Faculty Chapters

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  The Rise of Emerging Market Multinationals: Legal Challenges Ahead

  José E. Alvarez

  Lawyers are interlopers when the discussion concerns the business challenges that multinational enterprises (MNEs) from emerging markets face today, and are likely to face in the future. As many readers might know from their own (perhaps not entirely pleasant) encounters with lawyers, lawyers ask a lot of questions before they offer advice to their clients. They are notoriously cautious and curious. Accordingly, in this chapter, I would like to raise some of the questions a lawyer would want those running emerging market MNEs to answer, before beginning to suggest the legal ways forward. In doing so, I will begin by outlining some of the background realities that inspire these questions.

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  Europe Upside Down: Fallacies of the New Afrocentrism

  Kwame Anthony Appiah

  In the last few years, there has been a stream of publications, especially in the United States, aimed at establishing a new basis for the study and teaching of African and African-American culture. Whether or not they actually use the word “Afrocentric” on their packaging, those books—which differ enormously in the quality of their thought and writing, as well as in their factual reliability—have a certain common set of pre-occupations, whose persistence entitles one now to speak of an Afrocentric paradigm. This has two basic elements, one critical, the other positive, which are either argued or taken for granted. The negative thesis is that modern Western scholarship on cultural matters, high and low, is hopelessly Eurocentric. This mean, to begin with, that Western scholarship understands European history, intellectual life and social institutions as an ideal type, both normatively and descriptively. But Eurocentric work also displays an inability, rooted in prejudice, to enter sympathetically into the form of life of non-Europeans, and, especially, of black people of African descent. As a consequence, Western scholarship presupposes, so the story goes, that Africans have produced little of much cultural worth, and that cultural works of sophistication or value (like the architecture of Great Zimbabwe or the Pyramids), even when they are in Africa, are unlikely to have been produced by black people. In support of this Eurocentric thesis, some (and occasionally a great deal of) work goes into showing that European scholars, at least since the Enlightenment, have concealed facts about the African origins of certain central elements of Western civilization; notably the Egyptian origins of the Greek “miracle” and the black African origins of the Egyptian “miracle.” This negative thesis is argued as the prolegomenon to an alternative, positive, “Afrocentric” view, in which African cultural creativity is discovered to have been at the origin of Western civilization, while Western Civilization, especially modern Western civilization, is either asserted or implied to be morally depraved; incapable, in particular, of living peacefully with others. We (sometimes all of us, sometimes just those who are black) are urged, then, to centre on African history (and particularly the history of the Egypt of the Pharaohs) and return to African values.

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  Relativism and Cross-Cultural Understanding

  Kwame Anthony Appiah

  The thirty-three essays in Relativism: A Contemporary Anthology grapple with one of the most intriguing, enduring, and far-reaching philosophical problems of our age. Relativism comes in many varieties. It is often defined as the belief that truth, goodness, or beauty is relative to some context or reference frame, and that no absolute standards can adjudicate between competing reference frames. Michael Krausz's anthology captures the significance and range of relativistic doctrines, rehearsing their virtues and vices and reflecting on a spectrum of attitudes. Invoking diverse philosophical orientations, these doctrines concern conceptions of relativism in relation to facts and conceptual schemes, realism and objectivity, universalism and foundationalism, solidarity and rationality, pluralism and moral relativism, and feminism and post-structuralism. Featuring nine original essays, the volume also includes many classic articles, making it a standard resource for students, scholars, and researchers.

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  Alternative Economic Designs for Academic Publishing

  Theodore C. Bergstrom and Daniel L. Rubinfeld

  Prices of for-profit academic journals have increased extremely rapidly over the past two decades. This has troubled librarians and researchers who are concerned about the dissemination of knowledge. It has also led to tension between for-profit publishers and the academic community that provides those publishers with free labor. Economists who study academic journal pricing have considered alternative explanations for the growth in journal prices. McCabe suggests that increased concentration in the journal industry is a contributor to this growth. Nevo, Rubinfeld and McCabe attribute at least part of the rapid price increases to the increasing sophistication of for-profit publishers, who have learned that they can extract large rents from academic libraries, whose demands for journals are remarkably price inelastic. Edlin and Rubinfeld emphasize the relatively recent effort by major publishers to bundle print and electronic journals. Whatever the explanation, the high cost of academic journal is a pressing problem for university libraries and university budgets. This paper focuses on the policy issues that flow from the reality of high for-profit journal prices. We being by looking more deeply into the source of the inelasticity of library demands and the higher for-profit prices that result. We suggest that a key to understanding the pricing of journals under various policy regimes is to understand the two-sided markets that drive journal pricing. We follow with a discussion of alternative models for academic publishing and some remarks about how libraries and universities may cope with this problem.

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  Punishment and the Ius Post Bellum

  Alexis Blane and Benedict Kingsbury

  This chapter lays the foundations for considering modern questions on judgement and forcible punishment in international law by analysing approaches to forcible punishment in early modern writings on war and ius post bellum, in which, unlike modern international law texts, issues of punishment of states and peoples were addressed directly. The chapter centres on: the lectures in Spain of the Dominican Thomist Francisco de Vitoria (c.1485–1546), particularly the lectures On War and The Indies given in Salamanca in the 1530s; the writings in Oxford of the Italian Lutheran-influenced civil lawyer Alberico Gentili (1552–1608), particularly De iure belli (1598); and the writings in Holland and in exile of the Dutch-reform ecumenical humanist Hugo Grotius (1583–1645), particularly De iure belli ac pacis (1625–1646). The chapter first considers their general theoretical approaches to punishment as part of just war theory, then turns to explicate their views of punishment in the ius post bellum.

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  Women as Leaders in International Microfinance

  Deborah K. Burand

  This work within The SAGE Reference Series on Leadership provides undergraduate students with an authoritative reference resource on leadership issues specific to women and gender. Although covering historical and contemporary barriers to women’s leadership and issues of gender bias and discrimination, this two-volume set focuses as well on positive aspects and opportunities for leadership in various domains and is centered on the 101 most important topics, issues, questions, and debates specific to women and gender. Entries provide students with more detailed information and depth of discussion than typically found in an encyclopedia entry, but lack the jargon, detail, and density of a journal article.

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  Comments on Professor Damaška: Residual Truth of a Misleading Distinction

  Oscar G. Chase

  I am honoured to comment on the very helpful paper with which Professor Damaška opened the 2009 International Association of Procedural Law (“IAPL”) conference (the “Conference”). In it, he succinctly set the stage for the discussion that was to follow over the next two days. Professor Damaška gives us the historical background of the categories that we have re-examined, lays out the more recent developments in many parts of the world that have inspired our enterprise, and offered some reasons why those categories are—and are not—still useful and, to some degree, accurate descriptions of the legal world that we inhabit today. While he comes down on the side of the continuing utility of the hoary divisions, he also questions just how useful they remain. Thus, he sets the stage, but does not compel the dénouement. In short, he leaves us with plenty to do! In my few pages here, I will touch on the main points of Professor Damaška's paper and try to raise some additional questions. I will spend some moments on the issue of categorization per se, asking what functions categories serve in general and what dangers they present. It is important to situate the present paper in the context of Professor Damaška's prior work. I would claim that, in no small part, it is he who is responsible for bringing us to our current confused, but interesting moment. It was, after all, his book, The Faces of Justice and State Authority that, over two decades ago, questioned the received procedural categories, and proposed a new paradigm for understanding and differentiating among procedural systems. You will recall that in Faces of Justice, Professor Damaška firmly rejected the once dominant “Adversarial versus Inquisitorial” dichotomy because of its misleading normative implications and the imprecision of its boundaries. This is not to say that he abandoned tradition altogether. Often, he referred in “Faces of Justice” to “continental” or “civil law” countries, and contrasted them to the “Anglo-American” or “common law” world. He did so, however, in the service of an entirely new construct, and described two new categories of what he called “the character of procedural authority”. On one level (which I find most relevant to his Conference paper), he differentiated between systems according to their “structures of authority”. In this way, he found that some procedures revealed a preference for a hierarchical, bureaucratic structure by, inter alia, a professional judiciary, official control of the fact-finding process and robust supervision of lower courts. In contrast, other systems favoured coordinate decision-making, and this was exemplified especially by the jury, by private responsibility for fact investigation, and by the use of judges who had no special training for the job other than the practice of law. This new approach to mapping procedural systems was not an example of categorization for its own sake: the great contribution of Faces of Justice was that it linked the character of procedural systems to the general attitudes toward state authority of the societies in which they were found. Most relevant to this Conference, he showed that there were patterns of procedural character that differed from those that were traditionally dominant, and that these new categories helped to better understand procedural systems. Further, while he found parallels between the hierarchical and coordinate systems and the traditional common law / civil law divide, he also showed that the two systems of category did not map squarely onto each other. This frees us, and even encourages us, to step “outside the box” of our comparatist forbears with a more nuanced and sophisticated appreciation of difference. This is precisely what we did at the Conference for much of the time in the days that followed, and our work is reflected in the papers that have been reproduced here.

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  Does the Globalization of Anti-Corruption Law Help Developing Countries?

  Kevin E. Davis

  What role do foreign institutions play in combating political corruption in developing countries? This chapter begins by describing the recently developed transnational anti-corruption regime, which encompasses legal instruments ranging from the dedicated multilateral agreements sponsored by the OECD and the United Nations, to the anti-corruption policies of international financial institutions, to components of the international antimony laundering regime, international norms governing government procurement, and private law norms concerning enforcement of corruptly procured contracts. It also surveys the evidence concerning a variety of claims about the potential advantages and disadvantages of having foreign institutions play a role in preventing, sanctioning, or providing redress for corruption on the part of local public officials. One of the main conclusions is that more attention ought to be paid to whether foreign institutions displace and undermine, or alternatively complement and enhance, local anti-corruption institutions. The analysis not only sheds light on the transnational anti-corruption regime, but also has implications for other efforts to rely on foreign legal institutions to address the problems of developing countries.

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  Stumbling into Experimentalism: The EU Anti-Discrimination Regime

  Gráinne de Búrca

  EU anti-discrimination law originated in a single provision on equal pay between men and women, which was included in the 1957 EEC Treaty largely to allay French fears of wage competition from states without equal pay laws (Barnard 1996). Since then EU anti-discrimination law has broadened and grown considerably, to include a whole range of grounds other than sex, and contexts other than pay and employment. This chapter focuses on the transformation of EU anti-discrimination law over time, but its emphasis is not so much on its transformation in terms of the expansion beyond sex and gender equality, or beyond the employment context. Instead it is on the way in which EU anti-discrimination law has evolved as a distinctive governance regime, which I describe as stumbling into experimentalism. I use the metaphor of stumbling because, as will be explained in more detail later, there was in the shaping of the regime no apparent political commitment to create any form of experimentalist or reflexive governance in this field, nor any apparent awareness then or now on the part of participants in the system of the merits of such a regime. Indeed, it appears from interviews carried out for this chapter 1 that many of the actors who participate in the EU anti-discrimination regime maintain a fairly conventional understanding of their role as the provision and promotion of information about uniform norms to be defined by central authoritative institutions, even as they are beginning to develop and to share problem-solving practices amongst themselves and across some of the newly established networks.

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  Enhancing Global Innovation Policy: The Role of WIPO and Its Conventions in Interpreting the TRIPS Agreement

  Graeme B. Dinwoodie and Rochelle C. Dreyfuss

  In recent years, it has become clear that the TRIPS regime is in trouble. Although lawmaking in the World Trade Organization (WTO) has essentially stalled, there is a continuing need to recalibrate the rules applicable to knowledge production. For developing countries, entry into the WTO was a compromise. When intellectual property law-making was centered in the World Intellectual Property Organization (WIPO), these nations resisted attempts to increase the level of protection. That changed, however, with the inclusion of intellectual property in negotiations over trade: in return for access to markets in the developed world, developing countries were required to enact and enforce new intellectual property laws. While the TRIPS Agreement tried to ease their conversion to greater protection, the transitional provisions it included proved to be largely illusory: the time periods for compliance were too short; the promises of technology transfer and technical assistance, inadequately realized. Paradoxically, for some developing countries, the WTO regime can also be insufficiently protective: TRIPS rights are structured for the types of knowledge goods generated in the North, but do not cover the traditional knowledge, folklore, and natural endowments that constitute much of the informational wealth of the South. To be sure, the Doha Declaration and subsequent actions dealt with a few of the concerns of developing countries, but unless more radical accommodations are found, many WTO members may languish in a social and economic backwater, paying high prices for information products without the ability to fully exploit their own creative capacities. For developed nations, the problems are not very different, for there too TRIPS now offers both too much and too little protection. The Agreement was, after all, crafted for a particular era—an era that largely predated Internet commerce in trademarked goods, distribution of digitized copyrighted materials, and the informatics revolution within the patent industries. The explosion in global marketing puts pressure on the territoriality principle embedded in TRIPS, arguably leading to underprotection, particularly of works distributed electronically. At the same time, however, the emergence of new intellectual opportunities and enterprises alters the economics of information production. TRIPS’ strong commitment to a particular vision of proprietary rights—and, on the patents side, to technological neutrality—makes it difficult to revise the law to deal with such matters as the thickets of rights created in the software and biotechnological sectors, with open source innovation, and with new opportunities for serial and collaborative production. In theory, the problems facing WTO members could be resolved through new lawmaking. This could take a number of forms. For instance, a ‘bottom up’ approach would give states greater flexibility to adopt local laws to deal with the different problems they each encounter. As common solutions emerge, the Agreement could be modified to reflect these developments. Alternatively, solutions could originate at the international level; after codification into the Agreement, they would then ‘trickle down’ as member states transposed their new obligations into domestic law. For a variety of reasons, however, neither of these approaches has materialized. In part, the problem is simply stasis in the WTO. In part, there is a disconnect between the WTO’s objective of enhancing economic welfare through free trade and the values embodied in intellectual property law. For example, because of concerns over how liberalizing the rules on compulsory licensing would affect the market, even the one concrete achievement of the Doha Round—assuring developing countries access to essential medicines—has yet to be fully implemented. As many have noted, the WTO’s adjudicatory system has compensated somewhat for the lack of activity in the Ministerial Conference and the General Council. But for a number of reasons, it is not a substitute for a well-functioning ‘legislative body’. It cannot replicate the top-down approach of an international agreement on substantive norms because, under the Understanding for Dispute Settlement (DSU), the decisions by the Dispute Resolution Board (DSB) may not ‘diminish the rights and obligations provided in the covered agreements’. And the institutional character of the DSB does not encourage disregard of this formal limit on judicial activism. These constraints, both formal and institutional, appear to allow the DSB to complement a bottom-up approach because the TRIPS Agreement ostensibly leaves members with substantial room to maneuver. Members can, for example, increase the level of domestic protection. But as we have explained in other writing, the DSB has interpreted TRIPS flexibilities so narrowly that member states cannot otherwise adapt their laws to new circumstances.

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  WTO Dispute Resolution and the Preservation of the Public Domain of Science under International Law

  Graeme B. Dinwoodie and Rochelle C. Dreyfuss

  The TRIPS Agreement can be read to reflect a static view of the structure of intellectual property law. In this chapter, we address whether—and how—the TRIPS Agreement can be interpreted to give it more fluidity, and thus to allow adjustments in national intellectual property regimes designed to reflect the dynamic nature of information production. To focus that inquiry, we concentrate on efforts to ensure a broader public domain for “upstream” inventions by modifying various elements of U.S. patent law. The paper considers three stylized examples and asks whether each approach could be adopted by the United States without falling afoul of the TRIPS Agreement, as it is currently understood. Our purpose is to identify interpretive approaches that allow Members to keep their laws attuned to the developments and needs of science. In so doing, we also raise broader questions regarding the level of formalism generated by the WTO dispute settlement system, and the extent to which the TRIPS Agreement allocates power between supranational and national institutions, and between international and national laws.

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  Patents and Human Rights: Where Is the Paradox?

  Rochelle C. Dreyfuss

  There is an emerging trend, particularly in international and European circles, to bemoan what is termed the human rights paradox in intellectual property. Thus, it is claimed that intellectual property rights are grounded in fundamental concepts of human dignity and just deserts, in a commitment to accord to creators the benefits of their intellectual efforts. At the same time, however, it is recognized that intellectual property rights protect information, a non-rivalrous good. The paradox is said to arise when one human right is pitted against another, when intellectual property rights are used to restrict access to information that could—at no real cost to the developer—be deployed in ways that satisfy fundamental human needs. In a sense, it is not difficult to understand why this concern has emerged. At the international level, the Universal Declaration of Human Rights (UDHR) and the International Covenant on Economic, Social, and Cultural Rights (ICESCR) both articulate commitments to the rights of creators; the European Convention on Human Rights (ECHR) can be read in a parallel fashion. At the same time, however, all of these instruments recognize rights that require access to the fruits of creativity. As these commitments become enforceable in courts of law, the stage is set for a clash between the right to control information and the right to use it for such purposes as attaining health and education, participating in cultural activities, engaging in expressive conduct, or freely pursuing intellectual inquiry. But is there really a paradox here and is it related to patents? My thesis is that the equation of intellectual property rights generally—and patent rights in particular—to human rights is belied by the historical evolution of these rights and negated structurally, by the manner in which claims to intellectual products are recognized in legislative enactments and international instruments. As a theoretical matter, there are clearly dimensions to intellectual property that sound in human rights concerns (rights to protect one’s dignity, to be compensated for one’s labor, and to enjoy one’s property without arbitrary governmental interference). But at least on the patent side, there is little reason to think that the human rights concerns associated with creative labor must be furthered by recognizing a right to full control over the information that creative labor produces Elevating intellectual property rights to human rights has unfortunate pragmatic consequences. Presumably, human rights can be outweighed only by other human rights. Accordingly, under a human rights approach, the benefit stream flowing from inventive production can be distributed, without a patentee’s authorization, only to meet social needs that are likewise classified as fundamental. (Or to put it another way, every incursion on a patent right would need to be justified by showing that it involved an interest that is not only socially desirable, but that can also be categorized as a human right.) Instead of relying on legislatures and courts to wield well-understood tools embedded in existing patent law, ad hoc rights-balancing leads to unpredictable decision-making. The result, ironically, is an environment less conducive to decisions to invest time and money in intellectual efforts. The new—human rights—justification can, in short, thwart the traditional—utilitarian—goal of limiting protection from free riders as a means of encouraging the advancement of knowledge. This chapter lays out the historical, structural, and economic evidence undermining the equation of patent rights and human rights. It then tries t to understand the source of the rhetorical incarnation of patent rights as human rights. It ends with examples of how a utilitarian justification for patent rights is better suited to the task of furthering social welfare. Nothing here is intended to refute the claim that there are social interests that conflict with patent rights, to deny that some of these interests can be characterized as human rights, or to quarrel with the strategy of using human rights justifications to advance social welfare. My focus is limited to the question whether the debate over the balance between the interests of the public and patentees should be structured as a contest among human rights.

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  TRIPS and Essential Medicines: Must One Size Fit All? Making the WTO Responsive to the Global Health Crisis

  Rochelle C. Dreyfuss

  The establishment of the World Trade Organization (‘WTO’) marked an important new chapter in the administration of patent law, especially regarding inventions in the medical arena. Although intellectual property protection has long been governed by international norms, the principal international instrument on patents—the Paris Convention for the Protection of Industrial Property—largely focused on procedural issues. It required each state to accord national treatment to the citizens of other signatories, but it left most details on the scope and the substance of patent rights to the domestic law of each of its members. While many countries provided plenary protection to pharmaceutical products in order to stimulate their discovery, others took the position that medicines were too important to their citizens’ welfare to privatize. In 1994, that regime was significantly modified. Intellectual property, now conceptualized as a trade issue, became the subject of a new international instrument, the Agreement on Trade-Related Aspects of Intellectual Property Rights (‘TRIPS Agreement’ or ‘TRIPS’). Under the WTO framework, adherence to TRIPS is not only required of every WTO member, it is also enforceable through the WTO’s elaborate Understanding on Dispute Settlement (‘DSU’), an essentially adjudicative mechanism, administered by the Dispute Settlement Board (‘DSB’), complete with an Appellate Body to entertain appeals from Panel decisions and sanctions for non-compliance. Because TRIPS imposes substantive patent law standards, including a requirement that protection be accorded ‘in all fields of technology’, it is no longer possible for a WTO member to exclude medicines from the purview of protection. While the WTO is certainly a boon to any country seeking large foreign markets for its products, observers have been extremely concerned about TRIPS’ ‘one size fits all’ aspect, which ignores the heterogeneity of the world’s population and especially the problems that confront developing nations. Because these countries generally do not innovate at world levels, patents have highly adverse distributive consequences for them. Specifically, while the patents mandated by TRIPS may enhance incentives to engage in medical research, they shift wealth from developing nations to the developed economies that are the source of most pharmacological advances. In effect, patents act as a tax, putting treatment beyond the reach of all but the richest of the world’s populace. The key question, however, is whether the TRIPS Agreement is necessarily a one size fits all system. As a formal matter, the Agreement is a minimum standards regime, which (in theory) gives members freedom to tailor their laws to their individual circumstances. Furthermore, TRIPS’ statement of Principles and Objectives acknowledges the importance of balancing interests, promoting social welfare and protecting public health. While it is true that to date, outcomes in the DSB have tended to straitjacket member states and create fodder for the ‘one size fits all’ critique, adjudicators currently lack judicially manageable standards for converting the aspirations articulated in TRIPS’ Principles and Objectives provisions into concrete legislative safeguards for public interest concerns. But there are reasons to believe that the situation is susceptible to change. Emerging economies, such as India, South Africa and Brazil, are becoming far more sophisticated about their intellectual property needs. In the latest series of trade negotiations (the Doha Round), a coalition among these countries, less-developed economies, and an increasingly proactive set of non-governmental organizations (‘NGOs’), provoked the adoption of the Doha Declaration, which made a significant change to the TRIPS Agreement as it pertains to healthcare. And more can be expected. Countries in the developed world are now confronting novel technologies, such as synthetic biology, genomics and bioinformatics. As they cope with the problem of applying a legal regime developed during the Industrial Age to the advances of the Knowledge Economy, they too are beginning to feel TRIPS’ pinch. 16 As important, observers have become concerned about the legitimacy of WTO law-making more generally. With new approaches for making the WTO accountable, transparent and democratic, it should become easier to correct the shortcomings in the TRIPS Agreement. Section 2 of this chapter describes the requirements the TRIPS Agreement imposes regarding patent protection. Using an example drawn from India’s new patent law, it demonstrates the Agreement’s capacity to accommodate diverse interests as well as the weaknesses in the current regime. Section 3 takes up the question of how to make that international system more responsive to the healthcare needs of the global community. It suggests that the TRIPS Council, which was created to administer the TRIPS Agreement, could better utilize the expertise of the World Intellectual Property Organization (‘WIPO’), the World Health Organization (‘WHO’) and other institutions that deal with issues of intellectual property, development, health and human rights. Even if fully effectuated, the suggestions in section will not completely alleviate the global health crisis. TRIPS can certainly be altered to improve access to existing medicines. However, patent law relies in a fundamental way on the market to fuel innovation. Thus, it cannot create incentives to meet the needs of populations too poor to provide the level of profits that technological entrepreneurs seek. For neglected diseases, like malaria and dengue fever, it is necessary to devise an entirely new incentive structure, such as the one advanced by Thomas Pogge in this volume. This chapter also comments on the compatibility of some of these proposals with TRIPS.

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  The Imperfect Art of Medical Malpractice Reform

  Richard A. Epstein

  The greatest transformation of the health care delivery system in the United States was put in place in March 2010 when President Barack Obama and a Democratic congress prevailed over a fierce but unavailing Republican opposition. The Patient Protection and Affordable Care Act—aka ObamaCare—alters, in unimagined ways, the tax and regulatory environment for the delivery of health care services in the public and private spheres. Yet in the midst of all that tumult, Congress pointedly chose to bypass one area of passionate interest to doctors, hospitals, and other health care providers: the much mooted issue of medical malpractice reform. ObamaCare’s unmemorable contribution to this arena was its ‘‘sense of the Senate’’ (but not of the House of Representatives) in support of some modest experimental projects at the state level, which at some far distant time might disclose some undefined improvements within the system. The realist explanation for the want of any meaningful medical malpractice reform starts and ends with the proposition that the Democratic Party is joined at the hip to one of its key constituent groups: the trial lawyers. The more charitable explanation is that medical malpractice reform does not exert sufficient influence on the overall operation of the health care system to merit that inclusion in major social legislation. There is obvious truth in the former proposition, but much controversy over the latter. The substantive question is: Just what could any Congress hope to achieve by intelligent medical malpractice reform? Answering that question is not easy. It is first necessary to grasp the situation on the ground with medical malpractice. Just how many resources does it consume, and what social dislocations, if any, does it create? Once that is done, it is possible to think about a range of reforms and their probable consequences. Part I of this paper thus gives a brief overview of costs, direct and indirect, of running the current liability system. Part II then turns to a theoretical discussion of the proper basis of medical malpractice liability in order to explain why private contracts, not public tort rules, should govern. Part III then examines the set of possible reforms that could respond to the theoretical difficulties in the current approach. A brief conclusion follows.

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  The Many Faces of Fault in Contract Law: Or How to Do Economics Right, Without Really Trying

  Richard A. Epstein

  The concept of fault plays a dominant role not only in contract but also in tort. Often “fault” is the equivalent of the term “negligence.” Commonly, its definition is said to track the Hand formula, which compares the burden of precaution (B) with the expected losses, equal to the probability of loss (P) multiplied by the expected severity of the loss (L). Hand's earlier discussion of custom in The T.J. Hooper is often ignored.

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  Saturns for Rickshaws: Why Predispute Employment Arbitration Should Be Preserved

  Samuel Estreicher

  This work begins with a general introduction to employment ADR, discussing such topics as where plaintiffs can better vindicate their rights, general employment law strategies, how to assess workplace disputes and conflicts, and options for resolution. Employers are offered valuable advice on how to implement a successful employment arbitration program, with real-life examples to work from. Mediation of employment conflicts and employment arbitration are explored and a comparison of the two is provided, including with respect to statutory employment conflicts. Topics include respectfulness in the workplace, bullying, racial and cultural conflicts, sexual harassment, Disabilities Act disputes, airline disputes, weight discrimination, and discrimination based on marriage and pregnancy. Lastly, this book takes a look at the U.S. Supreme Court decision 14 Penn Plaza LLC v. Pyett, where the Court clarified and reaffirmed the use of mandatory arbitration for resolution of workplace disputes.

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  The Shift From Defined Benefit Plans to Defined Contribution Pension Plans

  Samuel Estreicher and Laurence Gold

  The United States has undergone a major shift in recent years from defined benefit pension plans to defined contribution plans. The shift has important consequences for most Americans because defined contribution plans, in granting decision-making authority to participants, will often fail to provide adequate retirement income to individuals with median earning capacity. The authors propose a number of legal changes to reduce some of the regulatory handicaps that have attended defined benefit plans and improve the reliability of defined contribution plans as a principal source of retirement income. The rationale of the national public-private pension system that presently covers—and has consistently covered—just under half of the Americans who work for their living is this: working people from business managers to stock clerks depend on the continuing stream of income they earn each working year to sustain themselves and their dependents; it is not in the interest of enterprises nor socially desirable to require older Americans to sustain themselves in their later years by working until the day they die; and government, through Social Security and enterprises through tax-qualified pension arrangements, should therefore provide individuals a means, over a working career, of earning a retirement benefit that enables them to approximate their pre-retirement standard of living.

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  The EC Microsoft Case and Duty to Deal: The Transatlantic Divide

  Eleanor M. Fox

  This chapter examines Microsoft’s offence in refusing to give full information to its work group server operating systems rivals so that they could interoperate as seamlessly with Microsoft’s PC and work group server operating systems as Microsoft could. It is well known that firms, even monopolists, have no general duty to deal, and this is especially true when a claim is made that the firm must share its intellectual property (IP). A dominant firm has a duty to deal only in the event of exceptional circumstances. The question is: Did the facts of the Microsoft case involve ‘exceptional circumstances’? The Microsoft case was preceded by two important precedents on duty to license IP: Magill and IMS Health. The Court of First Instance (CFI) in the Microsoft case purported to apply the criteria laid down in Magill and IMS Health, but pushed the round peg of the Microsoft facts into the square boxes of Magill and IMS Health. This chapter proposes abandoning the square boxes and resorting to concept rather than rules to determine when circumstances are so exceptionally important to consumers and the market that a duty to deal should arise. Resorting to concept, and given the general perspective of EC competition law, the European courts would probably find a duty. But is there a transatlantic divide?

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  The Story of Ex parte Young: Once Controversial, Now Canon

  Barry Friedman

  On its face the law of federal jurisdiction often appears technical and dry. It purports to a certain neutrality of application. Not far below the surface of jurisdictional doctrine, however, rest deeply important substantive choices. That is why such a seemingly arid subject matter is so closely studied and hotly contested. Time, though, plays funny tricks on jurisdictional doctrines. The law of jurisdiction grants access to the courts, and access is required to protect rights. Yet, over time, the kinds of plaintiffs coming to federal court, and the rights they seek to assert, change. In the Lochner era, at the turn of the twentieth century, corporate plaintiffs and their allies sought protection of property and contract rights in federal court. In the 1960s and 1970s, civil rights plaintiffs came to federal court seeking redress on issues of equality and personal liberty. The doctrine that at its inception favors one ideology may come in a later day to favor another. That is why the law of federal jurisdiction is constantly changing. It is the rare jurisdictional doctrine that stands the test of time unaltered, but the rule of Ex parte Young is one that has. Born in the crucible of the class wars of the late nineteenth and early twentieth centuries, Ex parte Young has become bedrock. The Eleventh Amendment to the Constitution protects states from certain suits as defendants in federal court. Despite that amendment, Ex parte Young holds that plaintiffs may sue state officials in federal court to enjoin the enforcement of unconstitutional acts. The doctrine has been relied upon, over the course of one hundred years, by plaintiffs of all ideological stripes. Ex parte Young is also a case that, in a sense, gives a lie to broad notions of “parity” between state and federal courts. One of the most enduring issues of federal jurisdiction is whether state courts will be as protective as their federal cousins in protecting federal constitutional rights. Yet, even at times when the Supreme Court has developed jurisdictional doctrine that appears to favor state court jurisdiction, the rule of Ex parte Young has endured. As the history and application of that doctrine indicate, when state laws are being challenged as violative of federal constitutional rights, there is often a preference for, and a sense to, having a choice to adjudicate those claims in federal court. The implicit message of Ex parte Young is that when a state law is challenged as unconstitutional, adjudication of the constitutionality of that law ought not to be left to the state courts.

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  Enter the Lawyers: Choosing and Working with Estate and Foundation Counsel to Secure an Artistic and Philanthropic Legacy

  Stephen Gillers

  This essay, prepared for the Aspen Institute's National Study of Artist-Endowed Foundations (Study), is about death and revival in a very special setting. It offers advice to artists, their families and advisors, and also to the lawyers they will work with, as they develop the artist’s estate plan and lay the groundwork for, and then manage, a foundation to realize the artist’s legacy through a philanthropy committed to charitable and educational purposes. Although I hope and expect that my advice will help all readers, the artists are the most important among them and whom I have in mind when I occasionally use the pronoun you. The intention throughout is to insure that the artist’s wishes are accurately identified and effectively implemented. Estate planning is complicated even in relatively simple circumstances, but especially in the one discussed here. Think about it. When the estate plan is made, the testator (let’s say this is a visual artist) does not generally know when he or she will die. Also, circumstances can change and changes must be foreseen so far as possible, but some cannot be foreseen. Changes can include new family members or new personal relationships. They can include change in the assets the artist owns at death—changes in both value and kind, as a result of sales, productivity, or reputation. Or the changes can be new estate tax or other laws whose possible adoption may not be contemplated. Then add to this the complications that arise when the estate’s property is not liquid and must be appraised, at least for the taxing authorities and perhaps for proper distribution of assets to heirs and beneficiaries or charity. The value and identity of that property might fluctuate, perhaps significantly, and often can be only roughly predicted when the estate plan is created. And some property is much harder to appraise accurately (e.g., paintings or intellectual property rights) than others (homes). Further complexity is introduced if the artist wishes to create an entity that will receive liquid or other assets in order to support a philanthropic purpose after his or her death—or indeed during a lifetime. The entity, let’s call it a foundation, must be created, its governing body identified, its method of succession defined, and its governing structure detailed. Who will make decisions about its operation? How will the artist’s intent be protected after death? How will the estate plan allocate distributions as between the artist’s family and the foundation (and perhaps others) and what happens after the death of the family members? These and other questions can make planning appear incredibly complex, and surely it is not simple. Many decisions must be made, some irrevocable, others amenable to change. This essay will try to clarify issues faced by artists, their family, and their advisers as they begin to think about the culmination of a productive life and the values they wish to preserve and perpetuate. Its focus will be those issues that arise in choosing and working with legal counsel. At the end of the essay, I will offer a summary of sorts—a half dozen recommendations to help guide readers through this specialized world.

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  Federalism and Public Choice

  Roderick M. Hills Jr.

  The public choice literature on federalism and its near-relation, localism, is voluminous in size but narrow in focus. If one includes articles on fiscal federalism and Tiebout’s spatial economies under the rubric of ‘public choice literature’, then the articles in law, political science, and public economics that refer to public choice concepts number in the thousands. Most of this literature revolves around the idea of mobility between competing subnational jurisdictions. Less of the literature focuses on how political activity by voters or politicians in federal regimes differ from unitary states’ politics. The literature, in other words, focuses on exit, not voice. The absence of substantial public choice scholarship on democratic behavior in federal regimes oddly contrasts with the political tradition of federalism in the United States. The Anti-Federalists opposed the US Constitution on the ground that only aristocratic elites would be able to compete in large electoral districts required by a continental nation. The Jacksonian Democrats opposed a broad construction of Congress’ power to fund infrastructure on the similar ground that wealthy ‘monopolists’ would exert disproportionate power at the metropolitan centers where the federal government’s officials would work. These ‘voice-based’ arguments treat federalism as a device by which to reduce slack between the agent (elected officials) and principal (the voters), by reducing the cost to voters of monitoring the agents’ actions. Public choice theory does not have much to say about the merits of this traditional theory of federal democracy, preferring to focus on the capacity of individuals to discipline officials by exiting, or refusing to enter, badly governed jurisdictions. In what follows, I will describe three aspects of public choice theory and federalism. First, I will outline public choice theory’s exit-based normative justifications for federal regimes. Second, I will describe voice-based normative justifications for federal regimes that are consistent with public choice theory, although not public choice theory’s central focus. Finally, I will examine public choice theorists’ positive theories for how federal regimes are sustained through the political process. In general, I will suggest that the most promising trend in public choice theory is the effort of economists, political scientists, and lawyers to tackle the thorny question of ‘voice’ in federal regimes—that is, how subnational politics differs in federal regimes from the politics of unitary states. Public choice theorists may have an inveterate suspicion of claims that subnational government is closer to the people or facilitates political participation: such positions have a sappy flavor that does not mix well with the public choice theorists’ self-image as hard-boiled realists free from illusions about the capacity of individuals to engage in collective action. William Riker, one of the founders of public choice theory, roundly ridiculed such claims on behalf of federalism. And yet nothing in the conventional account of how decentralization improves political ‘voice’ is inconsistent with the abstract principles of public choice theory. Moreover, while sketchy and conflicting, the evidence does not disconfirm the account of decentralization as improving democratic accountability. Whatever normative case can be made for federalism depends critically on this voice-based defense of federal regimes. In particular, the case for federalism based on exit critically depends on the argument for federalism based on improvement of ‘voice’.

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  Do the World Trade Organization Disciplines on Domestic Subsidies Make Sense? The Case for Legalizing Some Subsidies

  Robert L. Howse

  Prior to the Uruguay Round, the multilateral trading system did not contain any enforceable legal disciplines on domestic subsidies. The treatment of such subsidies in the General Agreement on Tariffs and Trade (GATT) was ambiguous: On the one hand, their legitimacy as tools of public policy was affirmed while their capacity to distort trade was also acknowledged. On the other hand, self-help against such subsidies was permitted in the form of countervailing duties (CVDs), provided that the subsidies caused “material injury” to domestic industry in the importing country. The Uruguay Round Agreement on Subsidies and Countervailing Measures (SCM Agreement) introduced a category of domestic subsidies called “actionable,” which can be challenged in World Trade Organization (WTO) dispute settlements, thus for the first time providing a multilateral legal remedy against subsidization. For a subsidy to be challenged in a WTO dispute settlement as actionable, it has to fall within the definition of subsidy in Article 1 of the SCM Agreement, which means it must entail a “financial contribution” governmental financial assistance to firms (from cash payments to equity infusions to provision of goods and services below market prices), and also confer a “benefit” on an enterprise; the subsidy must also be “specific,” either de jure (legally targeted at a particular industry or enterprise or group of industries or enterprises) or de facto (in fact used only or disproportionately by a particular industry or enterprise or group of industries or enterprises). If these criteria are met, then the subsidy in question will be actionable, which means that if the importing country can further show the existence of certain “adverse effects” on the interests of other WTO Members, then it can either request in WTO dispute settlement the legal remedy of removal of the offending measure or it may countervail the subsidy (provided the CVD action complies with the various procedural and substantive requirements in the SCM Agreement that apply to countervail). If any of these criteria are not met, not only will a dispute settlement action fail, but the imposition of CVDs will be illegal. The SCM Agreement (Article 8) originally entailed a defined list of subsidies to be deemed “nonactionable”; in other words, subsidies immunized from challenge in WTO dispute settlement as well as CVD action, even if they were to be found to meet the criteria discussed above. This list included certain subsidies for research and development, for environmental protection, and to disadvantaged regions. However, this provision for deemed non-actionability applied provisionally, for only the first five years that the SCM Agreement was in force. Since its effective expiration, WTO Members have been unable to agree either to continue with the list as it now stands or to create a different list. Therefore, today there are no subsidy programs that are explicitly protected as nonactionable. During the current Doha Round negotiations, proposals from developing countries (most notably Venezuela and Cuba) emerged for the reinstatement of a category of non-actionable subsidies. These proposals need to be seen in a context of renewed and more sympathetic attention by economists to the question of industrial policy and the role of various instruments of government policy, including subsidies, in achieving economic development goals through industrial policy. At the same time, an important and provocative article by Bagwell and Staiger has raised fundamental issues about the economic rationality of the SCM Agreement disciplines on domestic subsidies, suggesting that these rules may do more harm than good to the world trading system. The 2006 World Trade Report of the WTO Secretariat focuses extensively on the issue of subsidies and entertains the possibility that the SCM rules may, in some respects, end up disciplining efficient domestic policy interventions. In light of recent debates about subsidies and trade in the economics and trade policy literature, this chapter aims to revive the case for creating a “safe haven” of nonactionable subsidies in the SCM Agreement. It begins by looking at different rationales for, or ways of, conceptualizing the discipline of subsidies in WTO law. It then examines against this framework some important recent work in economics and trade policy on the question of subsidies and WTO law. In light of this analysis, this chapter continues by examining the extent to which the existing rules on domestic subsidies in the SCM Agreement are desirable and optimal in light of the justificatory framework developed in the first part of the chapter. Finally, the chapter considers proposals for reintroducing non-actionability and asks whether and how creating a safe haven for defined subsidies would improve outcomes under the SCM Agreement.

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  Man of Peace: Rehearing the Case against Leo Strauss

  Robert L. Howse

  Was there a coherent foreign policy doctrine or a philosophy of world politics behind the United States decision, along with its allies, to make war on Iraq and destroy the regime of Saddam Hussein? If so, is there a view about international law, either explicit or implicit, in this doctrine or philosophy? A range of media commentators and academics have suggested that the decision to go to war was prepared and decisively influenced by a perspective on world politics derived from ‘Straussianism’, a school of thought that developed around the teachings of Leo Strauss, a twentieth century German-Jewish philosopher who is well known as a critic of liberalism, and whose diagnosis of the spiritual and intellectual crisis of modernity led to an attempted recovery of pre-modern philosophical perspectives on thought and politics, as a way of understanding the crisis and perhaps also as an alternative to ‘nihilism’ and to the political implication of nihilism—fascism. Much has been made of Strauss’s hostility to liberalism, but to the extent he criticized liberalism this hostility is largely based on liberalism’s embrace of relativism and positivism, the separation of morals from law and politics, which Strauss saw had rendered Weimar liberalism impotent to counter the extremists with effective arguments and counter-strategies. One cannot underestimate the impact on Strauss of the collapse of the moderate centre in German politics, and the spectacle of the Weimar as ‘justice without a sword or of justice unable to use a sword’, incapable of standing up to fanaticism: Strauss witnessed these events with his own eyes in his formative years as a Jewish scholar in Berlin. Contrary to some critics of Strauss, however, the failure of Weimar democracy did not lead him to conclude that liberal democracy is necessarily weak or unable to maintain good public order. He noted that ‘there were other liberal democracies which were and remained strong’ through the economic crises and instability of the 1920s. While drawing some general lessons about the vulnerabilities of liberal democracy as a form of government, his explanation of the failure of liberal democracy in Weimar focuses on the specific political history and pathologies of German civilization. Strauss notoriously attracted students who were conservatives and even reactionaries. This was not only because of his critique of liberalism (which does not necessarily imply an endorsement of conservative thinking), but because of the potential for the recovery of ‘classical’ thought to legitimate all kinds of prejudices which had become disreputable as ‘elitism’, ‘sexism’, and so forth. Did the ancients not believe in slavery? Did they not regard giving citizenship to women as unthinkable? Just as the Nazis had invoked Nietzsche as a ‘great mind’ to give philosophical weight to their prejudices, Strauss might have opened up the possibility for American conservatives and reactionaries to invoke Plato and Aristotle for purposes of giving intellectual respectability to positions generally viewed as crudely ‘redneck’, as dark superstitions of the bad old days. But Strauss did not present Plato and Aristotle as apologists or ideologists for conventional Greek politics; instead, according to Strauss, the distinctiveness of ancient political philosophy emerges through its critique—indeed a radical critique—of the adequacy of the Greek city as against the standards of perfect, or rational, justice. According to Strauss, the unqualified rule of wisdom as presented in Plato is merely a theoretical construct for understanding the nature and limits of justice; its practical lesson is that the desirable form of political ordering is, as Strauss puts it, a mixture of wisdom and consent, a mixed regime that gives a proper place both to popular will and to the role of educated political, legal, and military elites: ‘The political problem consists in reconciling the requirement for wisdom with the requirement for consent… According to the classics, the best way of meeting these entirely different requirements—that for wisdom and that for consent or for freedom—would be that a wise legislator frame a code, which the citizen body, duly persuaded, freely adopts… [T]he administration of the law must be entrusted to a type of man who is most likely to administer it equitably, i.e. in the spirit of the wise legislator, or to “complete” the law according to requirements that the wise legislator could not have foreseen.’ What differentiates this from the modern liberal idea of separation of powers and checks and balances is that Strauss, following the classical political philosophers, does not believe the mixed regime can work as a balance of self-interested powers checking each other; it depends also on the character of those who exercise power, the kind of education they receive, and especially their capacity to believe in a common good and their respect for the rule of law. Be that as it may, a number of students or followers of Strauss have become prominent figures in American conservatism, especially neo-conservatism, Irving and William Kristol being the most famous examples.

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  The End of the Globalization Debate: Continued

  Robert L. Howse

  This brief essay pursues a line of argument that I deployed in a review article in the Harvard Law Review, discussing several important recent books about globalization. The thesis is that there is no longer a meaningful or important debate for or against globalization because the anti-globalizers have themselves gone global. In various sites of global law and policy-making, including those at the interstices of the global and local (as will be explained), the anti-globalizers actually found processes and institutions where, unlike the case with the ‘state’ in many instances, they could air their criticisms of policies and express their values as global values. Despite the continuing rhetoric and polemics regarding the promotion of globalization, there is no longer an anti-globalization ‘side’ in the debate, coherently representing the position that the territorial nation-state is and should remain the locus of control over economic activity and that it should retain a monopoly on legitimate governance. Today the protesters who march against ‘globalization’ are not marching in favor of the ‘state’. Instead, they are, mostly, advocating a set of values and causes that transcend state boundaries and that require global action. Anthony Giddens anticipated, at the beginning of this century, that the debate would re-focus as a debate about globalization, rather than whether globalization should take place (as I learned after writing my Harvard essay). In an interview in 2000, he suggested that the second globalization debate would be: “about what globalization is, what its consequences are, and what kind of framework we can develop for the world to accommodate it. It’s plainly had a lot of positive developments in producing a more interdependent world. We have to learn to harness those things, and we have to shift away from the kinds of political positions that were dominant for the last few years, and we have to produce a politics which allows us to create an inclusive society locally, nationally, and globally, and to harness these processes for the betterment of human beings.”

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  Global Justice, Poverty, and the International Economic Order

  Robert L. Howse and Ruti Teitel

  What principles of justice ought to guide the evolution of international economic law? In his essay for this volume, Thomas Pogge argues that there is a moral duty on the part of affluent countries not to contribute to the design of a ‘global economic order that, continually and forseeably, produces vast excesses of severe poverty and premature poverty-related deaths’. According to Pogge, the existing international economic order represents a violation of this duty, and this violation, which is a human rights violation, leads to an obligation to compensate the world’s poor through, inter alia, foreign aid. Pogge suggests: ‘In the modern world, the traffic of international and even intra-national economic transactions is profoundly shaped by an elaborate system of treaties and conventions about trade, investments, loans, patents, copyrights, trademarks, double taxation, labour standards, environmental protection, use of seabed resources and much else. These different parts of the present global institutional order realize highly specific design decisions within a vast space of alternative design possibilities. It is incredible on its face that all these alternative ways of structuring the world economy would have produced the same evolution in the overall incidence and geographical distribution of severe poverty.’ While building on a widely shared moral intuition that the existence of extreme poverty is inhuman and wrongful, Pogge’s argument has, in fact, complex and contestable normative and empirical foundations. When Pogge claims that existing international economic law has contributed to or caused in part the existence of extreme poverty, what he is really saying is that had a different set of rules and institutions been devised for the international economic order, the worst forms of poverty could have been eliminated in great measure. He thus judges the existing order against an imaginary counter-vision of the international economic order. The affluent countries violated their duty not to contribute to extreme poverty globally through choosing a set of rules and institutions different from some imagined alternatives, which could have eliminated the most extreme forms of poverty. At first, Pogge seems to be asserting that evidence of enormous and increasing income and wealth inequalities alone proves that the existing rules and institutions are sub-optimal: ‘These data should suffice to refute the Panglossian view: the present design of the global order is not optimal in terms of poverty avoidance’ This seems to be question-begging if not an outright logical error: however lamentable the realities evoked by the data, they cannot in and of themselves ever establish that alternative rules and institutions are or were actually available that could have or could now avoid or lessen these outcomes. A further difficulty here is that increased income inequalities over a given time period might, on some theories of economic development, be necessary to produce in the long term increases in wealth that can ultimately lead to the elimination of extreme poverty. This possibility is suggested by some of the data Pogge cites: the number of the very poorest of the poor dropped during much of the period in question (those living below $1 a day), even if income inequalities increased more sharply. In earlier work, Pogge tended to favour Rawls’s difference principle as a basis for global justice: under this principle even quite extreme inequalities of outcome are acceptable if such inequalities maximize the primary social goods of the least advantaged of all. Rawls derived the difference principle from a particular method for establishing the rules of justice for social cooperation, the veil of ignorance, asking what rules reasonable persons would choose without knowing what endowments they might have, i.e. how disadvantaged or advantaged in society they would be due to morally arbitrary factors.