Showing papers on "Principal (commercial law) published in 2012"

Towards a Social Theory of Agency

Abstract: We challenge critics of agency theory who suggest that agency theory's value does not extend outside a narrow context dominated by egocentric agents seeking only to maximize wealth at the expense of the principal. Instead, we argue that agency theory's flexibility allows for its application to a variety of non-traditional settings where the key elements of agency theory, such as self-interest, information asymmetry, and the mechanisms used to control agency costs can vary beyond the narrow assumptions implied in traditional agency-based research. We suggest that extending agency theory to diverse settings using a deductive approach can be accomplished by formally recognizing and incorporating the institutional context surrounding principal–agent (P–A) relations into agency-based models. Thus, criticisms that agency theory fails to acknowledge the social context in which P–A relations occur provides not a barrier but an opportunity for extending our understanding of P–A relations to a variety of diverse contexts.

Has Agency Theory Run its Course?: Making the Theory more Flexible to Inform the Management of Reward Systems

Abstract: Manuscript Type Conceptual Research Question/Issue In this paper we discuss three assumptions of agency theory: (1) conflicts of interest between principal and agent, (2) nature of risk, and (3) the proposed internal mechanisms to reduce agency costs. We review criticisms of agency theory's pessimistic assumptions of human behavior and its simplistic view about individual risk preferences to argue how the context may influence both the interest and mechanisms for aligning interest of principals and agents. Research Findings/Insights We draw on alternative theoretical perspectives from behavioral and organizational sciences to describe circumstances under which honesty, loyalty, and trust in agents' behaviors are possible and also the development of cooperative rather than contentious relationships. Theoretical/Academic Implications This study explores the boundary conditions of traditional agency theory in the hope of extending agency theory outside its current contextual boundaries. In doing so, we provide a more robust and exhaustive view of the economic exchange between principals and agents. Practitioner/Policy Implications This study offers insights to managers about how intrinsic incentives may provide an alternative mechanism of control over agents' behavior to extrinsic incentives prescribed by traditional agency theory. Indeed, intrinsic incentives of personal satisfaction and identification with organizational objects, combined with implicit social obligations and reciprocity may, under certain circumstances, provide stronger restraints on agent opportunism than the use of traditional extrinsic rewards in the form of incentive alignment.

The Law of Cyber-Attack

Abstract: Iran’s nuclear program grinds to a halt, the subject of a sophisticated computer attack that sent centrifuges spinning wildly out of control. A “distributed denial of service” attack takes the entire population of Burma offline immediately before the country’s first national election in twenty years. China’s military mounts an attack on a Falun Gong Web site based in Alabama. What law regulates these “cyber-attacks”? Does the law of war apply? If not, what other bodies of law might help address the problem? This Article examines these questions and, in the process, offers new insights into how existing law may be applied—and adapted and amended—to meet the distinctive challenge posed by cyber-attacks. It does so in two principal ways. First, the Article clarifies what cyber-attacks are and how they relate to existing bodies of law, including the law of war, recent international efforts to directly regulate cyber-attacks, international bodies of law that may be used to indirectly regulate cyber-attacks, and domestic criminal law. Second, the Article shows how existing law is deficient and what needs to be done to improve it. Although existing bodies of law do offer some tools for responding to cyber-attacks, these tools are far from complete or adequate. The law of war, for example, provides a useful legal framework for only the very small slice of cyber-attacks that amount to an armed attack or that take place in the context of an ongoing armed conflict. Other existing legal frameworks—both domestic and international—offer equally fragmentary assistance in addressing cyberattacks through law. Examining existing law leads to a clear conclusion: A new, comprehensive legal framework is needed to address cyber-attacks. That framework includes a more robust system of domestic enforcement, but a truly effective solution to this global challenge will require global cooperation. This Article thus outlines the key elements of a cyber-treaty that would provide a more comprehensive solution to the emerging threat of cyber-attacks.

What is Sports Law

Abstract: “What is sports law” is a question often asked by students, academics, lawyers and lay persons. The person attempting to respond often searches in vain for a response that is cogent and demonstrates some modicum of understanding of “sports law.” Perhaps the difficulty in articulating a response is, in part, a result of uncertainty related to what information is being sought. Is the “what is sports law” query intended to focus our attention on the content of the practice of sports law? In other words, which substantive areas of practice fall under the rubric of sports law? Specifically, is the role of the sports lawyer intended as the principal focus of the question? In this regard, perhaps what is sought is information concerning the range of services provided by the attorney who practices in the sports law context. Finally, perhaps the person who asks “what is sports law” seeks an answer to a more fundamental consideration—does such a thing as sports law exist? In other words, is sports law recognized as an independent substantive area of the law such as torts, contracts or employment law?

Agency Theory, Institutional Sensitivity, and Inductive Reasoning: Towards a Legal Perspective

Abstract: Making agency theory institutionally sensitive is a reasonable suggestion, as far as normal science stands. However, we argue that such a move has already been taking place, that it cannot address important problems with agency theory, and that the time is ripe for a critical re-examination of this theory. We suggest that inductive studies can not only be more sensitive to institutional features than deductive studies, but they can also offer deeper understanding of governance practices in specific contexts, as well as the potential for analytical or moderatum generalizations. Drawing from legal theory, we offer an alternative conception of the principal, and of the role and status of the board of directors. We contend that this reformulated agency theory has a greater potential of being institutionally sensitive because it recognizes various stakeholders as team members, rather than just adding specific institutional features as variables to the dominant conception of agency theory.

Beyond Employment: The Legal Regulation of Work Relationships

Abstract: Australian labour law, at least from the mid-twentieth century, was dominated by the employment paradigm: the assumption that labour law’s scope was the regulation of employment relationships –full-time and part-time, and continuing, fixed term or casual – with a single (usually corporate) entity employer. But no sooner had the employment paradigm established and consolidated its shape, it began to fall apart. Since the 1980s there has been a significant growth of patterns of work that fall outside this paradigm, driven by organisational restructuring and management techniques such as labour hire, sub-contracting and franchising. Beyond Employment analyses the way in which Australian labour law is being reframed in this shift away from the pre-eminence of the employment paradigm. Its principal concern is with the legal construction and regulation of various forms of contracting, including labour hire arrangements, complex contractual chains and modern forms like franchising, and of casual employment. It outlines the current array of work relationships in Australia, and describes and analyses the way in which those outside continuous and fixed term employment are regulated. The book seeks to answer the central question: How does law (legal rules and principles) construct these work relationships, and how does it regulate these relationships? The book identifies the way in which current law draws the lines between the various work relationships through the use of contract and property ownership, and describes, analyses and synthesises the legal rules that govern these different forms of work relationships. The legal rules that govern work relationships are explored through the traditional lens of labour law’s protective function, principally in four themes: control of property, and the distribution of risks and rewards; maintenance of income security; access to collective voice mechanisms, focusing on collective bargaining; and health, safety and welfare. The book critically evaluates the gaps in the coverage and content of these rules and principles, and the implications of these gaps for workers. It also reflects upon the power relationships that underpin the work arrangements that are the focus of the book and that are enhanced through the laws of contract and property. Finally, it frames an agenda to address the gaps and identified weaknesses insofar as they affect the economic wellbeing, democratic voice, and health and safety of workers.

The Treaty-Making Work of the Legal Committee of the International Maritime Organization

Abstract: The Legal Committee of the International Maritime Organization (IMO), or the Inter-governmental Maritime Consultative Organization (IMCO), as it was originally known, traces its beginnings to the 1967 Torrey Canyon incident. The purpose of this essay is to examine the treaty making work of the Legal Committee. While the main focus of its work has been to provide internationally applicable rules governing liability and compensation of shipowners, over the course of its history, stretching back more than 40 years, it has tackled other aspects of maritime law. The aim of this essay has been to trace the evolution of the Legal Committee from its humble beginnings, as an ad hoc body operating under the auspices of the IMO Council, to one of the principal committees of the Organization. The Legal Committee has largely completed its work of developing comprehensive rules for liability and compensation for maritime claims. Keywords:International Maritime Organization; Legal Committee; Maritime Consultative Organization; Torrey Canyon

Navigating EU Law and the Law of International Arbitration

Abstract: The European Union and international arbitration are two robust legal regimes that have managed to develop largely in accordance with their own respective ‘first principles’, and they have accordingly thrived. This article initially explains why that has been the case. But the era of parallelism between the regimes has ended, and rather suddenly. This article identifies the two principal fronts on which tensions between EU law and international arbitration law have emerged. Interestingly, both commercial and investment arbitration are implicated. A first front entails a conflict between the European Court of Justice's (ECJ's) expansive notions of EU public policy and two well-established axioms of international commercial arbitration law: first, that public policy must be construed narrowly when invoked as a ground for annulling an award or denying it recognition and enforcement; and second, that parties in arbitration are expected to raise all substantive arguments pertinent to their claims or defences in the course of the arbitral proceedings and not reserve them for post-award relief from a disappointing award. A second front finds EU Member States invoking their obligations under EU law as a defence – sometimes jurisdictional, sometimes substantive – in investor-State tribunals. The paradigm argument is that EU law mandates withdrawal of an illegal state aid in reliance on which an investor entered that market. This article examines two prevailing methodologies for addressing these tensions, in arbitral tribunals themselves as well as in reviewing courts. It concludes that many such tensions – particularly those along the first front – may be resolved through accommodation techniques well-established in other areas of the law. Others, particularly those arising in the investor-State context, resist resolution in that way and are requiring decision-makers to face the uncomfortable prospect of making one of these legal regimes cede ground to the other. The ECJ and investor-State tribunals are understandably inclined to prioritise the regimes differently, with the ultimate outcome falling to member state courts which owe allegiance to both regimes.

Can Agent Cheap Talk Mitigate Agency Problems in the Presence of a Noisy Performance Measure? An Experimental Test in a Single- and Multi-Period Setting

Abstract: Given traditional agency theory assumptions and unobservable effort in a single-period setting, a moral hazard arises in which the agent is expected to shirk and provide the minimal possible effort after contracting with the principal. Traditional solutions to this agency problem include paying the agent a financial incentive tied to some noisy measure of performance or allowing the agent to develop a reputation over multiple periods. As the noisiness of the performance measure increases, however, these traditional solutions become increasingly costly and ineffective. In many single- and multi-period agency settings in the firm, however, the agent can communicate a promised level of effort to the principal prior to contracting. We document that this pre-contract communication, which is non-enforceable and therefore considered “cheap talk” by traditional economic theory, can be highly effective in mitigating the moral hazard problem in agency theory. In a repeating single-period experimental set...

Family law issues and schools: Guidance for Australian educators

Abstract: A substantial number of Australian children are now living in separated families, with many moving between their parents’ homes. This has led to educators being confronted with an increasing number of family law issues. This article discusses the key aspects of family law that involve children. It highlights the need for schools to be aware of all family law orders that relate to children in their care, including family court, domestic violence and child protection orders. It also provides guidance in relation to how schools can adopt child focused approaches in some common scenarios, where parents are in dispute. In particular, we will recommend that educators take a child-focused approach, consistent with the principal provision of the Family Law Act 1975 (Cth) that ‘the best interests of the child’ be the paramount consideration. We will highlight how this contrasts starkly with what can be described as a ‘parental rights’ interpretation, which has unfortunately been taken by some since the 2006 amendments to the Family Law Act, and is, in our view, directly at odds with the intention of the legislation.

The European Parliament and Agency Control in the Area of Freedom, Security and Justice

Abstract: Despite aptly capturing the EU as a multi-principal model, the principal–agent literature has neglected the question of under what conditions a particular institution may become a principal. This article proposes a research framework that defines a principal not only through its involvement in the legal procedure establishing the agent, but also through its impact on the day-to-day work and institutional development of this agent. Using the case of the European Parliament and agency control in the Area of Freedom, Security and Justice, it is argued that the Parliament has managed partially to compensate in the post-delegation phase for constrained ex ante legal involvement. The key conditions allowing the Parliament to enter the circle of principals have been altered default conditions through the introduction of co-decision in Justice and Home Affairs policy, and the strategic behaviour of the agent in the principals' competition for leadership and control.

Conventions of Agency Independence

Abstract: It is often said that the legal touchstone of agency independence is whether the agency head or heads are removable at will, or only for cause. Yet this test does not adequately describe the landscape of agency independence. There are many important agencies who are conventionally treated as independent, yet whose heads lack for-cause tenure protection. Conversely, there are agencies whose heads enjoy for-cause tenure protection, yet are by all accounts thoroughly dependent upon organized interest groups, the White House, legislators and legislative committees, or all of these. Legally enforceable for-cause tenure protection is neither necessary nor sufficient for operational independence. The crucial consideration, largely neglected in the literature, is the role of what Commonwealth lawyers call conventions. Agencies that lack for-cause tenure yet enjoy operative independence are protected by unwritten conventions that constrain political actors from attempting to remove their members, to direct their exercise of discretion, or both. Such conventions may be generated by a variety of mechanisms; the common feature is that norms arising within relevant legal and political communities impose sanctions for violations of agency independence or create beliefs or internalized moral strictures protecting that independence. Conversely, where agencies enjoy statutory independence yet lack operative independence, the reason is that the interaction among relevant political actors has failed to generate any such set of protective conventions. The lens of convention helps resolve a range of puzzles about the behavior of Presidents, legislators, judges and other actors with respect to agency independence – including the Supreme Court’s puzzling treatment of SEC independence in Free Enterprise Fund v. PCAOB.By bringing the conventional character of agency independence to the surface, U.S. courts may begin to incorporate ideas from the courts of Commonwealth legal systems – such as the United Kingdom and Canada – that are familiar with the promise and problems of conventions and with the methods for harmonizing conventions with written rules of law. My principal suggestion is that U.S. courts interpreting statutes and constitutional rules that bear on agency independence should adopt the leading Commonwealth approach, according to which judges may indirectly “recognize” conventions and incorporate them into their interpretation of written law, although they may not directly enforce conventions as freestanding obligations.

Justifying Fiduciary Duties

Abstract: Fiduciary duties are critical to the integrity of a remarkable variety of relationships, including those between trustee and beneficiary, director and corporation, agent and principal, lawyer and client, doctor and patient, parent and child, and guardian and ward. Notwithstanding their variety, all fiduciary relationships are presumed to enjoy common characteristics and to attract a core set of demanding legal duties, most notably a duty of loyalty. Surprisingly, however, the justification for fiduciary duties is an enigma in private law theory. It is unclear what makes a relationship fiduciary and why fiduciary relationships attract fiduciary duties. This article takes up the enigma. It assesses leading reductivist and instrumentalist analyses of the justification for fiduciary duties. Finding them wanting, it offers an alternative account of the juridical justification for fiduciary duties. The author contends that the fiduciary relationship is a distinctive kind of legal relationship in which one person (the fiduciary) exercises power over practical interests of another (the beneficiary). Fiduciary power is form of authority derived from the legal capacity of the beneficiary or a benefactor. The duty of loyalty is justified on the basis that it secures the exclusivity of the beneficiary’s claim over fiduciary power so understood.

The Boundaries of an Undertaking in EU Competition Law

Abstract: This article considers how the boundaries of an undertaking or economic unit are identified in EU competition law. As an undertaking may be made up of several persons, it is not always easy to know when it comprises a natural person, a legal person or a group of persons (such as principal and agent, parent and subsidiaries or parent(s) and JV) and, consequently, whether such persons are acting unilaterally or jointly for the purposes of the competition law rules. This article scrutinizes the two principal lines of cases dealing with the notion of an undertaking as an economic unit and the relationship between them. It seeks to elucidate the principles and policy underpinning and influencing them and questions whether there is, or should be, a single concept of an undertaking which applies throughout EU competition law and, if so, how it is defined. It also discusses whether there is a need for a more holistic approach to be taken to the concept of an undertaking in the future, requiring some reconsideration of, and retrenchment in, the case-law.

Identity, Incentives, and the Value of Information

Abstract: We examine the impact of identity preferences on the interrelation between incentives and performance measurement. In our model, a manager identifies with an organization and loses utility to the extent that his actions conflict with effort-standards issued by the principal. Contrary to prior arguments in the literature, we find conditions under which a manager who identifies strongly with the organization receives stronger incentives and faces more performance evaluation reports than a manager who does not identify with the organization. Our theory predicts that managers who experience events that boost their identification with the firm can decrease their effort in short-term value creation. We also find that firms are more likely to employ less precise but more congruent performance measures, such as stock prices, when contracting with managers who identify little with the organization. In contrast, they use more precise but less congruent measures, such as accounting earnings, when contracting with managers who identify strongly with the firm.

"Sports Law": Implications for the development of international, comparative, and national law and global dispute resolution

Abstract: In this Article, we observe that legal regulation of national and international sports competition has become extremely complex and has entered a new era, which provides fertile ground for the creation and evolution of broader legal jurisprudence with potentially widespread influence and application. Our principal aim is to draw these developments to the attention of legal scholars and attorneys not necessarily familiar with sports law. Specifically, the evolving law of sports is having a significant influence on the development of international and national laws, is establishing a body of substantive legal doctrine ripe for analysis from a comparative law perspective, and has important implications for global dispute resolution. For example, the global processes used to establish an international sports antidoping code and to resolve a broad range of Olympic and international sports disputes (which is rapidly creating a body of global private law) provide paradigms of international cooperation and global lawmaking. In addition, judicial resolution of sports-related cases may develop jurisprudence with new applications and influence. Our objective is to generate greater awareness of the importance of sports, not only as a worldwide cultural phenomenon and a significant part of the twenty-first-century global economy, but as a rich source of international and national public and private laws that provide models for establishing, implementing, and enforcing global legal norms.

Islands of Conscious Power: Law, Norms and the Self Governing Corporation

Abstract: This article provides a theory of the relation between legal and non legally enforceable rules and standards in the corporation, and then uses that theory to analyze a variety of prominent features of corporate law. In the first part, we draw on recent developments in the theory of the firm to identify key problems facing participants in the firm. In developing this approach, we combine the "property rights" strand in the theory of the firm with the transaction cost approach. From this perspective, the main issue is solving the related problems of coordinating activities, choosing the firm's assets, and developing appropriate incentives for specific investments. In part II, we argue that the firm so understood will largely be governed through "norms," by which we mean "non-legally enforceable rules and standards" (NLERS). Indeed, the raison d'etre of firms is to replace legal/contractual governance of relations with NLERS. Using this framework, in part III, we analyze the duty of loyalty. In part IV, we analyze the duty of care and the business judgement rule, and a variety of other puzzling features of corporate law. From our perspective, corporate law can be understood as a remarkably sophisticated mechanism for facilitating governance by NLERS. Centralized management is used to determine the assets over which the corporation must have residual rights of control and to develop a governance structure for protecting the match-investments of insiders in these assets. Legal rules provide the default settings through which centralized management operate and prohibit non pro rata distributions (a combination of ex ante rules and the ex post duty of loyalty), which pushes controlling shareholders to maximize the value of the firm. Having established an "incentive compatible" legal form that facilitates NLERS governance, the law must be careful not to undermine that governance by midstream interference. Here, the duty of care and the business judgment rule are critical. The business judgement rule acts as a jurisdictional rule that facilitates a self governing NLERS relationship by preventing parties from turning to third party adjudicators. As such, it plays a role very similar to the role of the employment at will doctrine in employment law and for the same reasons. This analysis provides an explanation for why the duty of care, despite its appearance, does not function as a negligence rule, and why liability for directorial malpractice is so much less common than liability for other forms of professional malpractice, such as, legal or medical. The principal contexts in which the BJR does not apply are situations in which NLERS governance breaks down, generally because of last period temptations to defect. The difference in the ability of NLERS to govern midstream and end games provides the key to understanding a variety of corporate law puzzles. These puzzles include: the asymmetry between the legal standards governing purchases and sales of assets; the asymmetry between judicial review over decisions to resist all bids for control ("just say no") versus the review of sales of control; and the demand requirement in derivative litigation.

Agency problems in public sector

Abstract: Agency theory analyses the effects of contractual behaviour between two parties: principal(s) and agent(s). This relation is inevitably characterized by information asymmetry because agent holds a substantially larger volume of information than the principal. Due the negative effects of information asymmetry for the principal, this should cover supplementary costs with monitoring agents and/or grant incentives. The first objective of this paper is to emphasize the effects of information asymmetry, particularly on adverse selection and moral hazard. The second objective is to evaluate the negative effects of information asymmetry and to assess the viability of solutions proposed by scholars for mitigation. The third objective is linked with personal contribution, respectively to highlight specificity of agency theory in public sector and the mechanisms of action in this particular field. In this paper, literature is mainly based on scholarsA¢â‚¬â"¢ contribution to the proposed theme. Little literature approaches agency theory in public sector, in most cases the analysis being restricted to general issues. Research methodology is based on synthesizing relevant information from literature and adapting them to public sector particularities. The results reflect some threats for public bodies in their contracting activity. Conclusions present also a set of solutions which could be used by public institutions to optimize their activity of mitigating information asymmetryA¢â‚¬â"¢s effects. These solution guidelines could represent a useful instrument for make more efficient public money spending. Personal contribution and the novelty of this paper consist in presenting a new approach regarding mechanisms of managing information by agents. In case of public institutions, principals have more opportunities the take possession over the information managed by the agent. Nevertheless, agents can limit the principalA¢â‚¬â"¢s access to vital information by offering excessively much information, combining few vital data with numerous unimportant information. For further research, agentA¢â‚¬â"¢s information management should be depth and analyzed in which manner principal can control it.

Land and legality in the Darfur conflict

Abstract: Land rights in Darfur act as a principal protagonist to the cause and maintenance of the ongoing armed conflict. The internal functioning and interaction of statutory, customary, and Islamic legal regimes regarding land have facilitated significant aspects of the war, and their reform will be fundamental to any effective peace process. This article describes the role of these legalities in the conflict. Subsequent to a description of the legal environment, the article examines the legal crisis regarding land rights, focusing on six aspects: the repercussions of a single law, the exclusionary customary system, Islamic law, profound confusion over concepts and terms, institutional disarray, and the peace accords.

From the Nation State to the Market: The evolution of EU private law

Abstract: The State exists to deliver security and welfare to citizens. One of the principal functions of the State is to enhance welfare through the production of legal regimes. Law contributes to welfare in many ways, one of which is in its contacts with markets. In this chapter, we trace the evolution of the role of law in the private sphere, with special attention to EU law. Our thesis is that the State is in a process of evolution from a Nation State to a Market State. Looking at private law confirms this evolution.

Asset Owners versus Asset Managers: Agency Costs and Asymmetries of Information in Alternative Assets

Abstract: Agency theory is about striking the right balance between principals and their agents. In any agency relationship, the motives and desires of the agent may be different from that of the principal. For public corporations, agency theory is often called corporate governance. There is a growing awareness, however, that agency theory also applies to the investment management industry in which asset owners delegate the caretaking of their investments to asset managers. The potential misalignment of interests between asset owners and asset managers can lead to four agency costs: asymmetry of skill or alpha, asymmetry of incentives, asymmetry of liquidity, and asymmetry of risk taking.

Competition law in Pakistan: brief history, aspirations and characteristics

Abstract: 1 This article highlights various aspects of competition law in Pakistan. It aims to give an account of the historical evolution of competition law in Pakistan over time, underscoring the salient characteristics of legislation; to identify the institutional structure in charge of applying competition policies, featuring its form, powers and functions; and to assess the effectiveness of the regulatory agency as a principal authority for the application of competition policies with the aim of preventing or remedying possible anti-competitive conduct. This article comprises five parts. Part I introduces the topic. Part II focuses on the different phases Pakistan’s competition law has passed through. Part III outlines salient features of the law. Part IV highlights the institutional framework with detailed working mechanism, powers and functions as revealed by the law. Part V contains concluding remarks necessary for effective enforcement of the law. 1

Praktek teori agensi pada entitas publik dan non publik

Abstract: Game theory is the beginning of agency theory, game theory tries to find form and predict conflict resolution between individuals who are rational, and it helps us understand how managers, investors and other parties affected can be rationally agreed with the economic consequences of financial reporting. Agency theory is a branch of game theory that studies the design of contracts to motivate a rational agent to act on behalf of principal when the agent’s interests would otherwise conflict with those of the principal. In Indonesia, entities are divided into two sectors: public sector entities and private sector entities, although they differ in the ownership of the company but they both have similar traits. Both entities are equally divided into two parties that have the greatest interest, called the agent and principals. Both parties are often involved in conflicts of interest (conflict of interest), giving rise to agency cost. Agency conflict that occurs often brought losses to many parties, not only the parties in conflict alone but, more broadly. Be a mechanism to resolve complex mechanism both internally and externally. Internal mechanism with the revamping of the entity itself with providing the motivation of managers and shareholders to behave in a manner that advance corporate objectives. While the external mechanism is by application of the rules of the Regulator, such as the obligation to implement the Corporate Governance in an entity. Keyword : teori agensi, agen, principal, entitas public, entitas swasta

Arbitrators' Initiatives to Obtain Factual and Legal Evidence

Abstract: Arbitrators generally have wide powers to take initiatives to obtain factual and legal evidence, but rarely are they under a duty to do so The central concern of the article is to identify factors which arbitrators may refer to in exercising these powers The principal factors discouraging such initiatives are concern for party autonomy, concern to avoid increase in the duration and costs of the arbitration, concern to avoid the appearance of partiality, and concern not to reduce predictability The conclusion is that in general arbitrators should refrain from taking such initiatives, absent the presence of specific justificatory factors, which the article also seeks to identify

Where Are Limited Liability Companies Formed? An Empirical Analysis

Abstract: We empirically study formation-state choices of limited liability companies (LLCs). Most firms in our large sample of almost 20,000 LLCs are formed in the state where their principal place of business is located. As their size increases, firms become more likely to be formed outside that state, with Delaware emerging as the primary destination for LLCs that are not formed in the state of the principal place of business. We demonstrate that substantive law matters when LLCs choose their formation state. Limited liability companies are less likely to incorporate locally if their home state offers lax norms for minority-investor protection or creditor-friendly rules for veil piercing. In addition to contributing to the debate on regulatory competition in the law, this paper has implications for theoretical debates pertaining to choice of law in veil-piercing cases, the role of default rules, and the relationship between corporations and LLCs.

An Introduction to International Law

Abstract: National judges are a sort of propelling force behind international law to the extent that they perceive the need to realize that international solidarity which is too often lacking at the level of governments. Hence they are the principal addressees of this book.

Career Concerns and Performance Reporting in Optimal Incentive Contracts

Abstract: In many contracting settings incentives are provided not only through transfers but also through performance reports to prospective employers. This paper studies a principal-agent model of this kind, in which the principal sends a non-verifiable report of output to a competitive labor market interested in the agent's ability. It is assumed that the principal and agent write an enforceable contract over both payments and reports as a function of output, and that the contract terms they agree to cannot be observed by the market. When contracts are unrestricted, reports cannot affect the agent's future wage in equilibrium, because the agent will always pay the principal to give a good report. Under limited liability, reports can affect future wages, but only by designating output as "good" or "bad." This informative performance reporting benefits the principal, and may more than make up for the costs imposed by limited liability. The possibilities that the market may have some direct information about output, that the principal may have additional information about the agent's ability, and that the principal may have psychological or reputational costs of misreporting output are also considered.

Contractual Freedom under Delaware Alternative Entity Law: Evidence from Publicly Traded LPS and LLCS

Abstract: I. INTRODUCTION II. CONTRACTUAL FREEDOM UNDER DELAWARE ALTERNATIVE ENTITY LAW A. Fiduciary Duties Under Delaware Alternative Entity Law B. Academic Debate and Uncorporate Substitutes 1. Mandatory Distributions 2. Limited Lifetime and Mandatory Liquidation 3. Managers as Full-Fledged Owners C. Absence of Empirical Evidence III. METHODOLOGY A. Data Set B. Method of Legal Analysis 1. Fiduciary Waiver and Exculpation Provisions 2. Uncorporate Substitutes 3. Right to Elect Managers C. Limitations of Methodology IV. FINDINGS A. Fiduciary Duties 1. Waiver Provisions 2. Exculpation Provisions 3. No Waiver or Exculpation B. Uncorporate Substitutes 1. Mandatory Distributions 2. Mandatory Liquidations C. Right to Elect Managers D. Corporate Accountability Versus Uncorporate Substitutes V. ANALYSIS A. Fiduciary Duties ' Limited Role 1. Pockets in which Fiduciary Duties Live 2. The Contractual Constraints that Subsist B. Publicly Traded Alternative Entities as Uncorporations 1. Mandatory Liquidations 2. Mandatory Distributions 3. Managers as Full-Fledged Owners C. Absence of Other Corporate Governance Tools VI. CONCLUSION I. INTRODUCTION The fiduciary duties owed by the directors and officers of a Delaware corporation to the firm and its shareholders are mandatory. In general, these duties cannot be waived or modified by contract. (1) The fiduciary duties owed by the managers of an unincorporated Delaware alternative entity, in contrast, are not. Since August 1, 2004, limited partnerships (LPs) and limited liability companies (LLCs, and collectively with LPs, alternative entities) organized under Delaware law have been permitted to contractually modify, limit, and even eliminate the fiduciary duties of their managers arising under common law. (2) While there has been an extensive academic debate as to whether alternative entity firms should be permitted to contractually limit or waive fiduciary duties (3)--something that Delaware corporations cannot--there is little empirical evidence as to whether and to what extent such firms actually exploit this contractual freedom. (4) This study provides empirical evidence of the extent to which LLCs and LPs take advantage of the contractual freedom afforded under Delaware alternative entity law to limit or wholly eliminate the application of default fiduciary duties. Specifically, this study analyzes the operating agreements of every publicly traded LLC and LP organized under Delaware law as of June 2011. Although publicly traded LLCs and LPs (often referred to as master limited partnerships or MLPs) (5) represent only a small portion of the broader Delaware alternative entity landscape, (6) the number and size of these publicly traded firms have in recent years undergone dramatic growth, making them an increasingly significant part of the business world. (7) Perhaps more importantly, unlike their privately held counterparts, publicly traded alternative entities provide a ready window into contractual freedom as it is practiced under Delaware alternative entity law. In analyzing the operating agreements of publicly traded alternative entities, this study seeks to answer two basic questions. First, to what extent do LLCs and LPs take advantage of the contractual freedom afforded under Delaware alternative entity law to wholly eliminate the fiduciary duties of managers? Second, to what extent do Delaware alternative entities adopt so-called "uncorporate" substitutes--certain contractual devices designed to incentivize and discipline managers--in lieu of traditional fiduciary duties to limit agency costs? This study makes two principal findings. First, notwithstanding the ongoing academic debate, as a practical matter, fiduciary traditionalists have lost the battle to protect fiduciary duties from contract--at least in the publicly traded sphere. …

Adjudication in Australia

Abstract: Purpose – The purpose of this paper is threefold; first, to give a background to the security of payment problem in the New South Wales construction industry and the problem giving rise to the Building and Construction Industry Security of Payment Amendment Act 2010 (NSW) (“2010 Amendment Act”); second, to provide an analysis of the operation of the 2010 Amendment Act; and finally, to address the main implications of the amendments for the three parties involved, namely the claimant, the respondent and the “Principal contractor”.Design/methodology/approach – A review of the relevant literature was undertaken on the security of payment problem in the NSW construction industry and the problem giving rise to the 2010 Amendment Act. A “black‐letter” approach is adopted to analyse and explain the provisions contained in the 2010 Amendment Act. At the time of writing, no case law relevant to the amendments had been published.Findings – The amendments brought about by the 2010 Amendment Act add appreciably to th...