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Full-Text Articles in Law
Market Practice And The Evolution Of Foreign Sovereign Immunity, W. Mark C. Weidemaier, Mitu Gulati
Market Practice And The Evolution Of Foreign Sovereign Immunity, W. Mark C. Weidemaier, Mitu Gulati
W. Mark C. Weidemaier
The twentieth century witnessed a “tectonic” shift in international law, from absolute to restrictive theories of sovereign immunity. As conventionally understood, however, this transformation represented only a change in default rule. Under absolute immunity, courts could not hear lawsuits and enforce judgments against a foreign sovereign without its consent. Under restrictive immunity, foreign sovereigns were not immune to their commercial acts, regardless of consent. Using a two-century dataset of loan contracts, we show that market practice undermines this conventional understanding. For centuries, loan contracts were structured as if the rules of sovereign immunity could not be changed by contract. In …
Sovereign Immunity And Sovereign Debt, W. Mark C. Weidemaier
Sovereign Immunity And Sovereign Debt, W. Mark C. Weidemaier
W. Mark C. Weidemaier
The law of foreign sovereign immunity changed dramatically over the course of the 20th century. The United States abandoned the doctrine of absolute immunity and opened its courts to lawsuits by private claimants against foreign governments. It also pursued a range of other policies designed to shift such disputes into litigation or arbitration (and thus relieve political actors of pressure to intervene on behalf of disappointed creditors). This article uses a unique data set of sovereign bonds to explore how international financial contracts responded to these legal and policy initiatives. The article makes three novel empirical and analytical contributions. The …
Indiana Jones, Contracts Originalist, W. Mark C. Weidemaier
Indiana Jones, Contracts Originalist, W. Mark C. Weidemaier
W. Mark C. Weidemaier
The process of drafting a contract can be routine, almost automated. Over a long enough time, lawyers may stop paying attention to contract language or even forget why it is there. The problem is acute with standard-form contracts and perhaps especially so with financial contracts such as sovereign bonds. How should courts interpret contract language when neither the parties, nor their lawyers, nor any other relevant player in the market can credibly explain what it does? This essay addresses this question in the context of one of the most contested interpretive questions in modern international finance: the meaning of the …
A People's History Of Collective Action Clauses, W. Mark C. Weidemaier, Mitu Gulati
A People's History Of Collective Action Clauses, W. Mark C. Weidemaier, Mitu Gulati
W. Mark C. Weidemaier
For two decades, collective action clauses (CACs) have been part of the official-sector response to sovereign debt crisis, justified by claims that these clauses can help prevent bailouts and shift the burden of restructuring onto the private sector. Reform efforts in the 1990s and 2000s focused on CACs. So do efforts in the Eurozone today. CACs have even been suggested as the cure for the US municipal bond market. But bonds without CACs are still issued in major markets, so reformers feel obliged to explain why they know better. Over time, a narrative has emerged to justify pro-CAC reforms. It …
Judging Lite: How Arbitrators Use And Create Precedent, W. Mark C. Weidemaier
Judging Lite: How Arbitrators Use And Create Precedent, W. Mark C. Weidemaier
W. Mark C. Weidemaier
Common wisdom has it that arbitrators neither follow nor make precedent, with potentially dire consequences. These include the failure to enforce individual rights and the possibility that, over time, widespread use of arbitration will result in the decay or destruction of the law itself. Although difficult to test directly, this common wisdom can be explored indirectly by analyzing arbitrators’ citation practices. This article conducts such an analysis using a unique dataset of published arbitration awards from four US arbitration regimes: securities, labor, employment, and class action arbitration. It explores how arbitrators use precedent and where that precedent comes from, and …
Reforming Sovereign Lending: Modern Initiatives In Historical Context, W. Mark C. Weidemaier
Reforming Sovereign Lending: Modern Initiatives In Historical Context, W. Mark C. Weidemaier
W. Mark C. Weidemaier
In response to the Eurozone sovereign debt crisis, policymakers have initiated a range of reforms falling at both poles of the “hard”/“soft” law continuum. One of the most ambitious is the United Nations Conference on Trade and Development’s initiative to identify what it calls “Principles of Responsible Sovereign Lending and Borrowing.” The Principles aim to transform attitudes about sovereign lending in general, and sovereign loan contracts in particular, through consensus-building, promulgating model contract terms, and other soft law approaches. Principle 15, for example, envisions the use of collective action clauses (CACs) to ensure that debt restructurings occur “promptly, efficiently, and …
How Markets Work: The Lawyer's Version, W. Mark C. Weidemaier, Mitu Gulati
How Markets Work: The Lawyer's Version, W. Mark C. Weidemaier, Mitu Gulati
W. Mark C. Weidemaier
In this article, we combine two sources of data to shed light on the nature of transactional legal work. The first consists of stories about contracts that circulate widely among elite transactional lawyers. Surprisingly, the stories portray lawyers as ineffective market actors who are uninterested in designing superior contracts, who follow rather than lead industry standards, and who depend on governments and other outside actors to spur innovation and correct mistakes. We juxtapose these stories against a dataset of sovereign bond contracts produced by these same lawyers. While the stories suggest that lawyers do not compete or design innovative contracts, …
Toward A Theory Of Precedent In Arbitration, W. Mark C. Weidemaier
Toward A Theory Of Precedent In Arbitration, W. Mark C. Weidemaier
W. Mark C. Weidemaier
The claim that arbitrators do not create precedent recurs throughout the arbitration literature. As an empirical matter, however, it is increasingly clear that, in some arbitration systems, arbitrators often cite to other arbitrators, claim to rely on past awards, and promote adjudicatory consistency as an important system norm. Much like courts, then, arbitrators can (but do not always) create precedent that guides future behavior and provides a language in which disputants, lawyers, and adjudicators can express and resolve grievances. This Article provides a theoretical foundation for understanding the conditions under which such precedent will (or will not) arise. It identifies …
Contracting For State Intervention, W. Mark C. Weidemaier
Contracting For State Intervention, W. Mark C. Weidemaier
W. Mark C. Weidemaier
Most models of contracting behavior assume that contract terms are meant to be enforced, whether through legal or relational means. That assumption extends to dispute resolution terms like arbitration clauses. According to theory, contracting parties adopt arbitration clauses because they want to arbitrate disputes and because they believe that a counter-party who has agreed to arbitrate will keep that promise rather than incur the resulting legal or extra-legal sanction. In this article, I describe how this standard account cannot explain the origins of arbitration clauses in sovereign bond contracts. Drawing on original archival research and secondary sources, the article traces …
Disputing Boilerplate, W. Mark C. Weidemaier
Disputing Boilerplate, W. Mark C. Weidemaier
W. Mark C. Weidemaier
Sovereign bond contracts are thought to consist mostly of boilerplate. That is, except for a handful of custom terms, the contracts are assumed to adopt standard terms that are functionally if not literally identical to those used in other bond contracts. This characterization has important theoretical implications, for standardized terms may be “sticky.” The implication is that market participants may select widely-used terms over terms that would be optimal on their own merits. This article explores the phenomenon of standardization in the context of a particular contracting choice: whether to include an arbitration clause in a sovereign bond contract. Most …
From Court-Surrogate To Regulatory Tool: Re-Framing The Empirical Study Of Employment Arbitration, W. Mark C. Weidemaier
From Court-Surrogate To Regulatory Tool: Re-Framing The Empirical Study Of Employment Arbitration, W. Mark C. Weidemaier
W. Mark C. Weidemaier
A growing body of empirical research explores the use of arbitration to resolve employment disputes., typically by comparing arbitration to litigation using relatively traditional outcome measures: who wins, how much, and how quickly. On the whole, this research suggests that employees fare reasonably well in arbitration. Yet there remain sizeable gaps in our knowledge. This Article explores these gaps with two goals in mind. The first and narrower goal is to explain why it remains exceedingly difficult to assess the relative fairness of arbitration and litigation. The outcome research does not account for a variety of “filtering” mechanisms that influence …