind and also contemplates informing the agent through the contract. In the post-contractual stage, either party may be surprised by the other party's action. Finally, we analyze the value of awareness for each party, and present the negative result that awareness is not always valuable.

The Market for Legal Innovation: Law and Economics in Europe and the United States

Abstract: There have been a large number of innovations in legal scholarship in the U.S. legal academy over the past 25 or so years and very few from legal scholars in other parts of the world. For instance, because both of us work in the area of law and economics, we were both acutely aware of the large differences 1 We are grateful to Lee Fennell, Oren Gazal-Ayal, Tom Ginsburg, Aristides Hatzis, Richard McAdams, Steven Medema, Nicholas Mercuro, Larry Ribstein, Daria Roithmayr, Stephen Ross, Hans-Bernd Schafer, and Justice Robert Steigmann for comments on earlier drafts and to participants at workshops at the University of Illinois College of Law, the Comparative Law and Economics Forum, the University of Pompeu Fabra, the Graduate College of Law and Economics of the University of Hamburg, the Faculty of Law at the University of Ghent, the Faculty of Law at the University of Haifa, the Faculty of Law at the University of Ljubljana, the 2005 Annual Meeting of the Israeli Law and Economics Association, the 2005 Annual Meeting of the Asian Law and Economics Association, the Faculty of Law at the University of Rotterdam, the Faculty of Law at the University of Nancy, the Faculty of Economics at the University of Paris-Nanterre, the Faculty of Law at the University of Amsterdam, the Instituto de Empresa (Madrid), the Cercle de Lorraine in Brussels (DCH/Horsmans), the Lisbon Discussion Group in Public Policy and Institutions for their invitations to speak and for the valuable comments of the participants. We would also like to thank Assuncao Cristas, Ben Depoorter, Gerrit de Geest, Bertrand du Marais, Samuel Ferey, Fernando Gomez-Pomar, Hank Greeley, Stefan Grundmann, Aristides Hatzis, Dirk Heremans, Hein Koetz, Dennis Khong, Russell Korobkin, Pedro Magalhaes, Francisco Marcos, Wolfgang Oehler, Anthony Ogus, Ariel Porat, Maria Alessandra Rossi, Pablo Salvador, Eli Salzberger, Kyung Soon Song, Gerhard Wagner, and Omri Yadlin for their discussions with us about these matters. Nuno Garoupa acknowledges financial support by Nova Forum and FCT, POCI/JUR/55752/2004. We would like to thank Danieli Arbex, Ted Ulen, and Ariel Yehezkel for marvelous research assistance. 2 Professor of Law and Economics, School of Economics and Management, New University of Lisbon; Research Affiliate, FEDEA, Madrid, and Research Affiliate, CEPR, London. B.A., Universidade Nova de Lisboa; M.Sc., Queen Mary College, UK; LL.M., University of London; Ph.D., University of York. 3 Swanlund Chair, University of Illinois at Urbana-Champaign; Professor of Law, University of Illinois College of Law; and Director of the Illinois Program in Law and Economics. Market for Legal Innovation Garoupa & Ulen 2 in the receptivity to law and economics as between the U.S. and Europe. The U.S. legal academy has generously embraced law and economics (and some other legal innovations), while Europe (and the rest of the world) has not. Why has the U.S. led the world in the production and adoption of legal scholarly innovations? This Article seeks to answer that question generally and with particular reference to law and economics. In Part II we deal with two definitional issues—what we mean by a “legal innovation” and what counts as “law and economics.” The scholarly innovations on which we focus are new methods of looking at many areas of the law, such as feminist jurisprudence, or the articulation of the principles and boundaries of an entire new area of law, such as elder law. By “law and economics,” we mean the application of economic analysis to any of the area to which its application would not be obvious. Then in Part III we offer a series of anecdotes and empirical studies designed to show that law and economics is much more prominent in U.S. legal scholarship than in European legal scholarship. We then seek, in Part IV, explanations for the differences between the U.S. and European legal academies in their production and adoption of legal scholarship innovations generally and with respect to law and economics particularly. Our central claim is that it is the competitiveness of higher and legal education that is the principal explanation for the scholarly innovativeness of the U.S. and the lack of competition (and the consequent lack of an incentive to innovate) in European higher and legal education that explains the differences. We further hypothesize that the production and adoption of law and economics are attractive only to those who have experienced a prior legal scholarly innovation— legal realism. We draw a clear line of intellectual heritage from legal realism to law and economics. Before settling on competition and legal realism as the principal explanations for the production and adoption of legal scholarship innovations, we canvass (and reject) a large number of alternative explanations, such as political ideology, money, the differences between common and civil law systems, the structure of legal education, and more. In Part V we draw a connection between the standard economic theory of innovation and diffusion and our observations in the prior four sections of the Article. That economic theory of innovation and diffusion identifies three factors—demand, supply, and market structure—as determining the presence and pace of innovation and diffusion. We relate each of those factors to observable differences between the U.S. and Europe, showing that our explanation of the production and adoption of legal scholarly innovations follows the same factors as does the economic theory of innovation in production techniques. Market for Legal Innovation Garoupa & Ulen

Mere Children or Weapons of War - Child Soldiers and International Law

Abstract: This article discusses the current situation under international law relating to Child Soldiers in three principal areas: 1) How international law prohibits and/or restricts the recruitment of the Child Soldier; 2) How international law criminalizes the recruitment of the Child Soldier; and 3) How international law deals with and/or criminalizes the actions of the Child Soldier.

Reforming Complicity Law: Trivial Assistance as a Lesser Offense?

Abstract: American accomplice law is a disgrace. It treats the accomplice in terms of guilt and, potentially, punishment, as if she were the perpetrator, even when her culpability is often less than that of the perpetrator and/or her involvement in the crime is tangential. The subject of accomplice liability has received little scholarly attention in the United States except, coincidentally, for a flurry of intellectual activity in the mid-1980s. One of these articles, my own, proposed reform of complicity law in the form of what may be characterized as the "causation approach." The thesis of that article was that the criminal law fails to adequately distinguish between accomplices who are critical parties in a crime and those whose involvement is trivial. To alleviate this problem, the article recommended a statutory distinction between "causal" and "non-causal" accomplices: causal accomplices (persons but for whose assistance the offense would not have occurred) could continue to be convicted of the offense committed by the principal; non-causal accomplices would be convicted of a lesser offense and punished accordingly. In this article I consider Professor Kadish's approach to complicity, which sees no place for causation in the analysis, and other criticisms directed at the causation approach. I argue here that, notwithstanding the criticisms, the causation approach to accomplice liability is conceptually justifiable and would still make for good legislative reform. However, the causation approach, although preferable to current law, does not go far enough to distinguish between parties and does not express community sentiment as well as it could. Therefore, I now suggest variations on the causation approach, which would also result in a more just system than the present one.

Croatia’s computer laws: promotion of growth in E-commerce via greater cyber-security

Abstract: Croatia’s Electronic Signature Act (“ESA”) was enacted in 2002. The ESA is third-generation and provides for legal recognition of all types of E-signatures, but gives preferred status to the digital signature. The ESA provides for regulation of Certification Authorities (“CA”), who may voluntarily elect to become accredited if they are able to comply with stringent financial and technical requirements. The principal duties of CA’s are to: issue certificates to successful applicants; confirm the authenticity and integrity of E-signatures to relying third parties; maintain a repository of certificates which may be accessed by the public; and cancel a certificate if any information contained therein is discovered to be inaccurate. The ESA covers legal liability of CA’s and punitive measures which may be taken against them if they violate the ESA. The Electronic Document Act (“EDA”) was enacted in 2005. The EDA specifies how an E-document can be used to comply with a statutory requirement for production of a paper document or an original document. The EDA also creates a legal presumption of admissibility of evidence in electronic form, and contains rules pertinent to assumed time/place of transmission/receipt of an E-message. The EDA covers liability of Internet service providers and specifies several computer crimes. The Electronic Commerce Act (“ECA”) was enacted in 2003. The ECA provides for basic E-contract rules, basic regulation of E-commerce sellers, and basic consumer protections of E-commerce buyers. Although it was a satisfactory first-step, the ECA needs to be fine-tuned with the following modifications: (1) add E-contract attribution rules; (2) improve the E-contract acknowledgement-of-receipt rules; (3) add E-contract rules for carriage contracts; (4) strengthen the consumer protections of E-commerce buyers; (5) establish information technology courts for resolution of E-commerce disputes; (6) add cybersuite provisions; and (7) add explicit long-arm jurisdiction over foreign E-commerce sellers.

Oil on troubled waters? The slippery interface between the contract of employment and statutory labour law

Abstract: This article examines the underlying relationship between the contract of employment and statutory labour law, which together constitute the essence of individual labour law (or 'employment law', to use the more common international term). It argues that in South Africa contract and statute have become inextricably intermingled, resulting in a growing number of ambiguities and a confusing overlap and / or competition between statutory and contractual rights and remedies. It is further argued that the trend towards the establishment of two parallel regimes-one based on statute and the other on common law - has been given added momentum by the judgment in Old Mutual Life Assurance Co SA Ltd v Gumbi (2007) 28 ILJ 1499 (SCA). The article explores possibility of a more consistent articulation between the two principal regulators of the employment relationship, based on the underlying constitutional rights.

Stretching the Boundaries of Commission Liability The ICTR Appeal Judgment in Seromba

Abstract: In March 2008, the International Criminal Tribunal for Rwanda (ICTR) Appeals Chamber advocated in Seromba the general applicability of an approach, already propounded in previous judgments, which considerably broadens the notion of commission. It held that ‘committing’ is not limited to physical perpetration, thus implying that customary international law recognizes other forms of commission liability, which are distinct from joint criminal enterprise. As a result, the Appeals Chamber reversed the Trial Chamber's decision and held that Father Athanase Seromba's role in the massacre of April 1994 in the Nyange parish was not that of an aider and abetter, but rather of a principal perpetrator. While clearly motivated by the intent to impose an exemplary sentence on Seromba, the Appeals Chamber's reasoning lends itself to a number of objections.

Introduction to International Humanitarian Law

Abstract: International Humanitarian Law (IHL) is that portion of international law which is inspired by considerations of humanity. It aims to minimize the suffering of those not, or no longer, taking part in hostilities and to render the fighting more humane by restricting the use of barbaric weapons. Although the origins of contemporary IHL can be traced back to the nineteenth century, it is based on principles and practices which are much older. The two principal sources of IHL are the Hague and Geneva Conventions, the former setting out restrictions on the means and methods of warfare and the latter providing protection to certain categories of vulnerable persons. It is generally accepted that a large portion of the principles permeating IHL reflect customary international law and, in some cases, peremptory law (jus cogens). As such, it is binding on all States, irrespective of whether they have acceded to the relevant treaties. Although IHL has made a difference in protecting vulnerable individuals and restri...

Obedience as the Foundation of Fiduciary Duty

Abstract: I. INTRODUCTION Commentators, both doctrinal and theoretical,1 have come to agree that the fiduciary relationship rests on twin pillars, the duty of care and the duty of loyalty. This paper argues that a third duty, obedience, is more basic, the foundation on which the duties of care and loyalty ultimately rest. In place of the prevailing dualistic theory of fiduciary duty, it offers a trinitarian alternative. As in traditional trinitarianism, the claim here is that, properly understood, three identifiably different elements are, essentially, one. In that sense, fiduciary trinitarianism is, to shift metaphors from theology to physics, a unified field theorem of fiduciary duty. As in physics, the theory offered here takes up a double challenge: to explain more data-in this case, more legal doctrine and social policy-more simply. The ideal, here as there, will be to reduce all the relevant phenomena to a single, unifying principle. Physicists have yet to name their fundamental force; in the fiduciary relationship, it is the agent's duty to obey the will of the principal.2 Obedience to that will is the source not only of the duties of care and loyalty, but also of a peculiar but widely ignored obligation. This is the duty of private and charitable trustees to follow the directions of principals who are dead, a duty that gives principals what is known in Anglo-American law as dead hand control. As we shall see, this peculiar obligation occurs outside the principal scope of the prevailing dualist theory. That theory, largely economic in its method, has tended to focus on for-profit organizations, particularly business corporations, and to assimilate other fiduciary relationships, especially private trusts and charitable organizations, to the corporate model. This paper reverses that process of analysis. It shows how a close examination of the law of trusts, charitable as well as private, throws useful light on the law of corporations, both for-profit and nonprofit. Trinitarian theory accounts for both the presence of dead hand control in private and charitable trusts and its absence in business organizations. Part II identifies the duty of obedience in three basic steps. First, and most importantly, it shows how the duty of obedience underlies the duties of care and loyalty. Next, it distinguishes two forms of the duty of obedience, the strong and the weak. The strong form of the duty of obedience is dead hand control, the legally enforceable duty of living fiduciaries to follow the dictates of principals who are no longer alive. The weak form of the duty of obedience, on the other hand, is, essentially, nothing more than the ordinary law of contracts and agency. Under that law, private parties may impose obligations enforceable after their deaths both by and on behalf of surviving private parties, but neither by nor on behalf of the decedents themselves. With the weak form of the duty of obedience, in other words, the dead can pass control of property on to others, but the dead cannot take that control with them. Finally, Part II locates these two forms of the duty of obedience, the strong and the weak, in four kinds of fiduciary relationships: for-profit corporations, private trusts, charitable trusts, and charitable corporations.3 Each organizational form, we shall see, sheds important light on the others. In its weak form, the duty of obedience is universal in-indeed, essential to-all fiduciary relationships. In its strong form, by contrast, the duty of obedience is far from ubiquitous. It is found in the Anglo-American law of private trusts and charitable trusts, but not in the Anglo-American law of for-profit corporations. As a supposed corollary of charitable trust law, charitable corporation law sometimes includes a "strong" duty of obedience; American authorities are seriously divided on this point. To resolve this dispute, we have to turn from descriptive to normative analysis, from identifying to evaluating the strong form of the duty of obedience. …

Repeated Moral Hazard, Limited Liability, and Renegotiation

Abstract: We consider a repeated moral hazard problem, where both the principal and the wealth-constrained agent are risk-neutral. In each of two periods, the principal can make an investment and the agent can exert unobservable effort, leading to success or failure. Incentives in the second period act as carrot and stick for the first period, so that effort is higher after a success than after a failure. If renegotiation cannot be prevented, the principal may prefer a project with lower returns; i.e., a project may be "too good" to be financed or, similarly, an agent can be "overqualified."

The conclusion of contracts by software agents in the eyes of the law

Abstract: Faced with the ongoing evolution of software agents from mere passive tools to e-tailers acting autonomously for their human owners (principals), new legal challenges appear on the agenda. One of them is the question, whether the traditional law of agency that regulates the legal issues arising from human agents constituting legal relations between their principal and a third party, is applicable for software agents as well.Based on the characteristics of software agents this paper examines approaches for a legal classification of software agents and thereby analyzes current legislation that deal with the conclusion of contracts by software agents. Finally, this paper addresses remaining legal questions and discusses proposed solutions.

Toward Participatory Equality: Protecting Minority Rights under International Law

Abstract: The principal claim made by this Article is that the realization of full and effective equality for all citizens and residents within a multi-ethnic state requires “participatory equality.” Creating a system of participatory equality entails, for most states, making drastic and fundamental changes to the state's legal system, public spaces, social and economic structures, and funding and space provided for ethnic, cultural, and religious institutions; however, this type of transformation is the only means of respecting human dignity and ensuring peace. This claim is first made as a normative moral claim based on principles of justice and dignity; as this Paper will show, a broad and effective interpretation of international law concerning minority rights supports the same normative claim.This Article first reviews existing international law and other legal frameworks regarding national minority rights, including discussions of the specific case of indigenous peoples'rights and the intersection between individual and collective rights. The bulk of the Paper proposes a universal model, building upon existing legal frameworks, for building participatory equality for all members of a society, which requires the full and equal sharing of its resources in three primary domains: the public, the internal, and the historical domain. The need for such a model is all the more so for indigenous and minority groups of substantial size living under systems that cater to a majority based on ethnicity, religion, race or other dominant traits. Only when a nation's legal system secures the rights of all citizens to share equally in all of these domains can that nation fulfill the purpose of international minority rights legal bodies and deliver substantive equality to majority and minority concerns, both in law and practice.

The Fiduciary Obligation as the Adoption of Ends

Abstract: Contractualist scholars advance a theory of fiduciary duties as implied contract. Fiduciary duties are viewed as terms to which the parties would have agreed if they had the time and inclination to bargain. Contractualists maintain that when costs of bargaining specification and monitoring are high, courts imply particular terms and call them fiduciary duties, but actual terms trump implied terms. While it is true that many fiduciary duties can be waived or modified, this Article claims that the contractual approach is incomplete. The contractual approach can neither predict when fiduciary duties arise nor account for the mandatory rules that characterize fiduciary law, dismissing them, instead, as trivial. After critiquing the contractual model, this Article proposes a positive account of fiduciary duties based on Kant's description of duties of ethics and imperfect duties. Imperfect duties do not entail specific conduct that can be externally enforced; they require instead that the agent adopt goals, objectives, or ends. The fiduciary duty can best be described as an obligation by the fiduciary to adopt the principal's objectives. The Article demonstrates that leading fiduciary cases, as well as questions regarding when certain fiduciary duties arise, can best be understood within the framework of the fiduciary obligation as a duty to adopt the principal's ends as opposed to the framework of contract.

Repeated Moral Hazard, Limited Liability, and Renegotiation

Abstract: We consider a repeated moral hazard problem, where both the principal and the wealth-constrained agent are risk-neutral. In each of two periods, the principal can make an investment and the agent can exert unobservable effort, leading to success or failure. Incentives in the second period act as carrot and stick for the first period, so that effort is higher after a success than after a failure. If renegotiation cannot be prevented, the principal may prefer a project with lower returns; i.e., a project may be "too good" to be financed or, similarly, an agent can be "overqualified."

Guarding the Fiduciary's Conscience—A Justification of a Stringent Profit-stripping Rule

Abstract: This article argues that considerations of moral psychology support the traditional stringency of the rule according to which fiduciaries who get involved in a potential conflict of interest shall be stripped of all their gains. The application of the rule, regardless of good faith on the part of the fiduciary, is being contested by courts and academia alike. The article is focused on the ‘deterrence’ justification for the rule, and argues that its unusual strictness should be read as a response to a substantial risk of conscious-silencing self-deception. Given the knowledge gap between them, the principal is very much dependent on the fiduciary's personal integrity but, in the grip of self-deception, the fiduciary's inner checks break down so that manipulative transactions are approved as harmless ones. Two distinctive features of the fiduciary relationship increase the chances that even a professional and virtuous fiduciary will be moved by self-deception to misapprehend the harm which a conflict of interest might cause to the principal: first, the wide discretion in the application of the fiduciary's duty to specific situations; and, second, the power gap between the fiduciary and the principal which enhances the temptation to exploit the fiduciary's position. This risk can only be averted by the more stringent version of the rule, as it is only by preventing the fiduciary from ever considering the legitimacy of a specific conflict of interest that we can hinder the process of reflection which is so prone to being subverted by self-deception.

Reconstructing Insurance Law:The Law Commissions' Consultation Paper

Abstract: In July 2007 the English and Scottish Law Commissions published the consultation paper Insurance Law – Non-disclosure and Breach of Warranty (hereafter LCCP) which sets out in detail the Commissions' provisional proposals for the reform of insurance contract law with particular reference to the key areas of utmost good faith, warranties and agency. This article analyses, from a critical standpoint, the LCCP's principal conclusions and recommendations. It begins by noting, as a means of demonstrating that the current reform process should be informed by modern industry practices, that the ways in which modern insurance contracts are concluded differ significantly from those when insurance law was last reviewed by the Law Commission in 1980. The article then discusses the dichotomy between consumer and business insurance given that this distinction underpins the LCCP and its approach towards reforming the pre-contractual duty of good faith. By way of backdrop to the analysis, we consider the approach taken towards reforming the law governing intermediaries acting for prospective assureds during the disclosure process. Finally, the proposed rules for warranties and similar terms are examined. It is argued that the proposal to retain continuing warranties in business insurance contracts will, if implemented, represent a missed opportunity to rid insurance contracts of terms long criticised as draconian and disproportionate in their effect

Impartial contract-engineeering in real estate transactions : the Swedish broker and the Latin notary

Abstract: Even in the days of an ever closer European union, Europe contains no less than four different legal cultures with respect to real estate conveyances: the Latin-German notary system, the deregulated Dutch notary system, the lawyer/solicitor system, and the Scandinavian licensed real estate broker system. The latter is of particular interest in that Scandinavian brokers play a far larger role in real estate transactions than their European counterparts. This paper examines and compares the Swedish real estate broker and the Latin notary. The Swedish broker is required by law to act as an impartial intermediary, to provide counseling to both parties, and to assist in drawing up all contracts and other documents necessary for the transaction at hand. To that end, the broker must be active and observant of the particular needs of the parties to the present transaction, always striving to enable them to reach equitable and practical agreements so as to prevent future disputes. In other words, the broker is required to tailor the transaction to fit the needs of the buyer and seller. The Latin notary profession prevails in large parts of the world, particularly the Latin-German parts of continental Europe, and Latin America. While there are divergences in the notarial laws of all countries, the similarities are greater still, and it is correct to speak of a single profession throughout all these countries. The notary carries out several important functions, the nexus of which is the authentication of legal documents. In the preparation of these documents, the notary is required to provide impartial counseling in order to tailor the transaction at hand to fit the will and needs of the parties. To uphold the integra fama of the profession, and to safeguard the proper performance of the notarial functions, lawgivers in all countries emphasize the importance of impartiality and integrity. There are national divergences as to the specific rules of conduct related to impartiality, particularly those concerning what activities are considered incompatible with the notariat, but they rest on common principles. Most importantly, not only must the publica fides be honored, it must be seen in the eyes of the public to be honored. The organization and regulation of the notary profession raises important economic issues, particularly with regard to competition/monopoly and market failures. The discussion of the regulation or deregulation of the notariat is by no means settled. Comparing the two professions, it is striking to see the enormous similarities in the legal frameworks and their respective rationales. Two common features are of particular interest. Firstly, both the Swedish broker and the Latin notary are required to assist the contracting parties in the contract phase, drawing up any necessary documents and counseling the parties as to the implications of the transaction. In that respect, both professions function as tailors to the transaction. Secondly, both the broker and the notary are required to act impartially and independently – impartially visavi the contracting parties, and independently in order to preserve the public faith in the independence and integrity of the professions. The similarities can be summarized as a function on the real estate market: impartial counseling and contract-engineering. This function exists alongside other functions, such as the brokers’ traditional matchmaking, or the registration of property rights. This functional approach may prove very useful in all kinds of analyses of the real estate market, whether of political, legal, or economic nature. For instance, with respect to the merits and/or necessity of the Swedish impartiality rule, those wishing to amend the law and introduce a system of overtly partial brokers acting solely on behalf of their principal have to face the question of what is to become of counseling for the principal’s counterpart. Should the counterpart be forced to choose between hiring their own legal counsel or make do without? Further, those wishing to contest the mandatory notarial intervention in real estate transactions have to face the same question: what is to happen to impartial counseling, given not only to the client but also to the client’s counterpart? Both instances illustrate the common feature shared by the two examined professions: impartial contract-engineering and counseling. To complete the picture and cover the whole arena of real estate transactions, the next logical step is therefore to compare and analyze different systems for registration of property rights. Doing so will hopefully achieve a tool for examining the real estate market that will prove useful indeed, particularly in future discussions concerning European harmonization.