Competition between national legal systems: A contribution of economic analysis to comparative law

International and Comparative Law Quarterly

Volumn 48, Issue 2, 1999, Pages 405-418

  Ogus, Anthony ^a  

^a UNIVERSITY OF MANCHESTER   (United Kingdom)

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EID: 84964701087     PISSN: 00205893     EISSN: 14716895     Source Type: Journal    
DOI: 10.1017/S0020589300063259     Document Type: Article

References (116)

1. F. Easterbrook, “Federalism and European Business Law” (1994) 14 Int.Rev. Law and Economics 125,127–128.
2. Cf. B. De Witte, “The Convergence Debate” (1996) 3 Maastricht J. European and Comparative Law 105.
3. W. Van Gerven, “Bridging the Unbridgeable: Community and National Tort Laws after Francovich and Brasserie” (1996) 45 I.C.L.Q. 507
4. and, more generally, K. Zweigert and H. Kötz, An Introduction to Comparative Law (2nd edn, 1987), pp.23–27.
5. Notably P. Legrand, “European Legal Systems Are not Converging” (1996) 45 I.GL.Q. 52.
6. E.g. O. Lando, “Why Harmonize the Contracts Law of Europe”, in P. Sarcevic (Ed.), International Contracts and Conflicts of Law (1990), chap.l
7. B. S. Markesinis, “Learning from Europe and Learning in Europe”, in B. S. Markesinis (Ed.), The Gradual Convergence- Foreign Ideas, Foreign Influences and English Law on the Eve of the 21st Century (1994), chap.l.
8. P. Legrand, “The Impossibility of ‘Legal Transplants’” (1997) 4 Maastricht J. European and Comparative Law 111
9. “Against a European Civil Code” (1997) 60 M.L.R. 44.
10. G. Teubner, “Legal Irritants: Good Faith in British Law or How Unifying Law Ends Up in New Divergences” (1998) 61 M.L.R. 11.
11. For a detailed examination of the hypothesis, see A. Watson The Evolution of Law (1985). He argues that though the initial impetus for convergence might arise from social and economic forces, the phenomenon is largely attributable to lawyers who find it convenient to imitate legal principles developed in other jurisdictions.
12. Zweigert and Kötz, The Evolution of Law, at pp.8–12.
13. U. Mattei, Comparative Law and Economics (1997), which contains a number of previously published papers on the subject.
14. See also U. Mattei and F. Cafaggi, “Comparative Law and Economics”, in P. Newman (Ed.), The New Palgrave Dictionary of Economics and the Law (1998), Vol.1, pp.346–351.
15. U. Mattei and F. Puhitini, “A Competitive Model of Legal Rules”, in A. Breton et al. (Eds), The Competitive State,- Villa Colombella Papers on Competitive Politics (1991), pp.207–219.
16. A. Breton, Competitive Governments (1996).
17. The analogy with ordinary product markets should not, of course, be exaggerated because, inter alia: (except for referenda) voters must express preferences for a package of proposals rather than for single proposals; there is no way of indicating the intensity of their preferences; and “contracts” between prospective legislators and voters are not legally enforceable. See A. Ogus, Regulation: Legal Form and Economic Theory (1994), pp.59–61.
18. H. Demsetz, “Why Regulate Utilities?” (1968) 11 J. Law and Economics 55.
19. The famous struggle between the English Chancery Court and its common law rivals had a very significant impact on the evolution of legal principles: T. Plucknett, Concise History of the Common Law (5th edn, 1956), pp.159–163,589–595, 644–645.
20. A. Ogus, “Rethinking Self-Regulation” (1995) 15 Oxford J. Legal Studies 97.
21. Mattei, Oxford J. Legal Studies, at chap.4
22. S. Woolcock, “Competition Among Rules in the Single European Market”, in W. Bratton, J. McCahery, S. Picciotto and C. Scott (Eds), International Regulatory Competition and Coordination: Perspectives on Economic Regulation in Europe and the United States (1996), chap. 10.
23. For a model applicable to regulatory competition within the EU, see J.-M. Sun and J. Pelkmans, “Regulatory Competition in the Single Market” (1995) 33 J. Common Market Studies 67.
24. Woolcock, J. Common Market Studies, at p 306.
25. For the role of private interest groups in influencing legislation, see C. K. Rowley, R. D. Tollison and G. Tullock (Eds), The Political Economy of Rent-Seeking (1988)
26. and, for a summary of the literature, Ogus, The Political Economy of Rent-Seeking, at chap.4.
27. D. W. Leebron, “Lying Down with Procrustes: An Analysis of Harmonization Claims”, in J. N. Bhagwati and R. E. Hudec (Eds), Fair Trade and Harmonization, Vol.1: Economic Analysis (19%), chap2.
28. Law more favourable to individuals may also increase tourism to the relevant jurisdiction: J. G. Brown, “Competitive Federalism and Legislative Incentives to Recognize Same-Sex Marriage in the USA”, in Bratton et aL,Fair Trade and Harmonization at pp.271–274.
29. Woolcock, Fair Trade and Harmonization, at pp.305–306.
30. S. Pkciotti, “The Regulatory Criss-Cross: Interaction Between Jurisdictions and the Construction of Global Regulatory Networks”, in Bratton et al,Fair Trade and Harmonization, at p.110
31. Sun and Pelkmans, Fair Trade and Harmonization, at pp.83–84.
32. L. E. Ribstein, “Choosing Law by Contract” (1993) 18 J. Corporation Law 247.
33. “There seems little doubt that English commercial law is highly regarded by foreigners, who regularly select English law to govern their contracts and agree to submit their disputes to the English courts even where the transaction has no particular connection with this country. That is no doubt an acknowledgment of the pragmatism of English law and its sensitivity to legitimate business needs and a tribute to the expertise of our judges and the efficiency of our systems for the resolution of commercial disputes”: R. Goode, Commercial Law in the Next Millennium (1998), p.94.
34. See also on Delaware as a chosen jurisdiction for corporate law R. Romano, “Law as a Product: Some Pieces of the Incorporation Puzzle” (1985) 1 J. Law, Economics and Organization 225.
35. 16% of the total tax revenue of Delaware is derived from incorporation fees: R. Romano, The Genius of American Corporate Law (1993), pp.8–9.
36. I. Macey and G. Miller, “Toward an Interest-Group Theory of Delaware Corporate Law” (1987) 65 Texas L.Rev. 469.
37. Including information costs: Sun and Pelkmans, Texas L.Rev., at p.84.
38. J. M. Smits, “A European Private Law as a Mixed Legal System: Towards a Ius Commune through the Free Movement of Legal Rules” (1998) 5 Maastricht J. European and Comp.L. 328.
39. J. M. Smits, “Systems Mixing and in Transition: Import and Export of Legal Models: The Dutch Experience”, in E. H. Hondius (Ed.), Netherlands Reports to the Fifteenth International Congress of Comparative Law (1998).
40. For an account of how Dutch law has thereby been exported to countries in the former Soviet Union, see idem, pp.54–68.
41. Cf. R. Sacco, “Legal Formats: A Dynamic Approach to Comparative Law” (1991) 39 AJ.Comp.L. 343.
42. A. Watson, Legal Transplants: an Approach to Comparative Law (1974)
43. I. Ayres, “Supply-Side Inefficiencies and Competitive Federalism: Lessons from Patents, Yachting and Bluebooks”, in Bratton et aL, Legal Transplants: an Approach to Comparative Law, at pp.241–242.
44. Zweigert and Kötz, Legal Transplants: an Approach to Comparative Law, at pp.31–33.
45. E. K. Banalcas (Ed.), Civil Liability for Pure Economic Loss (1996).
46. In a contractual setting, even a difference in outcome may of little significance, if the parties can consensually prescribe their preferred outcome: R. Coase, “The Problem of Social Cost” (1960) 3 J. Law and Economics 1.
47. “Traditional or cultural factors may be construed as real-world transaction costs and/or patterns of path dependency that resist the evolution towards efficiency”: Mattei, J. Law and Economics, at p.121.
48. D. B. Walters, “Analogues of the Trust and Its Constituents in French Law from the Standpoint of Scots and English Law”, in W. A. Wilson (Ed.), Trusts and Trust-Like Devices (1981), pp.117–136.
49. M. Bridge, “Does Anglo-Canadian Contract Law Need a Doctrine of Good Faith?” (1984) 9 Can. Business LJ. 385.
50. D. C. Perrott, “Changes in Attitude to Limited Liability–the European Experience”, in T. Orhnial (Ed.), Limited Liability and the Corporation (1982), chap.5.
51. Romano, Limited Liability and the Corporation
52. W. J. Carney, “Federalism and Corporate Law: A Non-Delaware View of the Results of Competition”, in Bratton el at., Limited Liability and the Corporation, at chap.5.
53. Trendtex Trading Corporation v. Central Bank of Nigeria [1977] Q.B. 529: see Goode, Q.B., at p.92.
54. Code Civil, Arts.1139 and 1146.
55. J. Carbonnier, Droit Civil, Vol.4 (17th edn, 1993), No.77.
56. Droit Civil.
57. An English law equivalent is the softening of the requirement for consideration to support modifications to contractual obligations: J. Adams and R. Brownsword, “Contract, Consideration and the Critical Path” (1990) 53 M.L.R. 536.
58. F. Sonneveld and H. L. van Mens, 77k Trust Bridge or Abyss Between Common and Civil Law Jurisdictions? (1992).
59. See, especially, the Hague Convention on the Law Applicable to Trusts and their Recognition, 1985.
60. U. Mattei, “Efficiency in Legal Transplants: An Essay in Comparative Law and Economics” (1994) 14 Int.Rev. Law and Economics 3,10.
61. L. E. Ribstein and B. H. Kobayashi, “An Economic Analysis of Uniform State Laws” (1996) J. Legal Studies 131,142–144.
62. Easterbrook, J. Legal Studies n.l, at p. 128.
63. OECD Report on Regulatory Reform (1997), Vol.11, chap.4.
64. See, generally, P. H. Rubin and M. J. Bailey, The Role of Lawyers in Changing the Law” (1994) 23 J. Legal Studies 807.
65. For evidence as to how lawyers engaged by transnational corporations have been able to exploit differences in national regulatory regimes and hence perform an arbitrage function, see Picciotto, J. Legal Studies n.23, at pp.104–109.
66. Macey and Miller, J. Legal Studies n.27
67. Carney, J. Legal Studies n.41.
68. M. J. White, “Legal Complexity and Lawyers' Benefit from Litigation” (1992) 12 Int-Rev. Law and Economics 381.
69. W. Carney, “The Political Economy of Competition for Corporate Charters” (1997) 26 J. Legal Studies 303, 315–318.
70. Note, too, that in so far as judges are responsible for developing choice of law rules, they can be expected to favour formulations which benefit domestic lawyers; M. E. Solimine, “An Economic and Empirical Analysis of Choice of Law” (1989) 24 Georgia L-Rev. 49, 73.
71. R. G. Lee, “UN Convention on Sale of Goods: OK for the UK?” [1993] J. Business L. 131,132.
72. Mattei, J. Business L. n.48 at p.16.
73. M. Olson, The Logic of Collective Action (1965).
74. W. Cary, “Federalism and Corporate Law: Reflections on Delaware” (1974) 88 Yale LJ. 663
75. P. P. Swire, “The Race to Laxity and the Race to Undesirability: Explaining Failures in Competition Among Jurisdictions in Environmental Law” (1996) 14 Yale J. Regulation 67.
76. S. Rea, “Regulating Occupational Health and Safety”, in D. Dewees (Ed.), The Regulation of Quality: Products, Services, Workplaces and the Environment (1983), pp. 127–128.
77. R. Van den Bergh, “The Subsidiarity Principle in European Community Law: Some Insights from Law and Economics” (1995) 2 Maastricht J. European and Comp.L. 337.
78. R. Van den Bergh, “Subsidiarity as an Economic Demarcation Principle and the Emergence of European Private Law” (1998) 5 Maastricht J. European and Comp.L. 129.
79. A. Tunc, “It Is Wise not to Take the Civil Codes too Seriously”, in P. Wallington and R, Mertin (Eds), Essays in Memory of Professor F. H. Lawson (1986), chap.7.
80. A. von Mehren, “A General View of Contract”, International Encyclopedia of Comparative Law, Vol 7, chap.1 (1977), paras.79–80.
81. W. E. Oates and R. M. Schwab, “Economic Competition Among Jurisdictions; Efficiency Enhancing or Distortion Inducing?” (1988) 35 J. Public Economics 333.
82. R. B. Stewart, “Pyramids of Sacrifice? Problems of Federalism in Mandating State Implementation of National Environmental Policy” (1977) 86 Yale LJ. 1196.
83. K. Gatsios and P. Holmes, “Regulatory Competition”, in Newman, Yale LJ., at Vol J, pp.271,274.
84. For a fuller discussion, see R. L. Revesz, “Rehabilitating Interstate Competition: Rethinking the ‘Race-to-the-Bottom’ Rationale for Federal Environmental Regulation” (1992) 67 N.Y.U.L.R. 1210.
85. Woolcock, N.Y.U.L.R., at p.318
86. J. Bhagwati and T. N. Srinivasan, “Trade and the Environment: Does Environmental Diversity Detract from the Case for Free Trade?”, in Bhagwati and Hudec, N.Y.U.L.R., at pp.171–172.
87. O. Lando and H. Beale (Eds), Principles of European Contract Law (1995).
88. See further on types of harmonisation Ribstein and Kobayashi, Principles of European Contract Law n.49
89. and Smits, Principles of European Contract Law.
90. Lando, Principles of European Contract Law
91. J. Baselow, “Un Droit Commun des Contrats pour le March£ Commun” (1998) 50 Rev.Int. Droit Comp. 7.
92. Van den Bergh, 50 Rev.Int. Droit Comp.
93. See also Ribstein and Kobayashi, Rev.Int. Droit Comp.
94. Woolcock, Rev.Int. Droit Comp., at p.299
95. Ribstein and Kobayashi, Rev.Int. Droit Comp., at pp.140–141.
96. Both this, and the last, proposition are derivable from the Hayekian theory of law: F. A. Hayek, Law, Legislation and Liberty (1979)
97. and see A. Ogus, “Law and Spontaneous Order Hayek's Contribution to Legal Theory” (1989) 16 J. Law and Society 393.
98. Lecbron, J. Law and Society, at p.54.
99. Van den Bergh, J. Law and Society, at pp.146–147.
100. Leebron, J. Law and Society n.20.
101. This is now the policy favoured by the European Commission towards harmonisation of regulatory standards: see J. Pelkmans, “The New Approach to Technical Harmonization and Standardization” (1987) 25 J. Common Market Studies 249.
102. Leebron, J. Common Market Studies, at pp.55–57.
103. R. L. Revesz, “Rehabilitating Interstate Competition: Rethinking the ‘Race-to-the-Bortom’ Rationale for Federal Environmental Regulation” (1992) 67 N.Y.U.L.R. 1210
104. R. Van den Bergh, M. Faure and J. Lefevere, “The Subsidiarity Principle in European Environmental Law: An Economic Analysis”, in E. Eide and R. Van den Bergh (Eds), Law and Economics of the Environment (1996), pp.121–166.
105. P. Kelly and R. Atree (Eds), European Product Liability Law (1992), chap. 17.
106. Bhagwati and Srinivasan, European Product Liability Law.
107. See especially Oates and Schwab, European Product Liability Law
108. D. Salvatore (Ed.), Protectionism and World Welfare (1993)
109. Bhagwati and Hudec, European Product Liability Law
110. M. Trebilcock and R. Howse, “Trade Liberalization and Regulatory Diversity: Reconciling Competitive Policies” (1998) 6 European J. Law and Economics 5.
111. The Wealth of Nations (Ed. W. R. Scott, 1921), Book IV.
112. Judged by the Kaldor-Hicks measure of economic efficiency: cf. Ogus, Book, at pp.24–25.
113. Leebron, Book.
114. A. K. Klevorick, “Reflections on the Race to the Bottom”, in Bhagwati and Hudec, Book, chap.12.
115. R. Dworkin, Taking Rights Seriously (1977), chap.4.
116. Trebilcock and Howse, Taking Rights Seriously, at pp.14–15.