Law and Economics Commons^™

Laying Down The "Brics": Enhancing The Portability Of Awards In International Commercial Arbitration, Benjamin C. Mccarty

Benjamin C McCarty

The drafters of the 1958 New York Convention intended Article V(2)(b) to be interpreted narrowly, and while most pro-arbitration national courts do maintain narrowly defined areas of public policy that are sufficient for refusal of the recognition and enforcement of a foreign arbitral award, this is not always the case. Developing states and jurisdictions that maintain corrupt or inefficient judicial systems have shown a greater willingness to invoke the public policy exception for a broader, amorphous variety of reasons. This phenomenon has created a sense of unpredictability among international investors, arbitrators, and business executives as to the amount of deference …

Users' Patronage: The Return Of The Gift In The "Crowd Society", Giancarlo F. Frosio

Giancarlo Francesco Frosio

In this work, I discuss the tension between gift and market economy throughout the history of creativity. For millennia, the production of creative artifacts has lain at the intersection between gift and market economy. From the time of Pindar and Simonides – and until the Romanticism will commence a process leading to the complete commodification of creative artifacts – market exchange models run parallel to gift exchange. From Roman amicitia to the medieval and Renaissance belief that “scientia donum dei est, unde vendi non potest,” creativity has been repeatedly construed as a gift. Again, at the time of the British …

An Approach To The Regulation Of Spanish Banking Foundations, Miguel Martínez

Miguel Martínez

The purpose of this paper is to analyze the legal framework governing banking foundations as they have been regulated by Spanish Act 26/2013, of December 27th, on savings banks and banking foundations. Title 2 of this regulation addresses a construct that is groundbreaking for the Spanish legal system, still of paramount importance for the entire financial system insofar as these foundations become the leading players behind certain banking institutions given the high interest that foundations hold in the share capital of such institutions.

Optimized Theft: Why Some Controlling Shareholders “Generously” Expropriate From Minority Shareholders, Sang Yop Kang

Sang Yop Kang

Although controlling shareholder agency problems have been well studied so far, many questions still remain unanswered. In particular, an important puzzle in a bad-law jurisdiction is: why some controlling shareholders (“roving controllers”) loot the entire corporate assets at once, and why others (“stationary controllers”) siphon a part of corporate assets on a continuous basis. To solve this conundrum, this Article provides analytical frameworks exploring the behaviors and motivations of controlling shareholders. To begin with, I reinterpret Olson’s political theory of “banditry” in the context of corporate governance in developing countries. Based on a new taxonomy of controlling shareholders (“roving controllers” …

Present At The Creation: Reflections On The Early Years Of The National Association Of Corporate Directors, Lawrence J. Trautman

Lawrence J. Trautman Sr.

Effective corporate governance is critical to the productive operation of the global economy and preservation of our way of life. Excellent governance execution is also required to achieve economic growth and robust job creation in any country. In the United States, the premier director membership organization is the National Association of Corporate Directors (NACD). Now over 36 years old, NACD plays a major role in fostering excellence in corporate governance in the United States and beyond. Over the past thirty-six years NACD has grown from a mere realization of the importance of corporate governance to become the only national membership …

Negative Externalities And Subprime Auto Financing: Time To Let The Hanging Paragraph Go(2), Chunlin Leonhard

Chunlin Leonhard

Economists generally agree that when private transactions generate negative externalities (i.e. unintended harmful byproduct), government intervention is potentially necessary. Negative externalities are considered socially inefficient because they destroy market supply and demand equilibrium. The existence of negative externalities is therefore one of those rare occasions when government intervention in private transactions is justified. It follows that when the government does choose to intervene, its goal should be to remedy, not to encourage, negative externalities. This article identifies one bankruptcy rule, commonly known as the Hanging Paragraph in the Bankruptcy Code, 11 U.S.C. § 1325(a)(9), that violates the basic principle of …

Standard Contract Clauses As Public Goods: A New Way Of Understanding Inefficient Clauses, Enrico Baffi

enrico baffi

The aim of this work is to show how it is possible to identify market failures other than those traditionally identified by lawyers and law and economics scholars to justify the mandatory provisions of contracts between professionals and consumers and the equally mandatory provisions governing the abuse of economic dependency. This is a new approach that can be extended to other provisions and appears to rest on fairly solid microeconomic foundations. There is no doubt, however, that many criticisms can be leveled against it. Very briefly, I shall argue that the production of clauses characterized by being rather vague, indeterminate …

Rise Of The Intercontinentalexchange And Implications Of Its Merger With Nyse Euronext, Latoya C. Brown

Latoya C. Brown, Esq.

This paper examines the impending merger between the IntercontinentalExchange (ICE) and NYSE Euronext against the backdrop of the current structure of the global financial services industry. The paper concludes that the merger embodies what the financial services industry is becoming and captures the model that will allow exchanges to remain competitive in today’s marketplace: mega-exchanges with broader asset classes and electronic platforms. As technology and globalization threaten their vitality, exchanges will need to continue reinventing and adapting. Increasingly over the last decade they have done so by merging and by moving, at least a part of, their operations on screen. …

The Regulation Of U.S. Money Market Funds: Lessons From Europe, Latoya C. Brown

Latoya C. Brown, Esq.

The recent financial crisis challenged long held perceptions of money market funds (“MMFs”) as stable and highly liquid instruments. Regulators in the US and in Europe now seek to impose additional rules on MMFs to avoid another significant failure as happened to the Reserve Fund. In the US, the debate is drawing even more media attention as question of which regulatory body - such as the Securities and Exchange Commission, the Treasury Department, and the Financial Stability Oversight Council – should lead the way has taken interesting twists and turns. This paper examines primary reform options being proposed in the …

Ending Judgment Arbitrage: Jurisdictional Competition And The Enforcement Of Foreign Money Judgments In The United States, Gregory Shill

Gregory Shill

Recent multi-billion-dollar damage awards issued by foreign courts against large American companies have focused attention on the once-obscure, patchwork system of enforcing foreign-country judgments in the United States. That system’s structural problems are even more serious than its critics have charged. However, the leading proposals for reform overlook the positive potential embedded in its design.

In the United States, no treaty or federal law controls the domestication of foreign judgments; the process is instead governed by state law. Although they are often conflated in practice, the procedure consists of two formally and conceptually distinct stages: foreign judgments must first be …

• The Credit Crisis And Subprime Litigation: How Fraud Without Motive ‘Makes Little Economic Sense’, Peter Hamner

Peter Hamner

The recent collapse of the financial markets spurred numerous lawsuits seeking a faulty party. Many plaintiffs argue that market participants committed securities fraud. They claim that deficient subprime loans caused the financial crisis. These risky loans were allegedly originated by banks to be sold off to third parties. The subprime loans were securitized and spread throughout the financial markets. The risk these loans presented was allegedly not disclosed to the buyers of the loans and securities on the loans. As these deficient loans and securities began to default the financial markets came to a halt. This article argues that securities …