"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well."

-Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Saturday, February 6, 2010

SSRN Articles

Political scientists and law professors have lately taken to asserting that quantitative studies of judging reveal worrisome findings about the rule of law in the U.S. judicial system. The authors of Are Judges Political?, for example, declare: “We show that variations in panel composition lead to dramatically different outcomes, in a way that creates serious problems for the rule of law.”

To evaluate such assertions, one must first know what the rule of law requires of judges; then one must identify or measure how much, or in what ways, judges are falling short of these requirements: there must be rule of law baselines or standards. None exist, however - a gap which allows researchers to draw misleading conclusions from the results of their studies.

This essay demonstrates the need for rule of law baselines and offers several proposals for how they might be constructed (with due warnings about their limitations). Furthermore, it argues that the incorporation of such baselines into quantitative research on judging will enhance the value of the information produced in these studies.

This brief essay was presented at a two-day colloquium at Duke Law School involving federal judges, legal theorists, and political scientists, which was convened to facilitate a productive exchange of ideas on the design and orientation of quantitative research on judging.

The establishment of the professional law schools in Japan has generated conditions for a perfect storm that may devastate legal scholarship. First, the current generation of law scholars are so burdened by teaching and administration for the new law schools that it has become difficult for them to produce their own scholarship. Second, these burdens are impairing law professors’ ability to mentor new scholars. Finally, the academic track graduate law programs are attracting fewer among first tier of talent. Many of the best and brightest potential scholars are instead enrolling in the new professional law school programs.

Scholarship generates the intellectual foundation of the law. As the great pedagogical theorist Paulo Friere said: “I do research so as to know what I do not yet know and to communicate and proclaim what I discover.” If legal scholars in Japan cease to generate creative empirical and theoretical analysis of the law and society, a weakened ability to understand and report on the present will imperil the future.

This paper portrays the dynamics in legal education in Japan generating the current circumstances, considers the attending risks for the future, and aims to offer valuable policy reform suggestions.

This book chapter addresses the appropriate role of Fannie Mae and Freddie Mac, the government-chartered, privately owned mortgage finance companies, in the United States housing finance sector. The federal government recently placed Fannie and Freddie in conservatorship. These two massive companies are profit-driven, but as government-sponsored enterprises they also have a government-mandated mission to provide liquidity and stability to the United States mortgage market and to achieve certain affordable housing goals. How the two companies should exit their conservatorship has implications that reach throughout the global financial markets and are of key importance to the future of American housing finance policy.

While the American taxpayer will be required to fund a bailout of the two companies that will be measured in the hundreds of billions of dollars, the current state of affairs presents an opportunity to reform the two companies and the manner in which the residential mortgage market is structured. Few scholars, however, have provided a framework in which to conceptualize the possibilities for reform.

This book chapter employs regulatory theory to construct such a framework. A critical insight of this body of literature is that regulatory privilege should be presumed to be inconsistent with a competitive market, unless proven otherwise. The federal government’s special treatment of Fannie and Freddie is an extraordinary regulatory privilege in terms of its absolute value, its impact on its competitors and its cost to the federal government. Regulatory theory thereby clarifies how Fannie and Freddie have relied upon their hybrid public/private structure to obtain and protect economic rents at the expense of taxpayers as well as Fannie and Freddie’s competitors.

Once analyzed in the context of regulatory theory, Fannie and Freddie’s future seems clear. They should be privatized so that they can compete on an even playing field with other financial institutions and their public functions should be assumed by pure government actors. While this is a radical solution and one that would have been considered politically naïve until the recent credit crisis, it is now a serious option that should garner additional attention once its rationale is set forth.

Acceleration clauses are found in most debt instruments. Once triggering events have occurred, acceleration entitles a creditor to make its entire claim due and payable. While debt covenants have been analyzed extensively in the academic literature, the role of acceleration has been overlooked.

This paper examines the role of acceleration clauses and maintains that they play a critical role in debt financing. More than facilitating a creditor's collection rights, acceleration perfects a complex set of governance mechanisms within the corporate setting. The most apparent governance role of acceleration is to complement the debt covenants in deterring borrower misbehavior. The paper shows, however, that this role loses force when the firm has already deteriorated financially. Yet, in such states of the world acceleration plays two additional roles. First, it facilitates the commencement of bankruptcy and thus curtails any prospective losses to the creditors. Secondly, cross-accelerations establish a mutual balance of terror between the various creditors and prevent them from premature liquidation of the firm. Instead, cross-acceleration leads the parties to engage in collective negotiations and work out a comprehensive restructuring of the firm's finance.

The “narrative” model of legal judging argues that legal decision makers both do and should render judgments by assembling sensible stories out of evidence (as opposed to using Bayesian-type, linear models). This model is usually understood to demand that before one may judge a situation, one must give the parties the opportunity to tell their story in a manner that invites, or at least allows, empathy from the judger. This Article refers to this as the “inclusionary approach” to the narrative model of judging. Using psychological research in emotions and perspective-taking and the more intuitive techniques of literary criticism, this Article challenges the inclusionary narrative approach, arguing that, in practice, the law gives equal weight to an “exclusionary approach.” That is, in order to render sound, legitimate legal judgments, the law deliberately limits the sort of stories parties are allowed to tell – and does so on moral grounds, not, or at least not only, to improve the “accuracy” of the legal judgment. That is, as both a descriptive and normative matter, impoverished narratives can be better than enriched ones in leading decision makers to morally acceptable legal judgments.

If we accept that a bird in the hand is the worth two in the bush then the idea that the receipt of performance (even part performance) confers a benefit over and above the right to performance, and can be exchanged for something from the recipient, is consistent with the core idea of the consideration doctrine. All that remains is to replace the bilateral contract analysis in Williams v Roffey with a unilateral contract analysis (the promisor is only bound if the stipulated performance is actually received). This is preferable to three recently mooted alternatives to consideration as the primary test of enforceability: (i) the test of serious intention subject to contrary policies advanced in Antons Trawling v Smith; (ii) promissory estoppel as advanced in Collier v Wright, and (iii) leaving it all to the vitiating factors advocated in Gay Choon Ing v. Loh Sze Ti Terence Peter.

The growing number of arbitral decisions awarding compensation to investors has contributed to the development of law in the area of damages but also posed questions, which have attracted relatively little attention to date. This article first addresses the important but elusive matter of measuring compensation in non-expropriatory cases and then analyses a number of more discreet issues: approximation of damages, the impact of investment risk, contributory fault and mitigation, the flow-through of damage and the recoverability of moral damages in investment disputes. It is hoped that this analysis will inform and stimulate further debate on these issues.

Governing by contract in the U. S. today should be understood as integral to the processes, both political and economic, that made privatization a major domestic response to as well as driver of globalization. Faced with increased competition in global markets, the “Reagan revolution” responded with a domestic political program aimed, in part, at curtailing market regulation and other government functions in favor of “privatization.” Globalization as we understand it today in the United States is inseparable from its domestic politicization as neoliberal reform because they were, and are, interrelated as mutual cause and effect. Democratic and Republican administrations over the past two decades have claimed electoral mandates for government reforms under the banner of (in successive eras) “privatization,” “contracting out,” “competitive sourcing,” as well as other means of “disembedding” the state from the market. Today, the dominance of the public/private distinction as a feature of governance and contemporary political vocabulary makes it difficult for us to recognize these frames as something other than common sense categories, and their effects as anything other than a rational response to the natural operation of the global economy. It also makes it difficult to conceptualize alternatives. This essay argues that alternatives and the application of administrative law principles are necessary if we are to repair the democracy deficit attendant on the common sense view that markets and government operate in separate spheres, such that markets belong to a global sphere, while government is domestic.

In this paper the system of litigation costs in the Netherlands are discussed.

Dr. Bonham’s Case, decided by Edward Coke as Chief Justice of the British Court of Common Pleas in 1610, remains - to this day - the case acknowledging the supremacy of the fundamental (or natural) law interpreted and enforced as such by the judiciary and not a legislative body - here, Parliament. Coke’s idea of a law of nature superior to man-made law was not new. What was original - and even radical for the times - was the notion that the courts of law should be given the power and the right to interpret and enforce that law. This theory of judicial review was embraced first in the Massachusetts Colony in the case of Giddings v. Brown in 1657 and in subsequent challenges by the colonies to the supremacy of Parliamentary rule over them. Subsequently, Coke’s holding in Bonham’s Case became the very lynchpin for the American theory of the judicial review of legislation.

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