Law Commons^™

Stickiness And Incomplete Contracts, Julian Nyarko

University of Chicago Law Review

Both economic theory and legal theory assume that sophisticated parties routinely aim to write contracts that are optimal, in the sense of maximizing the parties’ joint surplus. But more recent studies analyzing corporate and government bond agreements have suggested that some contract provisions are highly path dependent, or “sticky,” with future agreements only rarely improving upon previous ones.

Analyzing half a million contracts using automated text analysis, this Article demonstrates that the stickiness hypothesis explains the striking lack of dispute resolution clauses that can be found in agreements between even the most sophisticated commercial parties. When drafting these contracts, external …

Proximate Cause Explained: An Essay In Experimental Jurisprudence, Joshua Knobe, Scott J. Shapiro

University of Chicago Law Review

One of the oldest debates in American jurisprudence concerns the concept of “proximate cause.” According to so-called formalists, the legal concept of proximate cause is the same as the ordinary concept of “cause.” The legal question of whether a cause is proximate for the purposes of establishing tort liability, therefore, is an objective matter about the external world determinable by familiar descriptive inquiry. By contrast, legal realists think that issues of proximate causation are disguised normative questions about responsibility. As the realists William Prosser and W. Page Keeton put it, proximate cause is better called “responsible cause.”

Recent work in …

Open Access, Interoperability, And The Dtcc's Unexpected Path To Monopoly, Dan Awrey, Joshua Macey

Coase-Sandor Working Paper Series in Law and Economics

In markets with significant scale economies and network effects, scholars and policymakers often tout open access and interoperability requirements as superior to both regulated monopoly and the break-up of dominant firms. In theory, by compelling firms to coordinate to develop common infrastructure, regulators can use these requirements to replicate scale and network economies without leaving markets vulnerable to monopoly power. Examples of successful coordination include the provision of electricity, intermodal transportation, and credit card networks.

This Article analyzes the history of U.S. securities clearinghouses and depositories in order to offer a significant qualification to this received wisdom. This history demonstrates …

Utility Mergers And The Modern (And Future) Power Grid, Joshua Macey

Coase-Sandor Working Paper Series in Law and Economics

Scott Hempling’s Regulating Mergers and Acquisitions of U.S. Electric Utilities provides a comprehensive history of electric utility mergers in the United States since the 1980s. Hempling documents the dramatic consolidation the industry has seen in the past fifty years, and he convincingly argues that electric utility mergers present unique problems for regulators. This Review considers how utility acquisitions (a) allow holding companies to leverage the utilities’ creditworthiness to cross-subsidize non-utility affiliates, and (b) exacerbate informational asymmetries between regulators and utilities. It argues that utility mergers generate negative spillovers outside of the utility’s service territory that have potentially significant environmental consequences, …

Congress’S Commissioners: Former Hill Staffers At The S.E.C. And Other Independent Regulatory Commissions, Brian D. Feinstein, M. Todd Henderson

Coase-Sandor Working Paper Series in Law and Economics

The expression “personnel is policy” has become a truism in Washington. Yet our understanding of how the political branches use appointments to project influence into the administrative state is incomplete. This Article leverages data on almost one-thousand commissioners serving on eleven major independent regulatory commissions to chart, for the first time, Congress’s growing practice of placing former legislative-branch personnel onto these entities. We then theorize that this phenomenon is rooted in fundamental changes in American politics in recent decades— and, in turn, that it has deeply affected administrative law and separation-of- powers dynamics.

Over the past several decades, the number …

Revitalizing The Generation-Skipping Transfer Tax, Daniel J. Hemel, Robert Lord

Public Law and Legal Theory Working Papers

Congress first enacted the generation-skipping transfer (GST) tax in 1976 to protect the estate and gift tax base and to ensure that extraordinary fortunes would bear their fair share of the transfer tax burden. Nearly a half-century into the life of the GST tax, those goals remain unrealized. In recent decades, high-net-worth individuals have succeeded in shifting hundreds of billions of dollars to “dynasty trusts” that—under current law—are poised to escape federal wealth transfer taxation indefinitely. The rise of dynasty trusts reduces the revenue-raising potential of the estate and gift taxes and allows a privileged class to exert vast economic …

Assessing Affirmative Action's Diversity Rationale, Adam Chilton, Justin Driver, Jonathan S. Masur, Kyle Rozema

Public Law and Legal Theory Working Papers

Ever since Justice Lewis Powell’s opinion in Regents of the University of California v. Bakke made diversity in higher education a constitutionally acceptable rationale for affirmative action programs, the diversity rationale has received vehement criticism from across the ideological spectrum. Critics on the right argue that diversity efforts lead to “less meritorious” applicants being selected. Critics on the left charge that diversity is mere “subterfuge.” On the diversity rationale’s legitimacy, then, there is precious little diversity of thought. In particular, prominent scholars and jurists have cast doubt on the diversity rationale’s empirical foundations, claiming that it rests on an implausible …

The Law Of Democratic Disqualification, Tom Ginsburg, Aziz Z. Huq, David Landau

Public Law and Legal Theory Working Papers

Almost all constitutions, including our own, include one or several ways to disqualify specific individuals from political office. The U.S. Constitution, indeed, incorporates no less than four overlapping pathways toward disqualification. This power of retail disqualification stands at the heartland of the complex project of democratic rule. In practice, it works both an instrument for preserving democratic rule, and also a knife against it. This Article is the first to analyze systematically the complex positive and normative questions raised by disqualification. It offers both a positive account of the function that disqualification plays in constitutional ordering, and a normative account …

Remediation In Foreign Bribery Settlements: The Foundations Of A New Approach, Samuel J. Hickey

Chicago Journal of International Law

A handful of nations spearhead the global anti-corruption regime through the transnational enforcement of foreign bribery laws. These laws prohibit corporations with a connection to the enforcing nation from paying or offering bribes to the officials of a foreign nation. Enforcement agencies construe the extraterritorial application of these laws broadly, establishing their global prominence. The most notable example is the United States Department of Justice’s enforcement of the Foreign Corrupt Practices Act of 1977 (FCPA). Enforcement agencies typically resolve investigations against corporations through deferred prosecution agreements and other consensual settlement mechanisms known generally as non-trial resolutions. Fines and penalties paid …

Whole Issue (Winter 2021 / 21.2)

Chicago Journal of International Law

No abstract provided.

Environment, Mobility, And International Law: A New Approach In The Americas, David J. Cantor

Chicago Journal of International Law

The role of international law in regulating international movement in the context of global environment change and hazards remains a topic of intense debate among both legal scholars and practitioners. Yet, as this Article shows, we have largely reached the limits of what existing international law methods and approaches can tell us about the future of the law in this area. By contrast, this Article draws on a detailed regional case study to offer a distinct perspective to that ongoing debate about the role and future of international law. Against the backdrop of emerging patterns of mobility linked to devastating …

Table Of Contents

Chicago Journal of International Law

Table of Contents (Winter 2021 / 21.2)

The Legal Man In The Moon: Exploring Environmental Personhood For Celestial Bodies, William B. Altabef

Chicago Journal of International Law

The rise of the commercial space industry endangers the preservation of environments, such as the lunar surface and other celestial bodies, with the threat of contamination and resource exploitation. In the coming decades, flights to space will become commonplace—but at present, there is no way to hold outer space polluters accountable. The existing international legal regime is weak, with the United Nations’ space treaties offering limited enforcement mechanisms against offenders. The increasingly popular concept of environmental personhood offers a solution by rethinking the meaning of a juridical person within the text of the United Nations Outer Space, Space Liability, and …

The Application Of International Tax Treaties To Digital Services Taxes, Katherine E. Karnosh

Chicago Journal of International Law

As digital services and electronic commerce have become more prevalent aspects of the global economy, there have been concerns over how tax systems will adapt to this change. International tax treaties in particular seem to be outdated and unprepared for the digital economy. Many international tax treaties provide that businesses are to be taxed on their income only in jurisdictions where they have a sufficient physical presence. By establishing their European headquarters and digital servers in countries with low corporate income tax rates (such as Ireland) and then using those headquarters to provide digital services to the rest of Europe, …

Human Rights Disclosure And Due Diligence Laws: The Role Of Regulatory Oversight In Ensuring Corporate Accountability, Rachel Chambers, Anil Yilmaz Vastardis

Chicago Journal of International Law

The proliferation of human rights disclosure and due diligence laws around the globe is a welcome development in the area of business and human rights. Corresponding improvement in conditions for workers and communities in global supply chains whose human rights are impacted by businesses has not materialized, however. In this Article, we focus on the oversight and enforcement features of human rights disclosure and due diligence laws as one of the missing links to achieving the accountability objectives envisaged by such legislation. Drawing on our analysis of key legislative developments, we observe and critique that the state has almost completely …

A Transnational Law Of The Sea, Josh Martin

Chicago Journal of International Law

It is widely accepted that we are presently struggling to govern the vast expanse of the ocean effectively. This Article finally gets to the real cause of much of the failures of the law of the sea: Westphalian sovereignty. In particular, it evidences that certain features of our obstinate model of public international law—such as sovereign exclusivity, equality, and territoriality—can be linked with a large majority of the governance “gaps” in the global ocean context. It thereby exonerates the falsely accused Grotius’s mare liberum doctrine and flag state regulation, which both still continue to receive an unmerited level of condemnation. …