Hostname: page-component-848d4c4894-p2v8j Total loading time: 0.001 Render date: 2024-05-14T17:52:03.027Z Has data issue: false hasContentIssue false

Competition Between National Legal Systems: A Contribution of Economic Analysis To Comparative Law

Published online by Cambridge University Press:  17 January 2008

Extract

Three main tasks can be identified for comparative law. The first is to investigate differences between legal systems and, in particular, to distinguish between “real” differences, where the outcomes of the application of principles diverge between legal systems, and “superficial” differences, where similar outcomes are masked by the conceptual structures of the relevant systems. The second is to trace developments in the relationships between legal systems and thus to explore tendencies of convergence or divergence (in terms of “real” differences), noting that in some areas convergence may be required under international legal instruments. The third task is to explain and to evaluate such developments: why do systems converge or diverge? Is convergence desirable or undesirable?

Type
Shorter Articles, Comments and Notes
Copyright
Copyright © British Institute of International and Comparative Law 1999

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1. Easterbrook, F., “Federalism and European Business Law” (1994) 14 Int.Rev. Law and Economics 125, 127128.Google Scholar

2. Cf. De Witte, B., “The Convergence Debate” (1996) 3 Maastricht J. European and Comparative Law 105.Google Scholar

3. Van Gerven, W., “Bridging the Unbridgeable: Community and National Tort Laws after Francovich and Brasserie” (1996) 45 I.C.L.Q. 507Google Scholar; and, more generally, Zweigert, K. and Kötz, H., An Introduction to Comparative Law (2nd edn, 1987), pp.2327.Google Scholar

4. Legrand, Notably P., “European Legal Systems Are not Converging” (1996) 45 I.C.L.Q. 52.Google Scholar

5. E.g. Lando, O., “Why Harmonize the Contracts Law of Europe”, in Sarcevic, P. (Ed.), International Contracts and Conflicts of Law (1990), chap.1Google Scholar; Markesinis, B. S., “Learning from Europe and Learning in Europe”, in Markesinis, B. S. (Ed.), The Gradual Convergence: Foreign Ideas, Foreign Influences and English Law on the Eve of the 21st Century (1994), chap.1.Google Scholar

6. Legrand, P., “The Impossibility of ‘Legal Transplants’” (1997) 4 Maastricht J. European and Comparative Law 111Google Scholar; “Against a European Civil Code” (1997) 60 M.L.R. 44.Google Scholar

7. Teubner, G., “Legal Irritants: Good Faith in British Law or How Unifying Law Ends Up in New Divergences” (1998) 61 M.L.R. 11.Google Scholar

8. For a detailed examination of the hypothesis, see Watson, A.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.Google Scholar

9. Zweigert and Kötz, op. cit. supra n.3, at pp.812.Google Scholar

10. Mattei, U., Comparative Law and Economics (1997)Google Scholar, which contains a number of previously published papers on the subject. See also Mattei, U. and Cafaggi, F., “Comparative Law and Economics”, in Newman, P. (Ed.), The New Palgrave Dictionary of Economics and the Law (1998), Vol.1, pp.346351.Google Scholar

11. Mattei, U. and Pulitini, F., “A Competitive Model of Legal Rules”, in Breton, A. et al. (Eds), The Competitive State: Villa Colombella Papers on Competitive Politics (1991), pp.207219.CrossRefGoogle Scholar

12. Breton, A., Competitive Governments (1996).Google Scholar

13. 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 Ogus, A., Regulation: Legal Form and Economic Theory (1994), pp.5961.Google Scholar

14. Demsetz, H., “Why Regulate Utilities?” (1968) 11 J. Law and Economics 55.Google Scholar

15. The famous struggle between the English Chancery Court and its common law rivals had a very significant impact on the evolution of legal principles: Plucknett, T., Concise History of the Common Law (5th edn, 1956), pp.159163, 589595, 644645.Google Scholar

16. Ogus, A., “Rethinking Self-Regulation” (1995) 15 Oxford J. Legal Studies 97.Google Scholar

17. Mattei, op. cit. supra n.10, at chap.4; Woolcock, S., “Competition Among Rules in the Single European Market”, in Bratton, W., McCahery, J., Picciotto, S. and Scott, C. (Eds), International Regulatory Competition and Coordination: Perspectives on Economic Regulation in Europe and the United States (1996), chap.10.Google Scholar

18. For a model applicable to regulatory competition within the EU, see Sun, J.-M. and Pelkmans, J., “Regulatory Competition in the Single Market” (1995) 33 J. Common Market Studies 67.Google Scholar

19. Woolcock, , op. cit. supra n.17, at p.306Google Scholar. For the role of private interest groups in influencing legislation, see Rowley, C. K., Tollison, R. D. and Tullock, G. (Eds), The Political Economy of Rent-Seeking (1988) and, for a summary of the literature, Ogus, op. cit. supra n.13, at chap.4.CrossRefGoogle Scholar

20. Leebron, D. W., “Lying Down with Procrustes: An Analysis of Harmonization Claims”, in Bhagwati, J. N. and Hudec, R. E. (Eds), Fair Trade and Harmonization, Vol.1: Economic Analysis (1996), chap.2.Google Scholar

21. Law more favourable to individuals may also increase tourism to the relevant jurisdiction: Brown, J. G., “Competitive Federalism and Legislative Incentives to Recognize Same-Sex Marriage in the USA”, in Bratton et al., op. cit. supra n.17 at pp.271274.Google Scholar

22. Woolcock, , op. cit. supra n.17, at pp.305306.Google Scholar

23. Picciotti, S., “The Regulatory Criss-Cross: Interaction Between Jurisdictions and the Construction of Global Regulatory Networks”, in Bratton et al., op. cit. supra n.17, at p.110Google Scholar; Sun and Pelkmans, op. cit. supra n.18, at pp.8384.Google Scholar

24. Ribstein, L. E., “Choosing Law by Contract” (1993) 18 J. Corporation Law 247.Google Scholar

25. “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”: Goode, R., Commercial Law in the Next Millennium (1998), p.94Google Scholar. See also on Delaware as a chosen jurisdiction for corporate law Romano, R., “Law as a Product: Some Pieces of the Incorporation Puzzle” (1985) 1 J. Law, Economics and Organization 225.Google Scholar

26. 16% of the total tax revenue of Delaware is derived from incorporation fees: Romano, R., The Genius of American Corporate Law (1993), pp.89.Google Scholar

27. Macey, J. and Miller, G., “Toward an Interest-Group Theory of Delaware Corporate Law” (1987) 65 Texas L.Rev. 469.Google Scholar

28. Including information costs: Sun and Pelkmans, op. cit. supra n.18, at p.84.Google Scholar

29. Smits, J. M., “A European Private Law as a Mixed Legal System: Towards a lus Commune through the Free Movement of Legal Rules” (1998) 5 Maastricht J. European and Comp.L, 328.Google Scholar

30. Smits, J. M., “Systems Mixing and in Transition: Import and Export of Legal Models: The Dutch Experience”, in Hondius, E. H. (Ed.), Netherlands Reports to the Fifteenth International Congress of Comparative Law (1998). For an account of how Dutch law has thereby been exported to countries in the former Soviet Union, see idem, pp.54–68.Google Scholar

31. Cf. Sacco, R., “Legal Formats: A Dynamic Approach to Comparative Law” (1991) 39 A.J.Comp.L. 343.Google Scholar

32. Watson, A., Legal Transplants: an Approach to Comparative Law (1974)Google Scholar; Ayres, I., “Supply-Side Inefficiencies and Competitive Federalism: Lessons from Patents, Yachting and Bluebooks”, in Bratton et al, op. cit. supra n.17, at pp.241242.Google Scholar

33. Zweigert, and Kötz, , op. cit. supra n.3, at pp.3133.Google Scholar

34. Banakas, E. K. (Ed.), Civil Liability for Pure Economic Loss (1996).Google Scholar

35. In a contractual setting, even a difference in outcome may of little significance, if the parties can consensually prescribe their preferred outcome: Coase, R., “The Problem of Social Cost” (1960) 3 J. Law and Economics 1.Google Scholar

36. “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, op. cit. supra n.10, at p.121.Google Scholar

37. Walters, D. B., “Analogues of the Trust and Its Constituents in French Law from the Standpoint of Scots and English Law”, in Wilson, W. A. (Ed.), Trusts and Trust-Like Devices (1981), pp.117136.Google Scholar

38. Bridge, M., “Does Anglo-Canadian Contract Law Need a Doctrine of Good Faith?” (1984) 9 Can. Business L.J. 385.Google Scholar

39. These include the costs of enforcing legal rights.

40. Perrott, D. C., “Changes in Attitude to Limited Liability—the European Experience”, in Orhnial, T. (Ed.), Limited Liability and the Corporation (1982), chap.5.Google Scholar

41. Romano, op. cit. supra n.25; W. J. Carney, “Federalism and Corporate Law: A Non-Delaware View of the Results of Competition”, in Bratton et al., op. cit. supra, n.17, at chap.5.

42. Trendtex Trading Corporation v. Central Bank of Nigeria [1977] Q.B. 529Google Scholar: see Goods, op. cit. supra n.25, at p.92.Google Scholar

43. Code Civil, Arts.1139 and 1146.

44. Carbonnier, J., Droit Civil, Vol.4 (17th edn, 1993), No.77.Google Scholar

45. Ibid. An English law equivalent is the softening of the requirement for consideration to support modifications to contractual obligations: Adams, J. and Brownsword, R., “Contract, Consideration and the Critical Path” (1990) 53 M.L.R. 536.Google Scholar

46. Sonneveld, F. and van Mens, H. L., The Trust-Bridge or Abyss Between Common and Civil Law Jurisdictions? (1992).Google Scholar

47. See, especially, the Hague Convention on the Law Applicable to Trusts and their Recognition, 1985.Google Scholar

48. Mattei, U., “Efficiency in Legal Transplants: An Essay in Comparative Law and Economics” (1994) 14 Int.Rev. Law and Economics 3, 10.Google Scholar

49. Ribstein, L. E. and Kobayashi, B. H., “An Economic Analysis of Uniform State Laws” (1996) J. Legal Studies 131, 142144.Google Scholar

50. Easterbrook, , op. cit. supra n.1, at p. 128.Google Scholar

51. OECD Report on Regulatory Reform (1997), Vol.II, chap.4.Google Scholar

52. See, generally, Rubin, P. H. and Bailey, M. J., “The Role of Lawyers in Changing the Law” (1994) 23 J. Legal Studies 807.Google Scholar

53. 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 Picriotto, op. cit. supra n.23, at pp.104109.Google Scholar

54. Macey and Miller, op. cit. supra n.27; Carney, op. cit. supra n.41.

55. White, M. J., “Legal Complexity and Lawyers' Benefit from Litigation” (1992) 12 Int.Rev. Law and Economics 381.Google Scholar

56. Carney, W., “The Political Economy of Competition for Corporate Charters” (1997) 26 J. Legal Studies 303, 315318Google Scholar. 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; Solimine, M. E., “An Economic and Empirical Analysis of Choice of Law” (1989) 24 Georgia L. Rev. 49, 73.Google Scholar

57. Lee, R. G., “UN Convention on Sale of Goods: OK for the UK?” [1993] J. Business L. 131, 132.Google Scholar

58. Mattei, , op. cit. supra n.48 at p.16.Google Scholar

59. Olson, M., The Logic of Collective Action (1965).Google Scholar

60. Cary, W., “Federalism and Corporate Law: Reflections on Delaware” (1974) 88 Yale L.J. 663Google Scholar; Swire, P. P., “The Race to Laxity and the Race to Undesirability: Explaining Failures in Competition Among Jurisdictions in Environmental Law” (1996) 14 Yale J. Regulation 67.Google Scholar

61. Rea, S., “Regulating Occupational Health and Safety”, in Dewees, D. (Ed.), The Regulation of Quality: Products, Services, Workplaces and the Environment (1983), pp. 127128.Google Scholar

62. Van den Bergh, R., “The Subsidiarity Principle in European Community Law: Some Insights from Law and Economics” (1995) 2 Maastricht J. European and Comp.L. 337.Google Scholar

63. Van den Bergh, R., “Subsidiarity as an Economic Demarcation Principle and the Emergence of European Private Law” (1998) 5 Maastricht J. European and Comp.L. 129.Google Scholar

64. Tunc, A., “It Is Wise not to Take the Civil Codes too Seriously”, in Wallington, P. and R, Merkin (Eds), Essays in Memory of Professor F. H. Lawson (1986), chap.7.Google Scholar

65. von Mehren, A., “A General View of Contract”, International Encyclopedia of Comparative Law, Vol.7, chap.1 (1977), paras.79–80.Google Scholar

66. Oates, W. E. and Schwab, R. M., “Economic Competition Among Jurisdictions; Efficiency Enhancing or Distortion Inducing?” (1988) 35 J. Public Economics 333.Google Scholar

67. Stewart, R. B., “Pyramids of Sacrifice? Problems of Federalism in Mandating State Implementation of National Environmental Policy” (1977) 86 Yale L.J. 1196.Google Scholar

68. Gatsios, K.and Holmes, P., “Regulatory Competition”, in Newman, op. cit. supra n.10, at Vol.3, pp.271, 274.Google Scholar

69. For a fuller discussion, see Revesz, R. L., “Rehabilitating Interstate Competition: Rethinking the ‘Race-to-the-Bottom’ Rationale for Federal Environmental Regulation” (1992) 67 N.Y.U.L.R. 1210.Google Scholar

70. Woolcock, , op. cit supra n.17, at p.318Google Scholar; Bhagwati, J. and Srinivasan, T. N., “Trade and the Environment: Docs Environmental Diversity Detract from the Case for Free Trade?”, in Bhagwati and Hudec, op. cit. supra n.20, at pp.171172.Google Scholar

71. Lando, O. and Beale, H. (Eds), Principles of European Contract Law (1995).Google Scholar

72. See further on types of harmonisation Ribstein and Kobayashi, op. cit. supra n.49 and Smits, op. cit. supra n.29.

73. Lando, op. cit. supra n.5; Baselow, J., “Un Droit Commun des Contrats pour le Marché Commun” (1998) 50 Rev.Int. Droit Comp. 7.Google Scholar

74. Van den Bergh, op. cit. supra n.62. See also Ribstein and Kobayashi, op. cit. supra n.49.

75. Woolcock, , op. cit. supra n.17, at p.299Google Scholar; Ribstein, and Kobayashi, , op. cit. supra n.49, at pp.140141Google Scholar. Both this, and the last, proposition are derivable from the Hayekian theory of law: Hayek, F. A., Law, Legislation and Liberty (1979)Google Scholar; and see Ogus, A., “Law and Spontaneous Order Hayek's Contribution to Legal Theory” (1989) 16 J. Law and Society 393.Google Scholar

76. Leebron, , op. cit. supra n.20, at p.54.Google Scholar

77. Van den, Bergh, op. cit supra n.63, at pp.146147.Google Scholar

78. Leebron, op. cit. supra n.20.

79. This is now the policy favoured by the European Commission towards harmonisation of regulatory standards: see Pelkmans, J., “The New Approach to Technical Harmonization and Standardization” (1987) 25 J. Common Market Studies 249.Google Scholar

80. Leebron, , op. cit supra n.20, at pp.5557.Google Scholar

81. Revesz, R. L., “Rehabilitating Interstate Competition: Rethinking the ‘Race-to-the-Bottom’ Rationale for Federal Environmental Regulation” (1992) 67 N.Y.U.L.R. 1210Google Scholar; Van den Bergh, R., Faure, M. and Lefevere, J., “The Subsidiarity Principle in European Environmental Law: An Economic Analysis”, in Eide, E. and Van den Bergh, R. (Eds), Law and Economics of the Environment (1996), pp.121166.Google Scholar

82. Kelly, P. and Atree, R. (Eds), European Product Liability Law (1992), chap. 17.Google Scholar

83. Bhagwati and Srinivasan, op. cit. supra n.70.

84. See especially Gates and Schwab, op. cit. supra n.66; Salvatore, D. (Ed.), Protectionism, and World Welfare (1993): Bhagwati and Hudec, op. cit. supra n.20CrossRefGoogle Scholar; Trebilcock, M. and Howse, R., “Trade Liberalization and Regulatory Diversity: Reconciling Competitive Policies” (1998) 6 European J. Law and Economics 5.Google Scholar

85. The Wealth of Nations (Ed. Scott, W. R., 1921), Book IV.Google Scholar

86. Judged by the Kaldor-Hicks measure of economic efficiency: cf. Ogus, op. cit. supra n.13, at pp.2425.Google Scholar

87. Leebron, op. cit. supra n.20.

88. A. K. Klevorick, “Reflections on the Race to the Bottom”, in Bhagwati and Hudec, op. cit. supra n.20, chap.12.

89. Dworkin, R., Taking Rights Seriously (1977), chap.4.Google Scholar

90. Trebilcock, and Howse, , op. cit. supra n.84, at pp.1415.Google Scholar