Faculty Chapters

Follow

• 

  Reining in the Regulators: Title VI of the Financial CHOICE Act

  Barry E. Adler, Thomas F. Cooley, and Lawrence J. White

  The drafters of the Financial CHOICE Act believe that the Dodd-Frank Act of 2010 mandated excessive regulation of the financial sector—especially banks—and also that U.S. financial regulators have not regulated wisely: both before and since Dodd-Frank. Although other parts of the CHOICE Act target specific provisions of Dodd-Frank (e.g., Title I provides an “off-ramp” from detailed Dodd-Frank regulation for well capitalized banks), Title VI addresses broader regulatory issues. In this chapter, we will address the following: • Requiring cost-benefit analyses of all financial regulatory proposals; • Requiring that Congress approve all major financial regulations; • Eliminating the “Chevron deference” to regulatory agencies; and • Requiring multi-person governing boards instead of single-heads of agencies.

• 

  Resolution Authority Redux

  Barry E. Adler and Thomas Philippon

  The economic and financial crisis of 2007-2009 caused the collapse or near collapse of several Systemically Important Financial Institutions (SIFIs), such as Bear Stearns, Lehman Brothers, Merrill Lynch, Fannie Mae, Freddie Mac, American International Group (AIG), and Citigroup in the U.S. and many others in the rest of the world. Except for Lehman, these financial giants were not allowed to fail, and many were bailed out by the taxpayers. The debate regarding the desirability of these bailouts will never be settled because it is impossible to assess the systemic consequences that disorderly failures would have had on the financial system and the broad economy. What is clear, however, is that citizens around the world do not want to be presented with the too-big-to-fail dilemma again. The job of regulators is therefore to make the system safer, and to create a process whereby SIFIs can fail in an orderly manner. In 2010, Congress enacted the Dodd-Frank Act, which, among other provisions, took a dual approach to the prevention of systemic collapse. In this discussion, we focus on Dodd-Frank Title I—Systemic Risk Regulation and Oversight—and Title II—Orderly Liquidation Authority (OLA) for Systemic Risk Companies. Title I insists that SIFIs maintain a sound capital structure and plan for dissolution in the event of crisis, i.e., create a Living Will. A Living Will should ensure that a failed bank holding company can be resolved under the US bankruptcy code, as are other corporate debtors.

• 

  The Use (and Misuse) of European Human Rights Law in Investor-State Dispute Settlement

  José E. Alvarez

  While the intersection between European human rights law and international investment law has been the subject of sporadic scholarship with respect to certain issues—such as the use of proportionality and the margin of appreciation in both regimes—it has not been the subject of sustained analysis across the wide number of matters being addressed by investor-state dispute settlement (ISDS). This essay begins to redress that gap. Section I describes how the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR) and the case law interpreting it by the European Court of Human Rights (ECtHR or Strasbourg Court) are being used or cited by investor-state tribunals charged with interpreting international investment agreements (IIAs). Section II advances general explanations for why this is occurring. Section III examines more closely some of the ECHR references made in the widely publicized arbitral ruling issued on July 8, 2016, Philip Morris Brands v. Uruguay. Section IV outlines some of the substantive issues (apart from proportionality and margin of appreciation) that elicit references to European human rights law and draws out some tentative lessons about the use (and possible misuse) of this law in ISDS. Section V concludes. The basis for this study is a dataset of public treaty-based ISDS awards, rendered by ICSID and non-ICSID tribunals, from the first such award in 1990 through June 1, 2016. That set of arbitral rulings, the PluriCourt Investment Treaty Arbitration Database (PITAD), among the most comprehensive available, contains 760 cases, including 515 resolved by either a dismissal on jurisdiction, or a partial or complete win for the claimant or respondent, or a discontinuance of the dispute.

• 

  Afterword

  Kwame Anthony Appiah

  Appiah uses a trip to attend a family wedding as a departure point for meditations on the nature of overlapping and conflicting claims of belonging.

• 

  Culture, Identity, and Human Rights

  Kwame Anthony Appiah

  This book is based upon a lecture series inaugurating the new Canadian Museum for Human Rights that took place in Winnipeg, Canada between September 2013 and May 2014. Fragile Freedoms brings together some of the most influential contemporary thinkers on the theory and practice of human rights. The first two chapters, by Anthony Grayling and Steven Pinker, are primarily historical: they trace the emergence of human rights to a particular time and place, and they try to show how that emergence changed the world for the better. The next two chapters, by Martha Nussbaum and Kwame Anthony Appiah, are normative arguments about the philosophical foundations of human rights. The final three chapters, by John Borrows, Baroness Helena Kennedy, and Germaine Greer, are innovative applications of human rights to indigenous peoples, globalization and international law, and women. Wide ranging in its philosophical perspectives and implications, this volume is an indispensable contribution to the contemporary thinking on the rights that must be safeguarded for all people.

• 

  Foreword

  Kwame Anthony Appiah

  Chinua Achebe is considered the father of modern African literature, the writer who "opened the magic casements of African fiction." The African Trilogy—comprised of Things Fall Apart, Arrow of God, and No Longer at Ease—is his magnum opus. In these masterly novels, Achebe brilliantly imagines the lives of three generations of an African community as their world is upended by the forces of colonialism from the first arrival of the British to the waning days of empire.

• 

  Race and Africana Social and Political Frames

  Kwame Anthony Appiah

  With the recent barrage of racially motivated killings, violent encounters between blacks and whites, and hate crimes in the wake of the 2016 election that foreground historic problems posed by systemic racism, including disenfranchisement and mass incarceration, it would be easy to despair that Dr. Martin Luther King Jr.'s dream has turned into a nightmare. Many Americans struggle for equal treatment, facing hate speech, brutality, and a national spirit of hopelessness; their reality is hardly "post-racial." The need for clarity surrounding the significance of race and racism in the United States is more pressing than ever. This collection of interviews on race, some originally conducted for The New York Times philosophy blog, The Stone, provides rich context and insight into the nature, challenges, and deepest questions surrounding this fraught and thorny topic. In interviews with such major thinkers as bell hooks, Judith Butler, Cornel West, Kwame Anthony Appiah, Peter Singer, and Noam Chomsky, Yancy probes the historical origins, social constructions, and lived reality of race along political and economic lines. He interrogates fully race's insidious expressions, its transcendence of Black/white binaries, and its link to neo-liberalism, its epistemological and ethical implications, and, ultimately, its future.

• 

  The Diversity of Diversity

  Kwame Anthony Appiah

  It is clear that in our society today, issues of diversity and social connectedness remain deeply unresolved and can lead to crisis and instability. The major demographic changes taking place in America make discussions about such issues all the more imperative. Our Compelling Interests engages this conversation and demonstrates that diversity is an essential strength that gives nations a competitive edge. This inaugural volume of the Andrew W. Mellon Foundation's Our Compelling Interests series illustrates that a diverse population offers our communities a prescription for thriving now and in the future. This landmark essay collection begins with a powerful introduction situating the demographic transitions reshaping American life, and the contributors present a broad-ranging look at the value of diversity to democracy and civil society. They explore the paradoxes of diversity and inequality in the fifty years following the civil rights legislation of the 1960s, and they review the ideals that have governed our thinking about social cohesion—such as assimilation, integration, and multiculturalism—before delving into the new ideal of social connectedness. The book also examines the demographics of the American labor force and its implications for college enrollment, graduation, the ability to secure a job, business outcomes, and the economy. Contributors include Danielle Allen, Nancy Cantor, Anthony Carnevale, William Frey, Earl Lewis, Nicole Smith, Thomas Sugrue, and Marta Tienda. Commentary is provided by Kwame Anthony Appiah, Patricia Gurin, Ira Katznelson, and Marta Tienda. At a time when American society is swiftly being transformed, Our Compelling Interests sheds light on how our differences will only become more critical to our collective success.

• 

  The Law of Honor

  Kwame Anthony Appiah

  Few challenges to legal regulation are more substantial than those posed by honor and the sentiments that surround it. The same is true of reason. Honor and reason are often at odds. This chapter will consider honor—and honor’s role as a threat to law, morality, and reason—and what this reveals about the nature and limits of the law. There are also ways in which honor and its sentiments can be mobilized in the service of the law. This discussion will start where moral life meets us, already up and running.

• 

  Economics of Tort Law

  Jennifer H. Arlen

  Chapter 3 discusses economic analysis of optimal tort liability, focusing on the use of liability where private parties cannot provide optimal incentives through private ordering, and information is costly. It shows that the central motivations for tort liability—imperfect contracting and costly information—alter its optimal structure and incentive effects, both as applied to individual injurers and risk-imposers operating within organizations. Section 2 examines optimal tort liability in the context where liability is needed: where injurers and victims are “strangers” who cannot bargain over optimal risk prevention or responsibility for losses. Section 3 examines tort liability when injurers and victims are in a market relationship, as with products liability and medical malpractice. Section 4 extends the analysis of optimal tort liability to the situation where risk-imposers respond to information costs by conducting their activities through organizations, as is generally the case most important torts other than automobile accidents.

• 

  The Criminal Regulatory State

  Rachel E. Barkow

  In this chapter, Rachel Barkow reconceptualizes the criminal process as an administrative bureaucracy. Prosecutors’ offices make decisions in ways that are better explained by bureaucratic pressures and institutional history than by crime rates or individualized concerns about culpability or proportionality. In fact, the explosion of the penal state and our current policies of mass incarceration can be explained at least in part by common principles of bureaucratic expansion and institutional self-interest, which in turn clarify why the penal system grew so radically even as crime rates fell. As Barkow puts it, in response to “the violence and unrest of the 1960s and 1970s ... [t]he government created agencies and actors who have a vested stake in resisting any efforts to contract the system and who seek to maintain the rules that make those bureaucracies run most efficiently.”

• 

  Is Patent Reform via Private Ordering Anticompetitive? An Analysis of Open Patent Agreements

  Matthew W. Callahan and Jason M. Schultz

  Private-ordering patent reform strategies are growing in number and popularity out of twinned desires to decrease patent litigation and promote cross-platform innovation. However, much like patent pools and other attempts at collective IP problem solving, questions of competition impact and antitrust policy arise. This chapter considers one such strategy—open patent agreements (OPAs)—and asks how it might perform under antitrust scrutiny. In the end, we conclude that OPAs should survive such scrutiny because they generate significant procompetitive effects, such as non-discriminatory access to knowledge and incentives for follow-on innovation, that more than outweigh the potential risks to competition.

• 

  Theorizing the U.S. Supreme Court

  Charles M. Cameron and Lewis A. Kornhauser

  We summarize the formal theoretical literature on Supreme Court decision-making. We focus on two core questions: What does the Supreme Court of the United States do, and how can one model those actions; and, what do the justices of the Supreme Court want, and how can one model those preferences? Given the current state of play in judicial studies, these questions then direct this survey mostly to so-called separation of powers (SOP) models, and to studies of a multi-member (“collegial”) court employing the Supreme Court’s very distinctive and highly unusual voting rule. The survey makes four main points. First, it sets out a new taxonomy that unifies much of the literature by linking judicial actions, modeling conventions, and the treatment of the status quo. In addition, the taxonomy identifies some models that employ inconsistent assumptions about Supreme Court actions and consequences. Second, the discussion of judicial preferences clarifies the links between judicial actions and judicial preferences. It highlights the relationships between preferences over dispositions, preferences over rules, and preferences over social outcomes. And, it explicates the difference between consequential and expressive preferences. Third, the survey delineates the separate strands of SOP models. It suggests new possibilities for this seemingly well-explored line of inquiry. Fourth, the discussion of voting emphasizes the peculiar characteristics of the Supreme Court’s voting rule. The survey maps the movement from early models that ignored the special features of this rule, to more recent ones that embrace its features and explore the resulting (and unusual) incentive effects.

• 

  Three Mistakes in Open Borders Debates

  Adam B. Cox

  What might justify laws that restrict the free movement of people across international borders? This chapter corrects three common mistakes made by those who try to answer this question. First, debates about open borders often conflate three quite distinct questions—about whether border restrictions are permissible, when they are permissible, and who gets to decide. Second, the early American immigration jurisprudence often cited by legal scholars was not about open borders arguments as many have supposed. Third, it will be very difficult to make a persuasive argument in favor of border restrictions without simultaneously tackling the question of what principles of equality require for those who are admitted into a state’s territory. These twin questions are typically segregated in philosophical work on immigration, but they are tied together in ways that are too often overlooked.

• 

  The Transformation of Europe Revisited: Civilising Interstatal Relations

  Gráinne de Búrca

  Joseph Weiler's The Transformation of Europe is one of the most influential works in the history of European studies. Twenty-five years after its original publication, this new collection of essays pays tribute to Weiler's legacy by discussing some of the most pressing issues in contemporary European Union law, policy and constitutionalism. The book does not intend to be a simple expression of intellectual esteem for Weiler's seminal work; instead, the collection honours it by critically engaging with some of its assumptions and theses. Overall, it shows how a study of 1991 can still be fundamental to the present and future of the EU, including the challenges of Brexit and Eurozone crises.

• 

  Introduction: A Blueprint for Illinois and Beyond

  Richard A. Epstein

  The Illinois Policy Institute has done a great public service in putting together this cohesive set of well-reasoned essays on a topic of great public urgency: "An Illinois Constitution for the Twenty-First Century." My major observation is that this book is both timely and tardy. Tardy, because one-sixth of the twenty-first century is already in the history books. Timely, because it is urgent to undo the many poor decisions of the Illinois legislature and courts that have compromised the state's political and fiscal health so that it now lags behind its neighbors on virtually all measures of economic well-being. In recent years, the Illinois Policy Institute has published a large number of individual posts, all of which are essential reading, which chronicle the dire situation within the state. The Institute notes the steady exodus of manufacturing jobs from Illinois, most of which go to neighboring states that have fewer pro-union rules and more stringent budgetary processes. The cumulative effect of these miscues is easy to determine even if the relative weights of the different institutional blunders are difficult to measure.

• 

  Optimal Constitutional Structure

  Richard A. Epstein

  The optimal constitution is classical liberal in form with a commitment to private property and limited government. These principles are not absolutes, and must yield to the need for the public control of force, fraud, and monopoly. This distribution of public and private rights is best understood by comparison to organizations like corporations and planned unit developments. This chapter identifies the mechanisms that corporate organizers and property developers use to attract and keep outside capital, noting the role structural protections and protections for individual rights. It examines how these mechanisms carry over to political institutions along two key axes—one dealing with the difference between unitary and federalist systems, and the other between presidential and parliamentary systems. It concludes that developing any general theory about the structural constitution as regards individual rights depends on the size, shape, and ethnic and regional differences within the polity.

• 

  The Unassailable Case Against Affordable Housing Mandates

  Richard A. Epstein

  Current disquiet about the shape of housing markets in the United States has brought forth systematic proposals for their reform. Some of these move in a pro-market direction. These include removing zoning restrictions on new construction in order to increase supply. They also include direct public subsidies for specific classes of housing paid from general public revenues, such as Section 8 Housing, which offers rental housing assistance to private landlords on behalf of low-income tenants (Housing Act of 1937, 42 U.S.C. § 1437f). As between these two, I prefer the market liberalization because only it can produce the double benefit of lower administrative costs and the expansion of supply. In contrast, direct public subsidies require higher taxes of unknown incidence and severity that generate political controversy and deadweight social losses. This chapter, however, bypasses both these programs to exclusively critique affordable housing mandates for “inclusionary zoning.” These mandates have gained in popularity in recent years, precisely because they do not require any direct appropriation of public funds. In June 2015, a unanimous California Supreme Court, speaking through Chief Justice Tani Cantil-Sakauye in California Building Industry Association v. City of San Jose (61 Cal. 4th. 435 (2015)) (CBIA), rebuffed constitutional challenges to the San Jose affordable housing program that “requires all new residential development projects of 20 or more units to sell at least 15 percent of the for-sale units at a price that is affordable to low-or moderate-income households” (CBIA at 442). Those programs are now operative in more than 170 municipalities in California alone (CBIA at 441).

• 

  A Yankee Gets Schooled in King Arthurs’s Court: Canadian Labour Law as a Cautionary Tale

  Cynthia Estlund

  Harry Arthurs has managed to be both mourner-in-chief for the impending demise of the aging “Wagner model” of labour relations that Canada and the United States share, and an aspiring architect of the future of work law in North America and beyond. From his lofty perch, he has chronicled the arc of organized labour’s rise and decline, on this continent and beyond. Never losing sight of the forest for the trees, and armed with a consummate erudition and eloquence, Harry has become a kind of labour law prophet for the advanced capitalist world, and especially for its Anglo-American regions. I write as one of his humble American followers. Harry’s importance to American labour lawyers and scholars stems partly from the location of his perch in Canada. We in the United States could learn a great deal—if we were capable of learning it—from Canada and the trajectory of its labour law regime. Of course, Harry would be the first to caution us about the complexity of cross-country learning. But if any two national labour law systems are “mutually intelligible,” ours should be. Canada’s basic framework for union organizing and collective bargaining was famously modelled on ours. It is a striking illustration of the “extraterritorialization of American labor law.” Our National Labor Relations Act (NLRA ), or Wagner Act, of 1935 served as a model for Canadian reformers in the mid-twentieth century, and the basic features that distinguish the Wagner model from much of the developed world—enterprise-based bargaining, exclusive representation, and majority rule—are still at the core of both systems. Yet, Canada has largely escaped one central pathology of American labour law: its sheer obduracy. Canadian labour law thus suggests some paths not taken in the United States.

• 

  Product Liability in North America

  Bruce Feldthusen, John C.P. Goldberg, Michael D. Green, and Catherine M. Sharkey

  Where products develop ever more rapidly, the law may face difficulties in responding accordingly to new security threats which may arise. In the field of product liability, an extraordinary need for legal development has thus been perceived, with legislators and judges feeling compelled to find new solutions and to look across borders for these. In the detailed reports in this book, the World Tort Law Society proves that it is in an ideal position to examine the most significant concepts. The report on North America studies the special regime for product liability from its origin in the case law of the US; the European report is centred around the EU Product Liability Directive with its merits and faults; and the influence of these two systems as well as new answers are shown in the reports on Asia, Russia and four key jurisdictions in the rest of the world. Similar questions are discussed worldwide: How can a strict liability regime for products be justified, and can it be justified in all cases? How does the special regime relate to general rules of tort law? Should services be subject to a similar regime? The Members of the Society seek to provoke thought for solutions to these pervasive problems. In this spirit, the volume’s comparative conclusions invite discussion, and the book includes four responses to that call from eminent tort lawyers from different legal backgrounds. First global, book-length study in the field of product liability.

• 

  Article 12: Scope of the Law Applicable

  Franco Ferrari

  The law applicable to a contract by virtue of this Regulation shall govern in particular: (a) interpretation; (b) performance; (c) within the limits of the powers conferred on the court by its procedural law, the consequences of a total or partial breach of obligations, including the assessment of damages in so far as it is governed by rules of law; (d) the various ways of extinguishing obligations, and prescription and limitation of actions; (e) the consequences of nullity of the contract. In relation to the manner of performance and the steps to be taken in the event of defective performance, regard shall be had to the law of the country in which performance takes place.

• 

  Article 18: Burden of Proof

  Franco Ferrari

  The law governing a contractual obligation under this Regulation shall apply to the extent that, in matters of contractual obligations, it contains rules which raise presumptions of law or determine the burden of proof. A contract or an act intended to have legal effect may be proved by any mode of proof recognised by the law of the forum or by any of the laws referred to in Article 11 under which that contract or act is formally valid, provided that such mode of proof can be administered by the forum.

• 

  CISG

  Franco Ferrari

  If it is true, as has been suggested, that the unification of the law governing transnational commerce promotes the flow of international trade through the creation of certainty and predictability, the bedrock desiderata of any commercial law, let alone one that is applicable to transnational situations, then it is unsurprising that efforts have long been underway to unify the law governing the contract for the sale of goods (—> Sale contracts· and sale of goods), the mercantile contract par excellence, the 'pillar of the entire system of commercial relations' and, thus, the 'lifeblood of international commerce'. From the very start, those unification efforts were focused on the creation of rules regarding contracts for the sale of goods linked to more than one jurisdiction. The goal was to create a set of rules that would allow one to overcome the consequences of the coexistence of different national legal systems characterized by country-specific rules, considered to be an impediment 'to economic relationships which constantly increase among citizens of different countries; an obstacle above all for the enterprises that are involved in international commerce and that acquire primary resources or distribute goods in different countries which all have different law'.

• 

  Factoring (Uniform Law)

  Franco Ferrari

  Although the trend towards worldwide unification of international trade law is at least one hundred years old, unification efforts in the area of substantive law are mainly associated with the second half of the last century. This is unsurprising, considering that in the 20th century, the globalization of most national economies has resulted in a dramatic increase in transnational commerce and, consequently, an urgent need for corresponding legislative policy designed to regulate such transnational commerce(—> Globalization and private international law). In other words, there appeared to be a growing demand for a body of law governing business transactions linked to a plurality of legal systems. To get to that body of law, it was necessary to overcome what has been considered to be its biggest obstacle, ie, the existence of a myriad of distinct domestic laws. Therefore, there has been a continuing effort to promote international trade through the unificat10n (and harmonization) of international commercial law.

• 

  Financial Leasing (Uniform Law)

  Franco Ferrari

  The UNIDROIT Convention on International Financial Leasing, 2312 UNTS 195, henceforth UNIDROIT Financial Leasing Convention, was adopted on 28 May 1988, at the conclusion of a Diplomatic Conference convened by the Canadian government, as was its sister convention, the Ottawa Factoring Convention (UNIDROIT Convention on International Factoring of 28 May 1988, 2323 UNTS 373, 27 ILM 943; —> Factoring (uniform law)). Like the International Factoring Convention, the UNIDROIT Financial Leasing Convention entered into force on 1 May 1995. The efforts leading up to the UNIDROIT Financial Leasing Convention go back to 1974, when the UNIDROIT Secretariat submitted to the Governing Council of —> UNID ROIT a proposal for the preparation of a preliminary study looking into whether the elaboration of uniform rules on leasing would be desirable and feasible. Once the Governing Council agreed to this proposal, the efforts towards the creation of uniform rules on leasing became a priority. Over the years, these efforts led to a preliminary report containing a number of policy considerations, which the Governing Council endorsed in 1975. The policy considerations included the exclusion of real estate leasing from the scope of the instrument to be drafted—because of the limited impact of that form of leasing at the international level, and the difficulties the drafters would have faced in attempting to unify at the same time principles of the law of real property and the law of personal property (—> Property and proprietary rights). Tentative drafts were made, as well as various revised drafts, the last of which, still containing reservations regarding certain provisions which were placed in square brackets for decision, was laid before the aforementioned Diplomatic Conference.