Faculty Chapters

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  Pre-Recognition Framework Agreements Under the National Labor Relations Act

  Samuel Estreicher and Michele M. Machalani

  The National Labor Relations Act (the "Act" or "NLRA") does not prohibit unions and employers from entering into framework agreements to guide future bargaining if the union becomes the majority representative in an appropriate unit. Section 8(a)(2) does prohibit employers from providing a labor organization "financial or other support" that undermines, in some concrete manner, the independence of that labor organization. Because the Letter of Agreement ("LOA") between Dana Corporation ("Dana") and the International Union ("UAW") had no immediate effect on employees' rights and in no way undermined the independence of the UAW, the LOA is not unlawful "financial or other support" violative of section 8(a)(2), but rather a hallmark of constructive employer-union relations permissible under the Act. The National Labor Relations Board ("NLRB" or the "Board") and the courts have made clear that not all employer cooperation constitutes "financial or other support" violative of the Act, and that employers may take steps that encourage and facilitate constructive employer-union relations. In established bargaining relationships, employers allow union access to employees on company time and property, and afford 'employees paid time off for grievance representation and union meetings. Negotiated outcomes do not have to be limited to the particular bargaining unit and can include possible voluntary recognition of the union at other locations. Under the longstanding Kroger doctrine, the collective bargaining agreement extends to those locations once the union obtains majority support of the affected employees. During organizing campaigns, employers may express a preference for and a willingness to negotiate with a union as long as employees are free to choose whether they want to be represented by that union or any union. Such cooperation is lawful under the Act and helps effectuate its underlying policies of promoting "industrial peace" and encouraging collective bargaining.

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  Judicial Power: Getting It and Keeping It

  John A. Ferejohn

  One could think that the move from authoritarian rule to parliamentary democracy would be generally favorable to legality. There are certainly many cases of authoritarian rulers who have seen courts and legal processes as threats to their powers and insisted on subservient judges, willing to permit lawless actions as required. However, not every authoritarian regime has been hostile to legality and independent legal institutions. Indeed, Steven Holmes has argued that law and independent judges are often in the interest of authoritarian as well as democratic rulers because they permit the upward flow of information valuable to maintaining stable rule. Whether that is so or not, it seems clear that the transition away from an authoritarian regime, insofar as it entails a break in the old legal order, can undermine the establishment of genuinely legal institutions. Many of the laws might be either new or, if old, of questionable pedigree. There may have been special deals or pacts—necessary to disband the old authoritarian system—aimed at protecting certain traditional elites from legal rules that apply to others. Moreover, judges might well have continued or at least been trained under the previous regime, so they may not have earned or deserved a high level of trust. One could hope, however, that as democratic or liberal institutions become more established, these conflicts would fade away. Perhaps; but the chapters in this volume provide reason to think that there remains a significant tension between law and democratic rule and judges are sometimes placed in a position where they must negotiate these difficult issues.

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  Two Views of the City: Republicanism and Law

  John A. Ferejohn

  Republicans have traditionally opposed democracy, arguing that rule by a majority is a form of despotic or lawless rule, and liberalism due to its emphasis on private goods over public projects and shared or public interests. Today, however, republicanism is associated with certain kinds of ‘democratic’ institutions and deliberative practices, whereas democracy is considered a means of assuring significant liberal protections for individual freedom. This chapter examines the link between republicanism and the nature of law. It describes at least two separate complexes of constitutional prescriptions that can be found in republican thought: the classical complex that can be seen in various forms in Rome and Athens. It argues that modern republicans endorse institutions that are different from those advocated by their classical forbearers because they have a different understanding of society and social conflict, and traces this difference to ‘social ontology’. The chapter also contends that a republican notion of the common good depends at least in part on what is believed to be the greatest danger or threat to the republic.

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  Forum Shopping in the International Commercial Arbitration Context: Setting the Stage

  Franco Ferrari

  For many, “forum shopping” is, if not a dirty word, at least a term with disparaging or pejorative connotations, indicating something that commentators and courts consider to be “evil” and, therefore, must be avoided. And it is to reach that result that various policies against forum shopping exist. In the United States, for instance, the doctrine laid down in Erie is, among others, a manifestation of such a policy on an intra-State level: it tries to avoid forum shopping between state and federal jurisdictions by imposing upon federal courts the application of state law on issues of substantive law when sitting in diversity. Similarly, Guaranty Trust Co. v. York and Klaxon Co. v. Stentor Electric Manufacturing Co., cases following the wake of Erie, also are evidence of an anti-forum shopping attitude of federal courts in the intra-State context, i. e., where the choice is between state and federal court. On an inter-State level, the policy against forum shopping is behind, for instance, the Uniform Conflict of Laws—Limitations Act (promulgated in 1982). This Act was introduced to prevent the inter-State forum shopping possibilities originating from the statute of limitations traditionally being characterized as “procedural” for conflict of laws purposes—which resulted in the application of the limitation period prescribed by the forum state’s law. Unlike the “borrowing statutes” the Act intended to replace, i. e., those statutes which try to prevent forum shopping by providing that a cause of action, irrespective of whether it has a statutory basis or a judge-made one, is barred in the forum if it is barred in the state where the claim accrued, the Act tried to prevent forum shopping by characterizing the statute of limitations as substantive for conflict of laws purposes, thus pairing the state law applicable to questions of liability and recovery with that state’s statute of limitations, regardless of whether it would be longer or shorter than that of the lex fori.

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  Your Money and Your Life: The Export of U.S. Antitrust Remedies

  Harry First

  This chapter examines the spread of two critical U.S. antitrust remedies—private damages and imprisonment—to competition law regimes around the world. After discussing the history of the acceptance of these remedies in the United States, the chapter presents a study examining the extent to which these remedies have been adopted in thirteen enforcing jurisdictions, representing a cross-section of large and small economies located in different parts of the world. The study finds a general movement toward acceptance of both remedies, even though successful private litigation is not yet widespread and imprisonment remains rare. The chapter concludes that these two remedies are appropriate for broad adoption outside the United States, not only in the jurisdictions covered but in other jurisdictions as well, because they advance antitrust's important remedial goals—deterrence of violations and compensation of those injured by antitrust violations.

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  The United States: The Competition Law System and the Country's Norms

  Harry First, Eleanor M. Fox, and Daniel E. Hemli

  This chapter discusses the history, institutional structure, mandate, procedural characteristics, and agency performance of the competition law system of the United States. The US enforcement system is complex. There are two major federal enforcement agencies and fifty state enforcement agencies, plus five federal districts or territories, and enforcement through private litigation. The state attorneys general can enforce federal antitrust law as well as state antitrust law when state residents are injured. The two US federal agencies are the Department of Justice Antitrust Division and the Federal Trade Commission. The former is a division of the executive branch; the latter is an independent regulatory agency. The Antitrust Division of the Department of Justice follows the bifurcated judicial model, investigating cases and bringing enforcement actions in federal courts of general jurisdiction. The Federal Trade Commission, consisting of five commissioners, follows the integrated agency model, with power to investigate and adjudicate cases internally, subject to subsequent appellate court review.

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  Japan: The Competition Law System and the Country's Norms

  Harry First and Tadashi Shiraishi

  This chapter discusses the history, institutional structure, mandate, procedural characteristics, and agency performance of Japan's competition law system. Japan's Anti-Monopoly Act (AMA) was originally enacted in 1947 at the prompting of US occupation authorities. The Japan Fair Trade Commission (JFTC), which investigates and enforces potential violations of the Act, was designed to follow the model of the US Federal Trade Commission. At least with regard to civil enforcement, the JFTC structure follows the integrated agency model. The Commission investigates violations of the Act, proposes remedial orders and/or administrative surcharges (a form of administrative fine), holds adversarial hearings in disputed cases, and decides whether there is sufficient evidence to support a finding of a violation and the entry of an order. Under the AMA, the JFTC is statutorily guaranteed independence; its chairman and four commissioners are appointed by the Prime Minister with the approval of both houses of the Diet; and the chairman and commissioners serve for fixed terms.

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  Harms from Antitrust Infringements: Will Substantive Divergences In EU/US Law Be Mirrored in Private Damage Cases?

  Eleanor M. Fox

  This work contains the papers of the Tenth Conference on "Antitrust between EU Law and national law", held in Treviso on May 17 and 18 , 2012 under the patronage of the European Lawyers Union - Union des Avocats Européens (UAE), the Associazione Italiana per la Tutela della Concorrenza - the Italian section of the Ligue Internationale du Droit de la Concurrence (LIDC)-, the Associazione Italiana Giuristi di Impresa (AIGI), the European Company Lawyers Association (ECLA), and the Associazione Antitrust Italiana (AAI). Some of the papers have been extensively reviewed and updated by the authors prior to publication. Contributions contained in this volume are the result of an in-depth analysis and study of the most salient issues arising from the application of antitrust rules, carried out by experienced and high-ranking professionals, company lawyers, academics and EU/national institutional representatives who attended the Conference. They deal with extremely topical issues, lying at the heart of current antitrust debate. Some of the most contemporary topics include those relative to the large-scale distribution sector and the control of concentrations at both national and European level. Ample consideration is also given to salient antitrust issues encountered in undertakings' day-to-day business life, as well as to the future of antitrust in the global economy, also in the light of the new powers recently attributed to the Italian Antitrust Authority to challenge administrative acts. This volume also includes some precious insights on the assessment and quantification of damages in antitrust infringements, from both an economic and legal perspective, as well as reflections on the role of judges in the application of antitrust law, also following the principles set forth by the European Court of Human Rights in the well-known Menarini case.

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  Introduction: The GAL Competition Project: The Global Convergence of Process Norms

  Eleanor M. Fox

  In 2010, as part of the Global Administrative Law (GAL) Competition Project, teams were selected to draft work describing the institutional design of their country or jurisdiction, identifying the mandate of the competition authority therein, the norms embedded in the system for both rights of defence and institutional performance, and the trade-offs made. This volume is the result of that project. This introductory chapter provides an overview of the major cross-cutting themes in the other chapters, including major points of convergence and divergence, as well as the major normative issues relating to institutional design and decision-making processes across the developed and developing world. It provides brief summaries of the studies of the competition law systems of various nations. It is divided into the four parts addressed by each study: institutional structure; mandate of the competition authority; due process norms in case-by-case decision-making; and institutional performance norms. It also comments on the new or consolidated competition law regimes in India and Brazil.

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  The International Institutions of Competition Law

  Eleanor M. Fox and Amedeo Arena

  This chapter examines four institutions that have or prospectively may have a significant role to play in global competition law or policy: the World Trade Organization (WTO), the Organization for Economic Cooperation and Development (OECD), the United Nations Conference on Trade and Development (UNCTAD), and the International Competition Network (ICN). For each institution, it first describes the institutional system to the extent necessary to report what process norms are implied or express in the inputs and outputs of the system. It then examines the norms against notional international standards. Finally, it offers a critical evaluation and recommendations. It is shown that compliance with institutional performance and due process norms varies considerably among the four international institutions, as do their institutional design and mandate.

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  The Past and Future of International Antitrust: Gaps, Overlaps and the Institutional Challenge

  Eleanor M. Fox, John Fingleton, and Sophie Mitchell

  International antitrust has expanded rapidly since the third quarter of the twentieth century. The need to fit national laws to the reality of global markets has led not only to nations looking beyond their borders but also to the contemplation of international modalities and instruments. We do not have world competition law and are unlikely to get it in the foreseeable future. We ask in this chapter: what level of protection do we have against global restraints; what trans-border problems remain unattended; and, in the absence of world competition law, what initiatives (if any) might the existing institutions take to fill the gaps in the web? In the first part of this chapter we describe the evolution of international antitrust. In answering the policy questions in the second half of this chapter, we focus in particular on the International Competition Network. Finally, we make some suggestions for modalities to address the problems that currently have no ‘home’.

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  REACH and Competition Law

  Daniel Francis

  This chapter summarizes the principal implications of the European Union's competition (or ‘antitrust’) laws for a company negotiating the hurdles and hazards of REACH compliance. Here, the guiding principle is that the EU competition laws-as well as the competition laws of any other relevant jurisdictions-apply with full force and effect to conduct that takes place under the auspices of REACH compliance. This can raise acute dangers for unwary companies because the type of competitor collaboration contemplated in many areas of REACH law and practice—including extended information exchange and cooperation among direct competitors—can raise serious concerns under the competition laws. Violations of these laws are punishable by fines that can reach hundreds of millions of Euros. Some jurisdictions—including various EU Member States, as well as the United States—go even further, and impose criminal sanctions (including prison terms for individuals) for such conduct, and/or create private rights of action for injured competitors or consumers. Illegal anti-competitive agreements are also automatically void. Moreover, these legal penalties are augmented by the real-world costs of being implicated in unlawful conduct, including adverse publicity, involvement in burdensome investigations (which may include ‘dawn raids’ by law enforcement personnel), and lengthy and expensive adjudicative proceedings. These costs, of course, are incurred regardless of outcome or actual guilt. EU competition law, thus, demands careful attention and strict compliance. EU competition laws are enforced by the European Commission's Directorate-General for Competition and by national competition authorities (NCAs), which exist in each Member State. Investigations and enforcement proceedings can be commenced by the Commission or an NCA. In certain circumstances, companies that report illegal conduct to the Commission (or other relevant enforcement agency) may be entitled to the protection of a ‘leniency’ programme that dramatically reduces exposure to fines and penalties in exchange for cooperation and information. This chapter proceeds in four parts. This first part provides a general introduction to the competition laws of the European Union and the principal dangers that they create in the context of work under REACH. The second part discusses the principal risks raised by participation in REACH consortia. The third and fourth parts address specific points of competition law compliance that arise during registration and authorization, respectively.

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  The Intellectual Property Clause's Preemptive Effect

  Jeanne C. Fromer

  Federal law’s preemption of state power in the context of intellectual property (as well as more generally) remains unclear in several respects, even in the face of considerable scholarship and judicial decisions on the subject. As Arthur Miller observes, “Preemption in the intellectual property context . . . has received oscillating treatment over the years. . . . The result has been a body of law replete with internal tensions, distinctions, and ambiguities, making definite answers to many preemption questions impossible to divine.” Much of the confusion in preemption doctrine in intellectual property comes from trying to piece together the Supreme Court’s various cases in the area into a coherent analytical framework. I propose that the cases can be read consistently, with the help of the Constitution’s Intellectual Property Clause (IP Clause), which grants Congress authority “[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” The IP Clause can help shed analytical light on when state laws are preempted. The IP Clause is the authority pursuant to which American copyright and patent laws have been enacted. As I discuss elsewhere, it establishes the means and ends to which Congress can legislate to protect intellectual property: Congress can act with the goal of promoting progress of science and useful arts, using only the means set out therein, of securing for limited times to authors and inventors the exclusive rights to their works. I argue here that, understood through the lens of the IP Clause, state laws are preempted on satisfaction of two conditions: (1) they lie within the preemptive scope of the IP Clause, and (2) they upset the IP Clause’s balance, as effectuated by a federal law. Because the IP Clause authorizes Congress to act only for the purpose of promoting progress in science and useful arts (using the means specified), when state laws (or their enforcement) are instead structurally directed to another purpose, they generally lie outside the scope of the IP Clause and therefore outside its preemptive scope. Nonetheless, transitively, state laws that piggyback off the federal laws passed pursuant to the IP Clause lie within its preemptive scope in certain ways, even if they lack structural purpose to promote progress of science and useful arts. State laws within the IP Clause’s preemptive scope ought to be preempted when they upset the IP Clause’s balance, as instantiated by federal laws enacted pursuant to its authority. The IP Clause effectuates a balance between granting incentives to authors and inventors to create certain valuable works and promoting the public interest of having access to these works (by encouraging their creation and by ensuring that rights last only for limited times). Federal legislation enacted pursuant to this power instantiates this balance in particular ways (even when Congress does not expressly state as much). It is therefore problematic when state laws within the IP Clause’s preemptive scope upset this balance. Part I explains my understanding of the IP Clause and provides an overview of the patent and copyright laws enacted pursuant to its authority. Part II describes the Supreme Court’s preemption doctrine, focusing on its case law with respect to intellectual property. Part III turns to the IP Clause’s preemptive effect. I maintain therein that the IP Clause does not preempt state laws of its own force, yet it is helpful in making sense of Supreme Court doctrine to decipher when state laws are preempted. I argue that state laws are preempted when they both fall within the IP Clause’s preemptive scope and upset the IP Clause’s balance, as instantiated by federal law.

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  Punishment and Social Solidarity

  David W. Garland

  Punishment and society scholarship takes as its analytic starting point Emile Durkheim’s theory of punishment and social solidarity. It does so not because Durkheim was the first to write about criminal punishment in a sociological vein—Montesquieu (1762) and de Tocqueville (1833) initiated that project long before—but because Durkheim’s argument best encapsulates the fundamentals of the sociology of punishment and its distinctive approach to penal phenomena. Durkheim’s foundational claim—that the punishment of offenders functions not to control crime but to enhance solidarity—is by now a familiar one. In the standard textbook formulation, it can appear somewhat glib and simplistic, but properly understood, Durkheim’s theory contains within it many of the conceptual issues with which the sociology of punishment has subsequently been concerned. I will set out the argument’s details in a moment, but first I want to explain why Durkheim’s analytical approach to punishment has served as a model for so much of the scholarship in this field. Durkheim’s innovative move, his foundational contribution to this field, is to separate the sociological analysis of punishment from the conventional assumption that penal laws and penal practices are determined by the exigencies of crime-control—and to make this separation sharp and explicit. In Durkheim’s view, punishment must be understood as a moral institution, shaped by collective values and social relationships rather than an instrumental one shaped by the demands of crime-control. No doubt criminal punishments do produce crime control effects—this is, after all, their manifest function. But Durkheim insists that punishment works poorly as an instrumental technique, rarely succeeding in deterring crime or reforming offenders. The ‘true function’ of penal sanctions, whatever the perceptions of the public or the intentions of the authorities, is the ritualized re-affirmation of collective values and the reinforcement of group solidarity. Durkheim insists on the following counterintuitive claims: that punishment’s chief functions are not penal but social; that penal sanctions generally fail to inhibit offenders though they succeed in other, less apparent, respects; that the messages punishment communicates are aimed not at criminals or potential criminals but at law-abiding citizens; and that the forms and extent of punishment are determined not by crime control exigencies but by the social values, social reactions, and social organization of the group on whose behalf punishments are imposed. Taken together, these ideas have supplied the foundations for punishment and society scholarship. Proof of this is that these basic ideas, or something very like them, find expression in all the theoretical traditions that operate within this scholarly field, even when the theories are otherwise at odds with Durkheim’s own. Marxists, Foucauldians, Eliasians, Weberians, Meadians, Bourdieuians (and of course, neo-Durkheimians) all utilize these same ideational tropes. And they all begin from the axiom that punishment’s forms, functions and transformations are to be understood not (just) as an instrumental response to crime but as a constitutive aspect of larger social processes. To make this observation is not to suggest that these theories are all, in some respect Durkheimian. It is to say that they are all, in some respect, sociological, and that Durkheim was the first fully to articulate the fundamentals of a sociological approach to this phenomenon. Punishment is a social process with social causes and social effects, not—or not merely—a reaction to crime. The sociological insight here is that neither individual crimes nor aggregate crime rates determine the kind or extent of penal activity that a society undertakes. It is not ‘crime’ that dictates penal laws, penal sentences, and penal policy decisions but rather the ways in which crime is socially perceived and problematized, together with the political and administrative decisions to which these reactions give rise. Moreover, the whole apparatus of criminal justice through which this ‘reaction’ is administered—the specific forms of policing and prosecution, trial and punishment, condemnation and sanctioning, penal institutions and regime management, and so on—is shaped by social conventions and historical developments rather than by the contours of criminality. So even when penal systems adapt to changing patterns of crime and problems of crime control—and they certainly do adapt to some degree—they always do so in ways that are mediated by social norms, cultural conventions, economic resources, institutional dynamics and political forces. Durkheim’s axiom is now so thoroughly taken-for-granted in the punishment and society literature that it is sometimes rendered in exaggerated versions. One occasionally reads, for instance, that punishment and penal policy are ‘unrelated to’ or ‘utterly disconnected’ from crime and crime rates. But this is an overstatement that transforms a sociological insight into an untenable claim. The phenomenon in question is, after all, the punishment of criminal offences and offenders, and the latter (offences and offenders) always operate in some relation to the former (punishment), and always exert some pressure on punishment’s character and extent. Durkheim urged us to think of punishment as ‘relatively autonomous’ of crime (to use a concept drawn from a different tradition). He taught us to think of it as being shaped by other forces, performing other functions, and never reducible to instrumental crime control. But he did not for a moment think that punishment and crime were unrelated. On the contrary, he defined crime as deviant conduct that violates social norms to the extent of being labeled ‘crime’ and punished with a criminal sanction. Crimes, for Durkheim, are wrongful acts that violate deeply felt social norms and provoke punitive reactions. There is no punishment without crime, just as there is no crime without punishment. The relationship is mutually constitutive.

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  Sociological Perspectives on Punishment

  David W. Garland

  The standard ways in which we think and talk about punishment are framed not so much by sociological theory as by two rather different discursive traditions, which might best be described as the “penological” and the “philosophical.” The first of these ways of thinking—which is as common among the lay public as it is among criminologists and criminal justice practitioners—views punishment more or less exclusively as a technique of crime control. Penal institutions and the processes of punishment are seen by penology as so many means to a fairly self-evident end: the reduction of crime rates and the restraint of individual criminals. Within this framework, the primary question is a technical one—“What works?”—and the critical tool for evaluating penal measures is the effectiveness study, which charts the impact of specific sanctions on patterns of offending and recidivism rates. Questions of “cost” are also part of the reckoning, and human costs may figure alongside financial and political ones, but the main thrust of the penological approach is to view criminal justice in instrumental terms as an apparatus whose overriding purpose is the management and control of crime. The other way of thinking that standardly shapes our understanding of penal issues is “the philosophy of punishment”—a branch of moral philosophy that flourished during the Enlightenment and that has recently enjoyed something of a renaissance, as criminologists and jurists are led to reexamine the normative foundations on which the penal system rests. This tradition sets up punishment as a distinctively moral problem, asking how penal sanctions can be justified, what their proper objectives should be, and under what circumstances they can reasonably be imposed. Its central concern is not “What works?” but rather “What is just?” and its discursive style is based on ethical reasoning and moral appeal, rather than on empirical research or technical knowledge. In recent years a third style of thinking about punishment has begun to develop and to offer a different framework for the analysis of penal issues. Instead of viewing punishment as a means to an end or a stock problem for moral philosophy, sociologists and historians have begun to conceptualize punishment as a social institution and to pose a series of questions that stem from this approach. In place of questions about punishment's effectiveness or its justification, these writers have been asking, “How do specific penal measures come into existence?” “What social functions does punishment perform?” “How do penal institutions relate to other institutions?” “How do they contribute to social order, or to state power, or to class domination, or to the cultural reproduction of society?” and “What are punishment's unintended social effects, its functional failures, and its wider social costs?” “Punishment" is thus understood as a cultural and historical artifact that may be centrally concerned with the control of crime but that is nevertheless shaped by an ensemble of social forces and has a significance and range of effects that reach well beyond the population of criminals. And the sociology of punishment—as I shall term this emergent tradition—has been concerned to explore the social foundations of punishment, to trace out the social implications of specific penal modes, and to uncover the structures of social action and webs of cultural meaning that give modern punishment its characteristic functions, forms, and effects.

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  Fault Lines in the Positive Economic Analysis of Tort Law

  Mark A. Geistfeld

  Economists routinely engage in positive analysis to identify the efficiency properties of a practice without expressly taking any position on the normative question of whether the practice should be conducted in an efficient manner. Economists confidently do so, as Milton Friedman observed in his famous essay on this methodological approach, simply because “[t]he conclusions of positive economics seem to be, and are, immediately relevant to important normative problems, to questions of what ought to be done and how any given goal can be attained”. Friedman was discussing problems of “economic policy,” illustrated by the issue of minimum-wage legislation. Regardless of one’s position on what the minimum wage ought to be, no one seriously doubts that this matter of economic policy depends on the costs of regulation, such as increases in the unemployment rate. Merely identifying those costs and any resultant inefficiencies enables an economist to make an important contribution to wage-regulation policy without adopting any normative position about the matter. Consistent with the approach of mainstream economics, the positive economic analysis of tort law evaluates the efficiency properties of tort rules without otherwise taking a stance on whether efficiency is an appropriate norm for tort liability. Tort law is not expressly a matter of “economic policy,” however, and so the value of positive analysis is less obvious than it is for wage regulation. But like positive economic analysis in general, the positive analysis of tort law would seem to have only a limited or contingent normative message for legal decisionmakers: “To the extent that you care about efficiency as a value, you should pay attention to the following conclusions”. Despite their evident similarities, positive economic analysis of the type championed by Friedman importantly differs from the positive economic analysis of tort law. Friedman observed that positive analysis “is in principle independent of any particular . . . normative judgments.” Unlike positive economic analysis, the positive economic analysis of tort law is tied to a particular form of normative judgment. Because there is no consensus about the normative purpose of tort law, one must engage in an interpretive exercise in order to figure out the substantive rationale for tort liability. The interpretive exercise has been conceptualized in different ways by different scholars, but there is widespread agreement that any viable legal interpretation must first offer a minimally plausible description of the important doctrines and practices comprising the body of law in question. This question of “fit” is addressed by the positive economic analysis of tort law, making it necessarily relevant to legal interpretation—a normative role that is absent from positive economic analysis in general. For example, positive analysis could show that tort law can be plausibly described as furthering the objective of allocative efficiency, in which case the interpretive inquiry would then try to identify an appealing norm or value that justifies this function for tort law. So, too, if positive analysis were to show that the important doctrines of tort law are inefficient, it would effectively rule out any normative rationale for tort liability that requires efficient rules. Positive analysis is normatively valuable even if tort law ultimately cares nothing about allocative efficiency. Due to its inherent normativity, the positive economic analysis of tort law may be subject to greater biases than positive economic analysis in general. This point has been sharply made by Kahan, who claimed that the economic analysis of law suffers from a “recurring bias” based on “a preference for storytelling that bolsters the credibility of [law and economics] as a general framework of analysis by showing that [economic] arguments ‘fit’ rather than conflict with existing doctrine.” Legal economists purportedly do so “to demonstrate the plausibility of economic frameworks generally—often in the face of skepticism by noneconomic theorists—by showing that these frameworks cogently explain why these rules have the content that they do”.

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  Contractual Networks, Contract Design, and Contract Interpretation: The Case of Credit Cards

  Clayton P. Gillette

  Transaction cost economics predicts that firms join together in a network when doing so reduces the costs of exchange or otherwise enhances value for those who participate in the network. Caffagi's taxonomy of networks indicates that network participants may employ various forms to accomplish these objectives, including serial or linear contracts (A-B, B-C, C-D) or concentric contracts in which one central party simultaneously contracts with multiple others, who may or may not contract with one another, but who are dependent on each other for success. Participants in a supply chain, for example, may engage in linear contracting. Concentric contracting, on the other hand, may be used by franchisors who transact individually with each franchisee, while franchisees are unlikely to transact with each other; nevertheless, the success of each franchisee depends to some extent on the performance of others. In each case, the network device is appropriate if it enhances the ability of participants to realize benefits not otherwise available or to induce cooperation among network participants that might otherwise be difficult to obtain if parties acted unilaterally or if obligations were restricted to those with whom they transacted bilaterally. In each of these examples, the potential participants in a network include multiple firms within the same industry. The likelihood that firms will participate in a common network poses an interesting contracting problem. One traditionally thinks of different firms within an industry as competitors who seek to gain an advantage over each other with respect to common customers and suppliers. The success of the network of which the potential competitors are members, however, depends critically on the willingness of participants to cooperate. Self-interested competition in all respects may ultimately, in classic prisoners' dilemma fashion, redound to the detriment of all participants. Thus, the fledgling literature on networks notes that they are often characterized by an interesting mix of competition and cooperation. Indeed, the mixture of cooperation and competition at least partially explains why a single, global contract may not be employed to govern the relationship among all participants in a network. Cooperation may be necessary to capture certain gains that any given firm could not generate by unilateral action. But the possibility of competition means that parties will not want common terms to apply to all aspects of the relationship, since some participants will desire to exploit an advantage they have over other participants by employing different contract terms than would be possible in a global agreement. What determines when network participants should cooperate and when they should compete? Law external to contract will dictate some of the boundaries, since cooperation over some aspects of the relationship, such as the setting of prices, may violate antitrust or other regulatory mandates. But even where cooperation is permissible, parties may avoid instantiating that result in a set of contractual obligations, perhaps out of concern that cooperation will induce lock-in effects that make subsequent change in industry practices more costly and more difficult, or perhaps because cooperation is more efficiently induced by informal reputational mechanisms than by threat of legal sanction for defection. At the very least, however, one would expect that the scope of contractual cooperation will be linked to the value of the network itself. That is, cooperation should be embodied in legal obligations where joint efforts that might not otherwise occur could increase the value of the network itself. This does not necessarily mean that all participants will benefit from any particular act of cooperation. The prisoners' dilemma predicate for the network implies that, absent a contractual agreement, some parties would be better off if they did not cooperate, but rather defected from the cooperative solution. It is for that reason that some form of contractual obligation is necessary to induce cooperation. If all parties benefited from cooperation ex post, then arguably no contractual obligation would be necessary to induce that behaviour. Contracting permits parties to share expectationally in the gains from cooperation: those who might do better ex post by defecting have opportunities to contract ex ante for a share of the enhanced value of the network that cooperation generates. Intranetwork contracts for cooperation, therefore, should exist in at least the following cases. First, one would expect to find obligations to cooperate where there is a dominant solution to the multiparty prisoners' dilemma, such as a clearly efficient pattern of behaviour or risk allocation that parties might not otherwise adhere to because they anticipate defection by others. Second, cooperation should exist to specify a solution to a coordination problem. Here, participants would presumably be willing to cooperate as long as they are aware of the solution to which all other participants will also migrate. Third, one would expect to find obligations to cooperate where doing so takes the form of assigning monitoring or other responsibilities to participants best positioned to undertake them, and thus to avoid free riding or other inducements for defection.

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  Social Mechanisms to Promote International Human Rights: Complementary or Contradictory?

  Ryan Goodman and Derek Jinks

  The study of the international human rights regime has increasingly emphasized how this regime matters rather than if it matters. An especially productive turn focuses on integrated conceptual models, which accept the importance of multiple forms of influence on state behavior. The Power of Human Rights (PoHR) provided a foundation for such studies by bringing attention to the significance of different logics of interaction at different points in the socialization process of states. That leading work and allied scholarship recognize the complexity of actor motivation, human and organizational behavior, and the global-level social environment. What is needed now is a social theory that accounts for why human rights abuses occur and how the international community does or might influence rights abusers to alter their behavior. The objective is to explain how changes in the relevant social environment—namely the existence, and ultimately the formal acceptance, of international human rights—affect the behavior of individuals, governments and non-governmental organizations. The “spiral model” of human rights change developed in PoHR—and further elaborated in this volume—is an important step in developing such a theory. At a high level of generality, the model provides a conceptually and empirically compelling account of the relationship between national policies and formal international human rights regimes. On this model, various socialization processes work together to influence non-compliant states to accept and ultimately comply with human rights norms through a five-stage process: repression, denial, tactical concessions, prescriptive status, and rule-consistent behavior. The model emphasizes how instrumental adaptation, argumentation and habitualization impel states first to commit formally to human rights regimes and thereafter, under certain conditions, to internalize human rights norms. Four mechanisms of social influence are identified by the authors as crucial to modeling the domestic political consequences of the human rights regime: coercion; incentivization; persuasion/learning; and capacity-building. Relevant actors move from conduct indicative of the “repression” phase to conduct indicative of the “rule-consistent behavior” phase because they are forced, encouraged by material incentive, convinced by persuasive argument, or enabled to do so. These mechanisms might work directly on governmental officials or they might work indirectly by mobilizing other relevant actors to influence government officials. The point is that international human rights norms—under certain conditions, through these socialization processes—prompt some relevant actors to change their behavior and/or their views. The strengths of this approach are considerable. The interaction between various relevant actors is conceptualized as a dynamic social encounter, triggering a range of socialization processes. The theoretical account is mechanism-based, identifying the processes whereby certain social predicates cause certain outcomes. The inventory of mechanisms is comprehensive—and ontologically eclectic. The model, as a consequence, yields clear, testable predictions about the nature of human rights change. Empirical work relying at least in part on this model has, and will continue to, provide subtle refinements. One important, but correctable, weakness of this approach is the way in which it conceptualizes (or fails to conceptualize) the relationship between the various mechanisms of social influence. According to the “spiral model,” international human rights norms, through various agents and in various ways, often mobilize each mode of influence. The assumption is that these mechanisms are broadly, if not completely, complementary. This assumption of complementarity, we will argue, is empirically suspect; and it inhibits refinement of the model along several axes. The next phase of research on human rights should include two related ambitions. First, it should systematically account for potential negative interactions between mechanisms of influence. Second, it should specifically consider how regime design might accentuate or mitigate such interactions. This is not to say that such considerations were entirely absent from PoHR. That work, and much of the work inspired by it, does reference “backlash” effects. Those references admit to the importance of accounting for negative as well as positive feedback effects. However, such effects are not conceived explicitly and studied systematically as positive or negative interactions between social mechanisms. Also, such “backlash effects” are only a small subset, and perhaps the most obvious form of counter-productive external pressures on state actors. What is needed, in our view, is analysis of a broad range of interactive, sequencing and condition-dependent effects. These should include subtle effects—which are not necessarily recognized by the actors themselves, which do not necessarily involve instrumental calculation, and which may nevertheless produce more durable social change. In short, we need better answers to some core questions: are social mechanisms complementary or contradictory? In what ways are they compatible or incompatible? And what difference do these considerations make for modeling the influence of global norms? This chapter offers reflections on these questions. We first identify and discuss various interaction effects between social mechanisms—emphasizing several crowding-out and crowding-in effects. We then identify and discuss various sequencing effects. Finally, we offer some reflections on whether and how these developments in the behavioral sciences ought to influence the modeling of human rights change.

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  Higher Profits as a Merger Defense: Innovation, Appropriability, and the Horizontal Merger Guidelines

  C. Scott Hemphill

  Parties to a horizontal merger may avoid antitrust liability by showing that the transaction will have a pro-competitive effect. The major focus of such an “efficiencies” defense is usually price—for example, that the merged entity will enjoy economies of scale, thereby lowering costs and putting downward pressure on price, ultimately to the benefit of consumers. A second, less frequent defense is to argue that the transaction is likely to increase innovation, again to the benefit of consumers. The revised Horizontal Merger Guidelines, issued by the U.S. Department of Justice and Federal Trade Commission (FTC) in 2010, expanded the treatment of innovation as a basis for an efficiencies defense. This comment examines an important but neglected aspect of the Guidelines’ discussion of innovation- based efficiencies. New language in the Guidelines suggests, as one way among several in which innovation matters, that a transaction might be approved if it permits a firm to “appropriate a greater fraction of the benefits resulting from its innovations.” In other words, higher profit is sometimes a merger defense. The Guidelines neither explain why increased appropriation should support clearance of a merger nor identify the limits of such a principle. This comment is an effort to fill that gap. The analysis proceeds in three parts. First, I introduce the “increased appropriation defense” as a type of innovation-based efficiencies defense contemplated in the revised Guidelines. Second, I present a transaction to which the increased appropriation defense was not applied, a transaction challenged by the FTC in federal court. In this deal, a drug maker bought the rights to NeoProfen, a new drug that treated a disease for which the drug maker already owned the only alternative drug therapy. My account emphasizes non-price competition between the two drugs, in contrast to the court’s focus on price competition. I conclude that substantial price and non-price competition existed between the two drugs, making the availability of an efficiencies defense relevant to the outcome of the case. Third, I consider how an increased appropriation defense might have applied to the NeoProfen acquisition. At its most expansive, the increased appropriation defense might support any acquisition that allows an innovator to increase the profits from its innovation. This interpretation is doubtful, I argue, in light of other provisions of the Guidelines. At a minimum, the increased appropriation defense permits a combination of complementary assets, the bringing together of which makes possible or enhances the marketing or distribution of an innovation. A difficult intermediate case arises when a merging party is poised to make socially beneficial expenditures—for example, investment in the development of an improved version of a product—that are profitable only if its ability to appropriate the benefits is preserved through merger.

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  Never Show Weakness: How Faking Autocracy Legitimates Putin’s Hold on Power

  Stephen Holmes

  According to Alexander Lukin, ‘Putin effectively transformed a mixed and unstable political system, which he inherited from Boris Yeltsin, into a classic authoritarian regime’. But this is giving Vladimir Putin more credit than he deserves. To understand better the trajectory of Russian politics in the two decades since 1991, we first need to grasp that an authoritarian regime is almost as difficult to create and consolidate as a democratic regime. This is especially true in the absence of two key factors that buoyed up Soviet power, first, a justifying ideology, and, second, sealed borders insulating the Russian elite from unshielded contacts with the West. The obstacle to recreating Muscovite autocracy today lies not in the absence of political will but rather in the absence of political capacity. Putin may pose as a superhero, but he cannot re-isolate Russia from the world. Such a reversion to autarky was never on the cards, for many reasons, above all because it would have struck directly at material interests of influential individuals in the Russian establishment: ‘What is the point of stealing all of that money from state coffers, stashing it away in foreign accounts or investing in expensive foreign real estate if the corrupt officials are denied access to these assets?’ Nor can Putin promulgate a new and persuasive theory of history with a capital H, any more than he can issue a decree and reconvert Russia to the Soviet economic model, reconstituting the command economy with the flick of a switch. The virtual impossibility of recreating a strong authoritarian regime in post-communist Russia is rooted in the nature of the Soviet collapse. Until 1991, the country was governed by a genuine ‘power vertical’, namely the CPSU. When this bureaucratic machine suddenly melted down and its myriad tentacles shrivelled up and disappeared, it left behind not scorched earth but a constellation of ‘orphans’, or highly developed but now disunited and essentially autonomous fragments of a highly developed but now defunct state. Such surviving shards of a once-mighty political system are what distinguish post-communist Russia from most other soi-disant democratizing countries. The arresting specificity (osobennost’) of contemporary Russia cannot be denied, despite the valiant efforts of Daniel Treisman to lump the lot and treat Russia as a ‘perfectly normal’ middle-income country. But neither can the country’s political distinctiveness be traced backed to the enigmatic Russian soul in the manner admired by Slavophiles and reviled by Westernizers. Rather, the historical exceptionalism of Putin’s Russia, seen in comparative perspective, appears most clearly in the bureaucratic fragmentation resulting from the disappearance of the CPSU, the immense riches that even today remain up-for-grabs because of the continued absence of socially legitimate owners, the extensive interpenetration of corrupt local, regional and national officialdom with criminal groups, and an anaemic sense of national identity among the country’s political and economic elite. No other country with such an undeveloped economy will be sending American astronauts into space. In the United States, at least, the Russian space programme is the best-known agency that was orphaned when the CPSU passed away. More important politically, naturally, are such entities as Gazprom, the former Soviet Ministry of Gas, now a humungous and non-transparent corporation in which the Russian government holds a controlling stake, and the Procuracy, which retains its formal prosecutorial and other functions but no longer has to answer to any ranking organization in a position to supervise its every move: ‘Prosecutors and police continue to dominate the judiciary as they did in the Soviet era, but unrestrained by the institutions of the old Communist system’, we are told, ‘the opportunities for abuse have grown’. Oleg Gordievsky, a former KGB agent who also spied for MI6, makes a similar point about his former employer: ‘The KGB without the Communist Party is a gang of gangsters’. Putin’s attempt to restore the power vertical in post-communist Russia was doomed not by a non-existent democratic opposition but by the conflicting vested interests of semi-autonomous bureaucratic agencies and financial- industrial clans: ‘For years, Putin tried to make it (Yedinaia Rossiia) the ruling party of Russia, a modern version of the Communist Party of the Soviet Union’. But his attempt was doomed to fail. ‘United Russia has suffered from its lack of a real active role. It is used too much as a shield against potential challengers: it is more of a party to protect power than a party in power’. Timothy Colton and Henry Hale describe Yedinaia Rossiia in similar terms, as ‘an administrative mechanism for elite advancement, coordination, and control, with few real roots in the electorate’. Commenting on the oddity of Putin’s decision to place various popular entertainers in the Duma as members of Yedinaia Rossiia, Boris Nemtsov is more scathing still: ‘United Russia is not a political party. These people are just the hired help. You know, at the king’s court, there were jokers and singers and clowns, and the king was their master. Their job is just to raise their hands on command and then put them down again’.

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  Concluding Remarks in the Light of International Law

  Robert L. Howse

  This concluding chapter underlines two contributions of the PRLSB to the international normative order concerning sovereign debt. The first contribution of the PRLSB is to qualify or limit a sovereign debtor’s obligation to repay the debt in full, where there is a situation of economic necessity. The second is to contribute to the evolution of the odious debt doctrine by establishing the norm that valid sovereign debt obligations are those contracted by publically interested state officials for purposes of serving the public good. Neither of these contributions depends on the Principles themselves being transformed into a hard law international instrument such as a treaty or acquiring the status of custom. Rather the Principles offer new normative tools for reshaping legal relations between sovereign debtors and both official and private creditors in the absence of a centralized international institution or tribunal.

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  Dispute Settlement in the WTO: A Manual

  Robert L. Howse

  Appellate Body’s major rulings that have helped clarify members’ rights and obligations under the various WTO agreements. It also provides an overview of steps in a WTO dispute, making reference to the relevant legal provisions, deadlines, and practices of the participating actors and institutions. The chapter concludes by exploring the challenges and opportunities for developing countries using the WTO dispute settlement system effectively.

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  Introduction

  Robert L. Howse

  Although originally seen as one of the main achievements of the Uruguay Round, the Technical Barriers to Trade (TBT) Agreement made little contribution to the jurisprudence of the World Trade Organization (WTO) in the first decade or so of the WTO’s existence. But this is changing. Recently, in a range of important and sensitive disputes, the rights and obligations of the TBT Agreement have been a central focus, and in 2012 the Appellate Body decided a trilogy of cases where it gave strong indications of its overall jurisprudential approach to the TBT Agreement. At the same time, the committee responsible for TBT issues in the WTO has begun to succeed in significant ‘rule-making’ activity, on issues such as the use of international standards. This watershed period for the TBT Agreement is the context for the present volume, where a distinguished and diverse group of scholars address many of the central doctrinal, conceptual, and policy challenges presented by the TBT Agreement. In thinking about the TBT Agreement, a logical point of departure is to consider whether and how it represents a different approach to the GATT in managing the interface between liberalized trade and domestic regulation. As Michael Trebilcock and I have observed, the GATT is premised upon the acceptance of regulatory diversity, limited only by requirements of non-discrimination (MFN and national treatment) and transparency. A common view of the TBT Agreement has been that the Agreement reflects a choice to go beyond non-discrimination toward the encouragement of what is sometimes called ‘positive integration’ or harmonization, imposing disciplines even on non-discriminatory regulations that have trade-restrictive effects. As Trebilcock and I have explored, the welfare calculus of going beyond the discipline of what Sykes calls ‘regulatory protectionism’ toward positive integration are complex. As Markus Wagner notes in Chapter 7 on harmonization, regulatory diversity undoubtedly increases the costs of trade, because producers must adapt to different regulatory requirements in different markets. But there can also be benefits from regulatory diversity, especially if preferences for regulation differ significantly from jurisdiction to jurisdiction. As is reflected in the (qualified) requirement that WTO Members use international standards as a basis for their regulations, unquestionably the TBT Agreement goes some distance in the direction of positive integration. The question is: how far does it and ought it? An alternative vision of the TBT Agreement, which stresses continuity with GATT, is that the Agreement offers a more refined or at least additional set of tools for addressing ‘regulatory protectionism,’ rather than striking out boldly in the direction of positive integration. On this view, under the TBT Agreement, domestic regulations must jump through a different set of hoops, but in the end if they are genuinely non-protectionist they should be able to land on their feet; on such a view one needs to pay attention to the limited, balanced, and qualified manner in which the GATT-plus obligations of the TBT Agreement are often expressed. The Appellate Body, in the US—Clove Cigarettes case, has taken the view that the overall balance between the right to regulate and trade liberalization should be viewed as the same under the TBT Agreement as that established under GATT through the interplay of, for example, the national treatment obligation with the Article XX general exceptions. This is a very important philosophical statement that affects the interpretation of the TBT Agreement as a whole; the Appellate Body would seem to be adopting the view that the TBT Agreement has the same aim as GATT, while simply adopting a different set of tests or balancing concepts. In other words, the TBT Agreement ought not to be read, overall, as a more liberalizing or integrating instrument than GATT. Since the TBT Agreement was negotiated, at a time when what is sometimes called neo-liberalism was at or near its peak, it is fair to say there has been increasing controversy about the merits of deregulation and growing concern about the capacity of the WTO regime to preserve ‘policy space’ for domestic authorities, especially in developing countries. While in the past mostly complaining about regulatory barriers in developed country markets, developing countries have been increasingly concerned with the preservation of their own policy space. Events as diverse as financial crises and outbreaks of food-borne illnesses have created a sense that cautious or strict regulatory approaches need not be seen as protectionist gestures to rent-seeking interests. In this emerging overall context, the Appellate Body’s approach to the TBT Agreement may well make sense from the perspective of the legitimacy of the WTO system, or at least that of the dispute settlement organs. Whether it is justified as a reading of the treaty under the interpretative principles of public international law or can be sustained by economic analysis (as Trebilcock and I would suggest, based upon the benefits of regulatory diversity) are questions. The answers can only be found based upon an in-depth examination of the text of the TBT Agreement and of how the dispute settlement organs, the TBT Committee, WTO Members, and other international organizations have engaged with and been affected by the Agreement. This is the task that the contributors to this volume have set for themselves.

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  Mainstreaming the Right to Development into the World Trade Organization

  Robert L. Howse

  Since the end of the cold war, two main visions have underpinned the normative evolution of international order: the vision of human rights and humanity and that of economic globalization. Historically, the legal, institutional and policy cultures of international human rights law and of international trade law operated almost entirely in isolation from one another. At the same time, as a matter of international law, the international human rights system and the World Trade Organization (WTO) regime are both based primarily on treaty obligations. A large majority of States are signatories to both the core WTO treaties (the so-called Covered Agreements) and the main United Nations human rights instruments. Although some human rights norms are arguably jus cogens and therefore of higher legal status than ordinary treaty commitments, in general, treaty-based WTO commitments and human rights treaty obligations have equal normative force in international law. As a report of the International Law Commission on fragmentation of international law notes: “In international law, there is a strong presumption against normative conflict” (A/CN.4/L.682 and Corr.1, para. 37). The implication is that one must explore how the WTO regime and the human rights regime can operate and evolve together, complementing each other in positive ways. Since the Third WTO Ministerial Conference, held now more than a decade ago in Seattle, Washington, United States, in 1999, there has been a concerted effort in the international human rights community, by activists, academics and the Office of the United Nations High Commissioner for Human Rights (OHCHR), to understand how trade affects the realization of human rights and what implications human rights obligations have for the interpretation and negotiation of trade agreements. The current Director-General of WTO, Pascal Lamy, has written about globalization with a human face and his conception of the economic sphere, including the international economic sphere, is deeply rooted in the notion of humanity. More recently, a joint study by the International Labour Organization (ILO) and the WTO Secretariat explicitly refers to freedom of association and the right to collective bargaining as “universally recognized human rights”, urges that they be respected as such and not just for instrumental reasons of social peace, and refutes with empirical evidence the notion that respect for such rights must come at a cost to economic development and competitiveness.

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  The American Revolution (II): The Origin and Nature of Colonial Grievances

  Daniel J. Hulsebosch

  The communication network for processing colonial grievances helped integrate the many different subjects and places in the Empire. Additionally, when the Empire was at war, metropolitan policy-makers and local governors were more willing to compromise with provincial interests. Throughout North America, colonists shared in a sense that the Imperial constitution was flexible and responsive to provincial claims. By the middle of the 1770s, however, the grievance network no longer performed effectively. Instead, the network had begun to operate selectively, binding particular provincial groups within each colony to each other and with similar groups in other colonies, while neighbors who had formerly worked together became unable to cooperate. Only then, in the middle of 1776 in the Declaration of Independence, were the many and sometimes inconsistent colonial grievances compiled into a one-sided list of indictments of the British king. The grievance network had become an instrument for civil war.