New Foundations of Transnational Private Regulation

Journal of Law and Society

Volumn 38, Issue 1, 2011, Pages 20-49

  Cafaggi, Fabrizio ^a  

^a UNIVERSITY OF TRENTO   (Italy)

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[No Author keywords available]

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EID: 79951895598     PISSN: 0263323X     EISSN: 14676478     Source Type: Journal    
DOI: 10.1111/j.1467-6478.2011.00533.x     Document Type: Article

References (128)

1. J. Braithwaite, Regulatory Capitalism 2008 For this distinction and its implications see.
2. Different goals are pursued by these two forms. Individual firms often regulate to promote product differentiation, and trade associations to standardize and make rules uniform, sometimes creating barriers to entry for newcomers.
3. This definition differs from that of standards adopted in the Agreement on Technical Barriers to Trade (TBT) under Annex 1.
4. H. Collins, Regulating Contracts 1999 The inadequacies of private law for regulatory purposes are examined by.
5. An interesting comparison, beyond the scope of this paper, concerns the function of public interest norms in public international law and that of public function\public interest in transnational private regulation.
6. J. Stiglitz, 'Regulation and failure' New Perspectives on Regulation, eds. D. Moss and J. Cisternino 2009 12.
7. K.W. Abbott and D. Snidal, 'Governance triangle' The Politics of Global Regulation, eds. W. Mattli and N. Woods 2009 50.
8. A.C. Cutler, Private Power and Global Authority: Transnational Merchant Law in the Global Political Economy 2003 On the correlation between globalization and the increasing power of transnational private actors.
9. Y. Dezalay and B.G. Garth, Dealing in Virtue. International Arbitration and the Construction of a Transnational Legal Order 1996 The increasing influence of private power in the global sphere has been observed for a long time.
10. S. Sassen, Territory, Authority, and Rights from Medieval to Assemblages 2006
11. G.P. Callies and P.C. Zumbansen, Rough Consensus and Running Code 2010.
12. The question had been already debated in the thirties in the United States with the pioneering work of Jaffe
13. L. Jaffe, 'Law Making by Private Groups' 1937 51 Harvard Law Rev. 201-53, at 213.
14. D. Levi-Faur and J. Jordana, 'The Rise of Regulatory Capitalism: The Global Diffusion of a New Order' 2005 598 Annals of the Am. Academy of Political and Social Sci. 200-17
15. D. Levi-Faur, 'Varieties of Regulatory Capitalism: Sectors and Nations in the Making of a New Global Order' 2006 19 Governance 363-6, at 363.
16. The presence of non-state actors in the global governance system is seen by many as a characteristic of global governance.
17. A. von Bogdandy, P. Dann, and M. Goldmann, 'Developing the Publicness of Public International Law: Towards a Legal Framework for Global Governance Activity' 2008 9 German Law J. 1375-400, at 1378 ff.
18. Those who claim that private actors exercising regulatory authority should be considered functionally equivalent to public actors and thus be subject to the same regime erase the complementarity. My claim is that functional - let alone structural - assimilation is a mistake and the distinction between public and private should be maintained even within a common set of principles concerning compliance with democracy and the rule of law.
19. Food safety provides a good illustration of a much wider phenomenon which concerns many sectors.
20. G.K. Hadfield, 'The Public and Private in the Provision of Law for Global Transactions' Contractual Certainty in International Trade: Empirical Studies and Theoretical Debates on Institutional Support for Global Economic Exchanges, ed. V. Gessner 2009
21. J. Davis, 'Privatizing the Adjudication of International Commercial Disputes: The Relevance of Organizational Form' The Enforcement of Transnational Private Regulation, ed. F. Cafaggi (forthcoming).2011
22. This is clear in the area of product safety and in particular that of food safety. C. Coglianese, A. Finkel, and D. Zaring (eds.), Import Safety. Regulatory Governance in the Global Economy 2009.
23. B. Kingsbury, N. Krisch, and R.B. Stewart, 'The Emergence of Global Administrative Law' 2005 68 Law and Contemporary Problems 15-62, at 16
24. J. Ruggie, Protect, Respect and Remedy: a Framework for Business and Human Rights 2008.
25. A.C. Cutler, V. Haufler, and T. Porter, Private Authority and International Affairs 1999
26. D. Drezner, All Politics is Global 2007.
27. W. Leebron, 'Lying Down with Procrustes: An Analysis of Harmonization Claims' Economic Analysis of Fair Trade and Harmonization, eds. J. Baghwati and R.E. Hudec 1996 41.
28. Legal harmonization by private parties can translate into an agreement similar to a treaty or the creation of an organization comparable to an IO or an IGO.
29. L.R. Helfer, 'Monitoring Compliance with Unratified Treaties: The ILO Experience' 2008 71 Law and Contemporary Problems 193-218. But see, in relation to ILO
30. D. Vogel, 'The Private Regulation of Global Corporate Conduct' Mattli and Woods, op. cit., n. 7, pp. 151 ff, highlighting differences from conventional self-regulation; also pp. 156 ff. In a different perspective, see A. Peters et al. (eds.), Non-State Actors as Standard Setters 2009.
31. E. Meidinger, 'Private Import Safety Regulation and Transnational New Governance' Coglianese et al. (eds.), op. cit., n. 16, 233.
32. E.E. Meidinger, 'The Administrative Law of Global Private - Public Regulation: the Case of Forestry' 2006 17 European J. of International Law 47-87.
33. R.O. Keohane and D.G. Victor, The Regime Complex for Climate Change 2010 26.
34. These difficulties, among other factors, have lead to the supply-chain approach in food safety where direct responsibility for ensuring safety has been distributed among the private operators of the supply chain.
35. S. Henson and J. Humphrey, The Impacts of Private Food Safety Standards on the Food Chain and on Public Standard-Setting Processes 2009
36. 'Final Report on Private Standards and the Shaping of the Agro-Food System', OECD, AGR/CA/APM (2006) 9/FINAL 2006.
37. See the critique of conventional international law and its weaknesses by Kingsbury et al., op. cit., n. 17, 15
38. B. Kingsbury and N. Krisch, 'Introduction: Global Governance and Global Administrative Law in the International Legal Order' 2006 17 European J. of International Law 1-13
39. B. Kingsbury, 'The Concept of "Law" in Global Administrative Law' 200920 European J. of International Law 23-57
40. A. Somek, 'The Concept of "Law" in Global Administrative Law: A Reply to Benedict Kingsbury' 2009 20 European J. of International Law 985-95.
41. Ming-Sung Kuo, 'The Concept of "Law" in Global Administrative Law: A Reply to Benedict Kingsbury' 2009 20 European J. of International Law 997-1004.
42. F. Cafaggi, 'Enforcing Transnational Private Regulation' 'Enforcement of Transnational Public Regulation' R. Stewart, in Cafaggi, op. cit., n. 15.
43. Food safety crises in the nineties showed that importing states were unable to control food safety hazards and changed the approach, placing monitoring responsibility on the supply chain. This shift in monitoring policies from public to private produced additional transformations in rule making, increasing transnational private regulation by retailers.
44. M. Koskenniemi, 'History of International Law since World War II' Max Planck Encyclopedia of International Law 2007.
45. J.E. Alvarez, International Organizations as Law Makers 2006.
46. A.-M. Slaughter, A New World Order 2004
47. A.-M. Slaughter, 'Global Government Networks, Global Information Agencies, and Disaggregated Democracy' 2003 24 Michigan J. of International Law 1041-76.
48. S. Picciotto, 'Networks in International Economic Integration: Fragmented States and the Dilemmas of Neo-liberalism' 1996 17 Northwestern J. of International Law and Business 1014-56, On legitimacy deficits of such networks in general, at 1045.
49. A. Cassese, 'Administrative Law Without the State? The Challenge of Global Regulation' 2005 37 J. of International Law and Politics 663-94
50. Access Denied, The Practice and Policy of Global Internet Filtering 2008 R. Deibert, J. Palfrey, R. Rohozinski, and J. Zittrain (eds.)
51. Y. Benkler, The Wealth of Networks: How Social Production Transforms Markets and Freedom 2006
52. D. Tambini, D. Leonardi, and C. Marsden, Codifying Cyberspace - Communications Self-Regulation in the Age of Internet Convergence 2008.
53. K.E. Maskus and J.H. Reichmann, International Public Goods and Transfer of Technology under a Globalized Intellectual Property Regime 2005. See the different contributions in
54. Examples range from ISO to professional standards like those drafted by IASB in the accounting profession.
55. The example of food safety is paramount. See Codex Alimentarius Commission (CAC), Joint FAO/WHO Food Standard Programme: Considerations of the Impact of Private Standards (2010), at <>.
56. Private regulation is designed by associations mainly controlled by private actors, businesses, and NGOs located in Western countries, but it is implemented and monitored in developing economies. Thus the costs of compliance is often shifted to suppliers upstream and then partly transferred to final consumers in the West.
57. There is relative widespread consensus over the distributional effects of private regulation although the measurement of the effects vary significantly sector by sector. See, in the field of food safety, OECD, op. cit., n. 30; Henson and Humphrey, op. cit., n. 29
58. Y. Amekawa, 'Reflections on the Growing Influence of Good Agricultural Practices in the Global South' 2009 22 J. of Agricultural and Environmental Ethics 531-57
59. L. Busch and C. Bain, 'New! Improved? The Transformation of the Global Agrifood System' 2004 39 Rural Sociology 321-46.
60. S.G. Mayson, 'Carbon Footprint Labelling in Climate Finance' Climate Finance, In the environmental field, for carbon footprint labelling, eds. R.B. Stewart, B. Kingsbury, and B. Rudyk 2009 283.
61. F. Cafaggi and K. Pistor, 'The Distributional Effects of TPR', unpublished paper on file with the author.
62. D. Vogel, 'Private Global Business Regulation' 2008 11 Annual Rev. of Pol. Sci. 261-82
63. G.C. Shaffer, 'How Business Shapes Law: A Socio Legal Framework' 2009 2 Connecticut Law Rev. 147-84.
64. D. Levi-Faur, 'The Global Diffusion of Regulatory Capitalism' 2005 598 Annals of the Am. Academy of Pol. and Social Sci. 12-32.In a different and closer perspective to the text
65. The tripartite model is frequent in the sector of labour and employment but it has also application in that of environment and food safety. The unilateral model is diffused in the area of financial regulation and e-commerce.
66. Compare, for example, Forest Stewardship Council or Marine Stewardship Council with IFRS in the accounting profession or IATA in the air transport.
67. The differences are wider with the so-called European continental view and more limited with the American perspective where differences within merchant law are widely recognized.
68. See F. Cafaggi (ed.), Refraining Self-Regulation in European Private Law (2006) 3 and, for a more recent elaboration, F. Cafaggi, 'Governance of Transnational Private Regulation' in Handbook of Governance, ed. D. Levi-Faur (2011, forthcoming).
69. F. Cafaggi, 'Compliance and Effectiveness in Transnational Private Regulation', on file with the author.
70. Differentiation does not imply lack of dialogue. The increased need for responsiveness has changed the regulatory model in the public domain, increasing forms of dialogue between the regulator and the regulated.
71. The hypothesis to be verified in empirical research is that, in oligopolistic markets, the powerful actors will form cartels while, in highly competitive markets, associations will play a more important role. However, in some cases, big players will use associations to exercise their powers, using cartels as purely informal mechanisms.
72. T. Buthe and W. Mattli, Private Global Regulation: The Politics of Setting Standards for International Products and Financial Markets 2011
73. T. Buthe and W. Mattli, 'Global Private Governance: Lessons from a National Model of Setting Standards in Accounting' 2005 68 Law and Contemporary Problems 225-62.
74. For an overview concerning SEs explicitly requiring listed firms to comply with IFRS, see at <>.
75. For instance, the board of IASB consists of 15 experts appointed by the IFRS board of trustees, according to either their experience in standard setting or as a member of the user, accounting, academic or preparer communities, see <>.
76. T. Buthe and W. Mattli, 'International Standards and Standard-setting Bodies' The Oxford Handbook of Business-Government Relations, eds. D. Coen, G. Wilson, and W. Grant 2009 440.
77. GLOBALGAP, General Regulations, Integrated Farm Assurance, Part II 3.1(vii), available at: <>.
78. See ICC homepage: <>.
79. There is no governmental or industry involvement in the foundation, see constitution of Oxfam, at <>.
80. H. Schepel, Constitution of Private Governance 2005.
81. Typically in multi-stakeholder models, regulation is incomplete at the stage of rule-making when compromises lead to vague rules. Regulatory contract completion occurs only later.
82. E.E. Meidinger, C. Elliott, and G. Oesten, 'The Fundamentals of Forest Certification' Social and Political Dimensions of Forest Certification, See, for a good overview, eds. E.E. Meidinger, C. Elliott, and G. Oesten 2003 3
83. E.E. Meidinger, 'Multi-Interest Self-Governance through Global Product Certification Programs' Responsible Business? Self-Governance in Transnational Economic Transactions, eds. O. Dilling, M. Herberg, and G. Winter 2008 259-91
84. The organizational structure consists primarily of three bodies: the Board of Trustees, the Stakeholder Council and the Technical Advisory Board.
85. See, for an overview of the organizational setup, <> for the FSC and <> for the MSC.
86. See, for instance, reform of the enforcement system recently introduced in FSC. See, also, Meidinger id.
87. G. Morgan, 'Market Formation and Governance in International Financial Markets: The Case of OTC Derivatives' 2008 61 Human Relations 637-60 For a succinct description.
88. For further information, see ISDA's homepage at <>.
89. 'The association is composed of three categories (1) primary members (the sellers) (2) associate members (primarily law firms and expertise providers) (3) the subscribers.' See ISDA Bylaws at <>.
90. See ISDA Master Agreement 2002.
91. J.G. Ruggie, 'Business and Human Rights: The Evolving International Agenda', For an overview of the different models, CSRI Working Paper no. 38 2007.
92. WADA was founded in 1998 as an independent agency with foundation board, an executive committee, and several specialized committees, see <>.
93. For a more detailed overview of the governance scheme, see <>.
94. See articles 3.1. and 3.1.1 of ISO Bylaws.
95. To simplify the classification we have implicitly assumed homogeneity of regulatees, while underlining that beneficiaries' interests can differ.
96. See, for a more detailed analysis of the governance dimension, Cafaggi, op. cit. (2011), n. 55.
97. R. Baldwin and M. Cave, Understanding Regulation 1999
98. W. Streeck, Reforming Capitalism 2008
99. L. Bruszt and R. Holzhacker, The Transnationalization of Economies, States, and Civil Societies 2009
100. C. Scott, 'Regulatory Governance and the Challenge of Constitutionalism' Regulation After the Regulatory State, eds. D. Oliver, T. Prosser, and R. Rawlings 2010
101. T. Prosser, The Regulatory Enterprise 2010.
102. J. Black, 'Constructing and Contesting Legitimacy and Accountability in Polycentric Regulatory Regimes' 2008 2 Regulation & Governance 137-64
103. C. Scott, 'Regulating Private Legislation', 'Regulatory Agencies, Regulatory Legitimacy and European Private Law', and T. Prosser, Making European Private Law, eds. F. Cafaggi and H. Muir Watt at pp. 235 and 254 respectively. 2008
104. For a comparative analysis, see G. de Búrca and C. Scott (eds.), Law and New Governance in the EU and the US 2006
105. C.F. Sabel and J. Zeitlin, Experimentalist Governance in the European Union: Towards a New Architecture 2010.
106. G.D. Majone, 'International Regulatory Cooperation. A Neo-institutional Approach' Transatlantic Regulatory Cooperation, eds. G.A. Bermann, M. Herdengen, and P. Lindseth 2001 109
107. F. Cafaggi, 'Rethinking self-regulation in European Private Law' Cafaggi, op. cit., n. 55. 2006
108. F. Cafaggi, 'Private Law Making and European Integration' in Oliver et al., op. cit., n. 86.
109. For a detailed analysis concerning the United States, see G.E. Metzger, 'Private Delegation, Due Process and the Duty to Supervise' in Government by Contract, eds. J. Freeman and M. Minow (2009) 291. For an overview, see Cafaggi, id.
110. Such complementarity becomes particularly relevant when conflicting regimes attempt to externalize costs on the each other because the typical states' institutions that govern these processes are missing. Private macro-governance acquires greater importance.
111. It should be underlined that unlike law making by international organizations, in the field of transnational private regulation we are far away from the identification of common rules for all the regimes. The gap filler function is primarily played by different private domestic laws. Given their strong differences, the construction of a set of common principles is a very delicate and challenging task.
112. This is the key issue addressed by GAL. See Kingsbury et al., op. cit., n. 17, pp. 19 ff
113. B. Kingsbury and R.B. Stewart, 'Legitimacy and Accountability in Global Regulatory Governance: The Emerging Global Administrative Law and the Design and Operation of Administrative Tribunals of International Organizations'
114. See, for example, the explicit recognition of the ISO/IEC system as internationally accepted standards by the TBT Agreement.
115. J. Black and D. Rouch, 'The Development of the Global Markets as Rule-Makers: Engagement and Legitimacy 2008 2 Law and Financial Markets Rev. 218-33, on the financial markets sector, at 223.
116. J. Ruggie, 'Promotion and protection of all human rights, civil, political, economic, social and cultural rights, including the right to development' A/HRC/8/5 2008
117. J. Stiglitz, 'Regulating Multinational Corporations: Towards Principles of Cross-border Legal Frameworks in a Globalized World Balancing Rights with Responsibilities' 2008 23 Am. University International Law Rev. 451-558.
118. J. Braithwaite and P. Drahos, Global Business Regulation 2000
119. There is a general phenomenon of the legalization of international relations. This is partly the consequence of increased interdependences, associated with systemic risks, which demand greater coordination and a global governance response. But it takes different forms and organizational models. On the issue of the legalization of international relations J. Goldstein, M. Kahler, R.O. Keohane, and A.-M. Slaughter, Legalization and World Politics 2001.
120. G. Teubner (ed.), Global Law Without a State 1997.
121. For different perspectives see Kingsbury, op. cit., n. 30 and von Bogdandy et al., op. cit., n. 11. 2/26/2011 8:14:34 AM2/26/2011 8:14:34 AM
122. Often cited examples are the code of good practice for setting social and environmental standards by ISEAL and the UN Global Compact.
123. Such collaborative rule making occurs within a multi-stakeholder organization: for example, the Anti Doping Code drafted by the WADA.
124. One increasing phenomenon is the negotiation of standards between big MNCs and strong individual developing countries or clusters of them. On these phenomena in relation to financial markets
125. K. Pistor, 'Global Network Finance: Institutional Innovation in the Global Financial Market Place' 2009 37 J. of Comparative Economics 552-67.
126. F. Cafaggi, 'Legal transplants in TPR: New challenges for Comparative Law', on file with the author.
127. A. Katz, 'Taking Private Ordering Seriously' 1996 114 University of Pennsylavania Law Rev. 1745-63.
128. Advertising provides a good illustration of multi-level complementarity between transnational private law and 'regional' or state legislation.