Comparative and Foreign Law Commons^™

Should The United States Adopt Crs?, Noam Noked

Michigan Law Review Online

The United States' one-sided approach to tax transparency might lead to an unprecedented clash with the European Union (EU) in the near future. In light of the EU's deadline for the United States, the U.S. Treasury and Congress should urgently engage in a discussion on whether the United States should adopt the Common Reporting Standard (CRS) for automatic exchange of financial account information. A recent report from the U.S. Government Accountability Office considered this issue and did not recommend adopting CRS. This Essay discusses the contents of the report, as well as important considerations that were left out of the …

Stock Market Reactions To India's 2016 Demonetization., Vikramaditya S. Khanna, Dhammika Dharmapala

Articles

On November 8, 2016, the Indian government made a surprise announcement that certain currency notes (representing 86 percent of the currency then in circulation) would no longer be legal tender (although they could be deposited in banks over a limited period). The stated reason for this sudden “demonetization” was to combat tax evasion and corruption associated with “unaccounted for” cash. We compute abnormal returns for different subsamples of firms—defined by industry, ownership structure, and other characteristics—on the Indian stock market around this event. There is little evidence that sectors thought to be associated with greater tax evasion or corruption experienced …

The Rise-And-Fall Of Leading International Financial Centers: Factors And Application, Adam Church

Michigan Business & Entrepreneurial Law Review

This Note will look at the role of four broad factors that correspond with the rise-and-fall cycles among leading international financial centers. The four factors are: trust in a financial center’s abilities; the central banking and monetary policy systems of the center’s home nation; the home nation’s landscape of financial policy and regulation; and the overall stability of the financial center itself. First, this Note will undertake a broad historical survey of the shifts in prominence from Amsterdam to London, from London to New York, and from New York back to London to define the scope of these factors through …

Private Equity Investments In Microfinance In India, Hugh Manahan

Michigan Business & Entrepreneurial Law Review

A trail connects a skyscraper in Manhattan’s Financial District to a tiny food stand in a village in the southeast Indian state of Tamil Nadu. Initially wild and overgrown, the trail now resembles a well-developed road, cleared and shaped. The trail does not connect customers to call centers or raw materials to laborers; the path connects lenders seeking abnormal returns on their investments to borrowers living in poverty. This is the path of private equity investments in microfinance. Microfinance is a powerful financial innovation that has changed personal finance in many parts of the world. While microfinance began as non-profit …

Regulation Of Private Equity In Brazil: Policy Questions Presented And Critique, Shannon Guy

Michigan Business & Entrepreneurial Law Review

In this note, I explore some of the policy questions affecting Brazil’s private equity industry that the country must tackle. In Part II, Section A, I begin by asking the threshold question of whether the Brazilian government should play an active role in encouraging the growth of the private equity industry. I resolve that Brazil should play an active role in encouraging the industry’s growth to encourage several possible benefits to the real economy. Private equity may benefit the economy by providing job growth and job preservation, improved access to credit for firms that would not otherwise have funds, and …

The Basel Iii Liquidity Coverage Ratio And Financial Stability, Andrew W. Hartlage

Michigan Law Review

Banks and other financial institutions may increase the amount of credit available in the financial system by borrowing for short terms and lending for long terms. Though this "maturity transformation" is a useful and productive function of banks, it gives rise to the possibility that even prudently managed banks could fail due to a lack of liquid assets. The financial crisis of 2007-2008 revealed the extent to which the U.S. financial system is exposed to the risk of a system-wide failure from insufficient liquidity. Financial regulators from economies around the world have responded to the crisis by proposing new, internationally …

Private Equity In Brazil: Industry Overview And Regulatory Environment, Shannon Guy

Michigan Business & Entrepreneurial Law Review

The overall goal of this note is to paint a picture of the current state of the private equity industry in Brazil and the existing regulations which must be obeyed to participate as a private equity investor. Part II of this note provides a brief history of the private equity industry in Brazil, discusses recent investor interest in the growing area, and introduces the main regulatory bodies in Brazil. Part III explains several specific rules that govern a private equity investment by breaking down the “life” of a private equity investment into four stages: (1) setting up the private equity …

Venture Capital Investments In China: The Use Of Offshore Financing Structures And Corporate Relocations, Jing Li

Michigan Business & Entrepreneurial Law Review

Based on an analysis of the relevant Chinese laws and regulations governing the corporate governance structure of venture capital (“VC”)-invested firms, as well as a discussion on the feasibility of employing different alternatives to make direct and indirect VC investments in Chinese portfolio firms, this article studies a hand-collected sample consisting of the twenty-nine VCbacked Chinese portfolio firms that have been financed and listed from 1990 to 2005 in order to empirically show how these investments were actually made in practice. The findings show that twenty-three out of the twentynine firms received their VC investments in various offshore holding entities, …

Ability To Pay, John A. E. Pottow

Articles

The landmark Dodd-Frank Act of 2010 ("Dodd-Frank") transforms the regulation of consumer credit in the United States. Many of its changes have been high-profile, attracting considerable media and scholarly attention, most notably the establishment of the Consumer Financial Protection Bureau ("CFPB"). Even specific consumer reforms, such as a so-called "plain vanilla" proposal, drew hot debate and lobbying firepower. But when the dust settled, one profoundly transformative innovation that did not garner the same outrage as plain vanilla or the CFPB did get into the law: imposing upon lenders a duty to assure a borrower's ability to repay. Ensuring a borrower's …

Populist Retribution And International Competition In Financial Services Regulation, Adam C. Pritchard

Articles

The pattern of regulatory reform in financial services regulation follows a predictable pattern in democratic states. A hyperactive market generates a bubble, the bubble deflates, and much financial pain ensues for those individuals who bought at the top of the market. The financial mess brings the scrutiny of politicians, who vow "Never again!" A political battle ensues, with representatives of the financial services industry fighting a rearguard action to preserve its prerogatives amidst cries for the bankers' scalps. Regulations, carefully crafted to win the last war, are promulgated. Memories fade of the foolish enthusiasm that fed the last bubble. Slowly, …

Impediments To Financial Development In The Banking Sector: A Comparison Of The Impact Of Federalism In The United States And Germany, Khalil Nicholas Maalouf

Michigan Journal of International Law

This Note examines how differences in U.S. and German variants of federalism have contributed to the formation and development of the dual banking system in the United States and the three-pillar banking system in Germany. Specifically, this Note considers the manner in which federalism has informed the respective banking systems' reactions to dynamic changes in the global banking industry and analyzes the role federalism has played in contributing to or impeding reform efforts in the United States and Germany.

Anti-Terrorist Finance In The United Kingdom And United States, Laura K. Donohue

Michigan Journal of International Law

This Article adopts a two-tiered approach: it provides a detailed, historical account of anti-terrorist finance initiatives in the United Kingdom and United States-two states driving global norms in this area. It then proceeds to a critique of these laws. The analysis assumes-and accepts-the goals of the two states in adopting these provisions. It questions how well the measures achieve their aim. Specifically, it highlights how the transfer of money laundering tools undermines the effectiveness of the states' counterterrorist efforts-flooding the systems with suspicious activity reports, driving money out of the regulated sector, and using inappropriate metrics to gauge success. This …

What's Your Sign? -- International Norms, Signals, And Compliance, Charles K. Whitehead

Michigan Journal of International Law

This Article proposes a new approach to understanding state compliance with international obligations, positing that increased interaction among the world's regulators has reinforced network norms, as evidenced in part by a greater reliance among states on legally nonbinding instruments. This Article also begins to fill a gap in the growing scholarship on state compliance by proposing a better framework for understanding how international norms influence senior regulators and how they affect both state decisions to comply as well as levels of compliance.

Convergence And Competition: The Case Of Bank Regulation In Britain And The United States, Heidi Mandanis Schooner, Michael Taylor

Michigan Journal of International Law

This Article consists of four main parts. Part I introduces the convergence by competition model as it applies to the regulation of financial institutions and sets the stage for the test case application of the model to the regulatory systems in the United States and United Kingdom. Part II provides a comparative history of bank regulation in Britain and the United States. Central to our argument is the proposition that, even in the presence of globalized financial markets and the opportunities for rule competition brought in their wake, the bank regulatory systems of the United States and Britain continue to …

Incentives For Peace And Profits: Federal Legislation To Encourage U.S. Enterprises To Invest In Arab-Israeli Joint Ventures, Daniel Lubetzky

Michigan Journal of International Law

This article proposes a set of provisions that would encourage U.S. companies and entities to invest in joint ventures with Israeli and Arab partners in the Middle East. The immediate effect of these provisions would be to revive and fortify the economies of that region. The long-term objectives behind the enactment of such incentives would be threefold: (1) to improve the prospects for peace and stability in the Middle East; (2) to enhance the strategic and political standing of the United States in the Middle East; and (3) to increase the long-term international competitiveness of U.S. businesses.

Laws Separating Commercial Banking And Securities Activities As An Impediment To Free Trade In Financial Services: A Comparative Study Of Competitiveness In The International Market For Financial Services, Sarah A. Wagman

Michigan Journal of International Law

By comparing U.S., Japanese, and European institutions' competitiveness in the international market for financial services, this Note focuses on the possible implications of the Glass-Steagall Act in the international trade context as a means of exploring some of the additional arguments which have emerged in favor of reforming U.S. bank regulation.

The Feasibility Of Debt-Equity Swaps In Russia, Thomas M. Reiter

Michigan Journal of International Law

This Note examines the origins, development, and mechanics of debt-equity swap programs in Latin America before discussing the various goals and policy considerations involved in formulating debt-equity swap programs. Next, the Note describes Russia's debt situation and sketches the outlines of a debt-equity swap program that will reduce Russia's foreign debt while stimulating foreign direct investment.

Drafting Dispute Resolution Clauses For Western Investment And Joint Ventures In Eastern Europe, Mary Theresa Kaloupek

Michigan Journal of International Law

This Note discusses issues the practitioner should consider in drafting a dispute resolution provision for a client investing in one of the newly democratizing countries. Part I will discuss arbitration law in Eastern Europe; the dispute resolution provisions in the various foreign investment laws; the applicable national law; and each nation's enforcement procedures for arbitral awards issued in other nations. Part II reviews the dispute resolution provisions in various bilateral and multilateral treaties relating to foreign investment including the Convention on the Settlement of Investment Disputes (ICSID Convention) and the informal agreements between the American Arbitration Association (AAA) and the …

Unwelcome Imports: Racism, Sexism, And Foreign Investment, William H. Lash Iii

Michigan Journal of International Law

This article will address the problems minorities and women face from Japanese foreign direct investment. This article focuses on Japanese direct investment because the rapid rise in Japan's direct investment in the United States, combined with a record of discrimination by Japanese firms in Japan and abroad, makes Japanese investment the best example of the problems addressed in this article. However, the discriminatory attitudes described here may well be held by other foreign investors, and therefore, the legislation proposed later in this article addresses a broader problem.

The Development Of The Equal Treatment Principle In The International Debt Crisis, Carsten Thomas Ebenroth, Rüdiger Woggon

Michigan Journal of International Law

Since the outbreak of the international debt crisis at the beginning of the 1980s, debtor countries have reached a series of agreements with private creditor banks, with the aim of reducing the financial strain on the debtor countries and enabling them to service their debts. Long-term extensions of maturities are a central aspect of many of these arrangements. Included in the restructurings are all the medium- and long-term claims of the creditor banks, often short-term trade credits and interbank lines, and, in individual cases such as the restructuring of the debts of Poland, Yugoslavia, Costa Rica, and some African States, …

Foreign Investment Protection: A Reasoned Approach, Earl Snyder

Michigan Law Review

The main purpose in protecting private foreign investment is to encourage capital to move to newly developing nations in spite of serious, existing non-business risks. These risks are (1) the political risk (outright and "creeping" expropriation), (2) the transfer risk ( currency controls and inconvertibility of funds), and (3) the calamity risk (insurrection, revolution, war, etc.). But why encourage this? Why should an affluent, powerful nation seek, in effect, to transport overseas some of its affluence and power? Why--in the case of the United States-should encouragement be given to that which may, according to some, tend to tip still more …

Banking-Disclosure Of Records-The Duty Of A Bank As To Customer Information, Robert B. Wessling S.Ed.

Michigan Law Review

The purpose of this comment, therefore, is to describe the scope of the banker's duty as to customer information as best it can be discerned in light of the increasing exchange of credit information and increasing resort to such information by government agencies-particularly the Internal Revenue Service. In the process, it is hoped that attention will be drawn to the uncertainty which exists in this area, perhaps prompting action by the states or the banks themselves to clarify the scope of the duty and to encourage uniform treatment of customer information in a manner consistent with this duty.

Waiver Of Protest: A Comparative Study, Raúl Olivera Y Borges

Michigan Law Review

Parallel to the study of protest, it is pertinent to consider the nature and legal effects of exempting clauses which, while not essential, may be found in bills of exchange. Waiver of protest appears to have been introduced by the practice in France during the first third of the nineteenth century. It is generally used to moderate the consequences of non-payment, by a drawer who lacks confidence in the solvency of the drawee, or who fears that he may not be able to provide the necessary funds before maturity. The drawer can thus spare the susceptibilities of a drawee who …

Promissory Notes In The Legislations Of The Americas, Juan Octavio Díaz Lewis

Michigan Law Review

It has rightly been said that the promissory note is the Cinderella of negotiable paper. It is indeed strange that this instrument, widely used in most countries, is accorded only a few words in the legal textbooks and a few sections in the respective statutes. The purpose of the present study is not to rescue promissory notes from their present position of obscurity, but rather to present a unified classification of the specific provisions relating thereto, which are in force at the present time in the legislations of the American continent.

Acceptance By Intervention In Bills Of Exchange, Salvador Ltriago

Michigan Law Review

Intervention is an act whereby a person becomes a party to a negotiable instrument, whether by accepting the bill or by paying the sum indicated thereon, in order to relieve one of the obligors on the bill from the action of recourse that the holder could assert against him in consequence of default of acceptance or payment by the drawee.

The complexity of the material to be discussed renders it necessary, in order to clarify the development of the exposition, for us to advance several concepts, which will later be considered more fully at the proper places.

Capacity Under The Negotiable Instruments Laws Of The Americas: A Comparative Study, Luis M. Ramirez B.

Michigan Law Review

Closely related to the legal rules that regulate the different aspects and effects of endorsement is the question of capacity to endorse bills of exchange. This forms part of negotiatory capacity in general, which, in a broad sense, may be defined as the faculty of a person to acquire rights and to assume obligations on negotiable instruments.

Foreign Exchange Restrictions And Public Policy In The Conflict Of Laws: Part Ii, Evsey S. Rashba

Michigan Law Review

Political Laws have been the subject of a much disputed doctrine. It has been stated by Dicey, and by other authoritative writers in various countries, that a court has no jurisdiction to entertain an action for the enforcement of a "political law" of a foreign state. The term "political law" is not limited to the field of public law. It is, of course, only exceptionally that rules governing the relations between a state and its citizens are given extraterritorial effect. The doctrine goes further. It holds that rules which are technically a part of private law, but which are designed …

Basic Monetary Conceptions In Law, Arthur Nussbaum

Michigan Law Review

While in various periods of American legal history American courts have been confronted with problems of a monetary character, the importance and multiplicity of these questions have never been more strongly felt than within the last few years, and there is certainly no indication that this situation will change in the near future. The jural difficulties arising from monetary troubles are unusual, not only because of their financial and social implications, but also because of their theoretical intricacies. No wonder, therefore, that arguments advanced by courts in cases of a monetary nature are very often highly unsatisfactory. Again and again, …

Book Reviews

Michigan Law Review

Multiple book reviews by various authors.

Garnishment-Foreign-Double Liability

Michigan Law Review

Plaintiff, a resident of New York, obtained a judgment in Connecticut against El Saieh, a resident of Haiti, the court in that action obtaining jurisdiction by garnishment of a debt owed El Saieh by defendant, a Connecticut corporation, which was served with garnishment process, and admitted an obligation to El Saieh based on a policy of fire insurance issued through its agency in Haiti on a stock of goods located there. Plaintiff then sought to enforce the judgment against the defendant garnishee, which set up a defense of double liability, contending that under the laws of Haiti it was absolutely …