Copyright (c) 2008 All rights reserved. http://works.bepress.com/ahdieh Recent documents in Robert B Ahdieh en-us Wed, 02 Apr 2008 17:41:03 PDT 3600 http://works.bepress.com/ahdieh/8 http://works.bepress.com/ahdieh/8 Fri, 27 Oct 2006 14:08:53 PDT Legal scholars, as well as economists, have focused limited attention on the role of coordinated groups of market participants - committees, clubs, associations, and the like - in social ordering generally and in the evolution of norms particularly. One might trace this neglect to some presumptive orientation to state actors ("expressive law") and autonomous individuals ("norm entrepreneurs") as the sole parties of interest in social change. Yet, alternative stories of social ordering and norm change might also be told. Dramatic recent changes in the contracting practices of the sovereign debt markets offer one such story. Using the latter by way of illustration, this essay explores the potential role of groups as mechanisms of norm transformation. In appropriate circumstances, it suggests, groups may offer an intermediate path of change between regulatory mandate and decentralized markets. Where a pattern of private behavior is at once inefficient but resistant to decentralized market change, groups may effectively stand in for the market - relying on private rather than public incentives to define outcomes, yet offering an infrastructure of coordination lacking in a pure market dynamic. Building on this conception, the essay offers a potential framework for the analysis of groups - as market substitutes in their internal dynamics, as market-mediating in their external interactions, and, most counter-intuitively, as contributing to norm change not exclusively through their strength, but also through their weakness. Robert B. Ahdieh Banking and Finance Bankruptcy Law Commercial Law Contracts International Law International Trade Law and Economics Organizations Securities Law http://works.bepress.com/ahdieh/7 http://works.bepress.com/ahdieh/7 Fri, 27 Oct 2006 14:08:52 PDT Robert B. Ahdieh Contracts and Commercial Law Social Norms http://works.bepress.com/ahdieh/6 http://works.bepress.com/ahdieh/6 Fri, 27 Oct 2006 14:08:51 PDT Robert Ahdieh http://works.bepress.com/ahdieh/5 http://works.bepress.com/ahdieh/5 Fri, 27 Oct 2006 14:08:49 PDT Securities markets are commonly assumed to spring forth at the intersection of an adequate supply of, and a healthy demand for, investment capital. In recent years, however, seemingly failed market transitions--the failure of new markets to emerge and of existing markets to evolve--have called this assumption into question. From the developed economies of Germany and Japan to the developing countries of central and eastern Europe, securities markets have exhibited some inability to take root. The failure of U.S. securities markets, and particularly the New York Stock Exchange, to make greater use of computerized trading, communications, and processing technologies, meanwhile, seems to suggest market resistance to technological modernization. In light of this pattern, one must wonder: How are strong markets created and maintained, and what might be law's role in this process?This Article attempts to articulate a model for understanding the needs of efficient market transition and the resulting role of law in that process. Specifically, it suggests a "cueing" function for law in market transition. Grounded in largely ignored lessons of game theory and microeconomic analysis of so-called network effects, cueing theory identifies the coordination of market participants' expectations as law's central role in market transition. Building on recent legal literature on private regulation, social norms, and the expressive function of law, this theory suggests that in securities market transition--whether it be market creation in central and eastern Europe or market restructuring in the United States--law primarily serves to convene, encourage, inform, and facilitate.A cueing role for law constitutes an important extension of traditional conceptions of what law does, particularly in securities regulation, but in other areas as well. Regulatory cues are neither coercive nor outcome determinative and involve a close intertwining of public and private regulation. The exceptional character of law in this context, and the recent growth in areas where regulatory cues might have fruitful application, may explain why such a role has not previously been analyzed. Yet in securities markets and other industries exhibiting network economies--from electricity transmission and interstate transportation to telecommunications and the Internet--a cueing function for law may be central to efficient transition. It may explain much of why "law matters" in the modern economy. Robert B. Ahdieh Administrative Law Banking and Finance Corporations Law and Economics Securities Law http://works.bepress.com/ahdieh/4 http://works.bepress.com/ahdieh/4 Fri, 27 Oct 2006 14:08:48 PDT Robert B. Ahdieh Administrative Law and Regulated Industries (including Environmental Regulation) Corporate and Securities Law: Comparative Corporate and Securities Law: General Financial Services (including Banking and Insurance) Intellectual Property and Electronic Commerce Social Norms http://works.bepress.com/ahdieh/3 http://works.bepress.com/ahdieh/3 Fri, 27 Oct 2006 14:08:46 PDT Not unlike the average American, nations from the United States to Burkina Faso have long relied on credit to survive. Taking various forms over the years, such debt has most recently been financed through sovereign bonds. Like their corporate cousins, sovereign bonds amount essentially to a contract obligating the debtor to make recurring payments of principal and interest until a maturity date, on which any remaining balance of principal comes due. Unlike corporate bond contracts, the terms of sovereign debt contracts are set out with a firm expectation of future debt restructuring, when the sovereign issuer―perhaps inevitably―faces financial distress.In the face of this premonition, contract boilerplate in sovereign debt instruments issued in the United States long dictated the unanimous consent of bondholders to any debt restructuring. This requirement persisted for decades, notwithstanding widespread consensus that such unanimous action provisions increased transaction costs, produced inefficient delays in debt restructuring, enhanced the moral hazards of the sovereign debt market, and otherwise triggered collective action failures. Yet, the sovereign debt markets have recently made an about-face, replacing the unanimity requirement for debt restructuring with less demanding provisions for collective, or majority, action by creditors. Completed over the course of just a few months in 2003, this unexpected and dramatic shift offer a natural experiment of sorts: Why might contract boilerplate not respond to apparent efficiency demands for extended periods? What might cause it to respond eventually? In particular, what role might state action have in the evolution of boilerplate contract terms and in contract transition generally?In the realm of international finance, these inquiries demand urgent analysis, both because the relevant sovereign debt contract standards continue to evolve, and because the appropriate role of national authorities and the official sector (e.g., the International Monetary Fund) in shaping the sovereign debt restructuring regime remains an open question: Most broadly, can the market be expected to facilitate efficient transition in contracts with significant boilerplate elements, or is regulatory mandate essential to such change? Challenging this dichotomous choice between market or mandate, this Article proffers a "third way" toward efficient contract transition. While the market may not always produce efficient transition, ordinary public regulation may not be the answer. Instead, this Article identifies state action grounded in noncoercive "regulatory cues" as the mechanism of efficient transition in standardized contract terms. In the face of growing reliance on boilerplate contract terms and standard-form contracts, public intervention in the form of regulatory cues may, paradoxically, help to facilitate meaningful choice in contract design, and hence a true freedom of contract. The role of regulatory cues in sovereign debt contracts, moreover, may also pressage a potential role in international regulation generally given the limits of hard power within a community of sovereign states. Robert B. Ahdieh Bankruptcy Law Commercial Law Contracts Economics International Law Law and Economics http://works.bepress.com/ahdieh/2 http://works.bepress.com/ahdieh/2 Fri, 27 Oct 2006 14:08:45 PDT Robert B. Ahdieh Administrative Law and Regulated Industries (including Environmental Regulation) International Law (including Trade Law) Law and Development; Legal History; Comparative Law http://works.bepress.com/ahdieh/1 http://works.bepress.com/ahdieh/1 Fri, 27 Oct 2006 14:08:43 PDT Recent years have seen dramatic growth in the number of international tribunals at work across the globe, from the Appellate Body of the World Trade Organization and the International Tribunal for the Law of the Sea, to the Claims Resolution Tribunal for Dormant Claims in Switzerland and the International Criminal Court. With this development has come both increased opportunity for interaction between national and international courts and increased occasion for conflict. Such friction was evident in the recent decision in Loewen Group, Inc. v. United States, in which an arbitral panel constituted under the North American Free Trade Agreement found a Mississippi jury trial to have been "the antithesis of due process."Much of the interaction of courts across national borders--including the citation of foreign legal authority, transnational coordination of complex litigation, and the enforcement of foreign judgments--has been analyzed through the metaphor of "dialogue." As suggested by the Loewen case, however, there is a growing pattern of interaction between international tribunals and national courts for which dialogue is an ill-suited analogy. Contrary to conventional expectations of incapacity and restraint in international adjudication, recent interactions between international tribunals and domestic courts incorporate a significant dimension of "review" in both a literal and a figurative sense. Although such review is not appellate in nature, it shares with appellate review some potential to effectuate its mandate without the consent of the court subject to review. This dimension of "power" further distinguishes emerging cases of international review from transnational dialogue. Standing between the hierarchy of appellate review and the comity of judicial dialogue, Loewen and similar occasions for international engagement with national courts represent a distinct pattern of judicial interaction, one I develop and detail as "dialectical review."Defined broadly as a hybrid of appellate review and dialogue, the nature of dialectical review can be elaborated by examining other hybrid judicial interactions--federal habeas review of state criminal convictions and appellate courts' use of dicta as a signaling device to lower courts. In each of these cases, a form of dialectical review serves as a mechanism of legal innovation. In the face of accelerating trends of globalization, a pattern of dialectical review between international and national courts can help to facilitate the emergence, evolution, and internalization of universal norms of due process. The present analysis thus offers international and domestic judges, as well as policymakers, a framework for understanding and facilitating beneficial judicial interaction in an ever-shrinking world. Robert B. Ahdieh Administrative Law Conflict of Laws Constitutional Law Courts Dispute Resolution International Law International Trade Judges Jurisdiction