GJIL Vol. 41
Daniel Chow, Anti-Counterfeiting Strategies of Multi-National Companies in China: How a Flawed Approach is Making Counterfeiting Worse
Multinational companies (MNCs) are attacking the counterfeiting problem in China through a short-term approach that emphasizes enforcement: raids of counterfeiters, seizures of products, and destruction on machinery and equipment. This enforcement-based approach seeks to use physical force and intimidation to coerce counterfeiters into submission. The basic flaw of this approach is that it ignores the role of local protectionism in supporting the trade in counterfeit goods. Local governments protect counterfeiting because it brings economic benefits to the local economy by generating revenue and creating jobs. One result of local protectionism is that the consequences of being caught for counterfeiters are minor. Fines are so low as to be just the cost of doing business, and imprisonment is rare. Many counterfeiters are back in business only a few days or weeks after being caught. In China today, there is plenty of enforcement but little or no deterrence. In such a system, MNCs are finding that the more enforcement they undertake, the more counterfeiting results.
MNCs need to be patient and adopt a long-term approach measured in years or even decades in order to make any meaningful progress against counterfeiting. While institutional incentives and pressures within MNCs might make a long-term approach difficult or impossible to accept, it is clear that the short-term enforcement-based approach is not working. Enforcement without deterrence has the unintended, even opposite, effect of provoking and inciting counterfeiting to new heights in China.
Bruce Winfield Bean, Hyperbole, Hypocrisy, and Hubris in the Aid-Corruption Dialogue
In this article I examine the relationship between corruption and foreign aid – specifically, development aid intended to alleviate poverty by fostering economic growth. More than $2.5 trillion has been expended over the past six decades on aid of all kinds. This total includes military aid, humanitarian and disaster relief assistance as well as development aid designed to enhance economic growth. Despite the proud rhetoric we hear about how generously aid is provided, there is abundant evidence from the World Bank and others that development aid has not succeeded in producing sustainable economic growth. Indeed, we have known for decades that such aid has been counter-productive, leading to reduced GDP per capita in more than half of all cases.
All serious scholars agree that corruption is a pervasive, global phenomenon. But the failure of development aid to reduce corruption has not been linked to corruption. I focus on “grand” or “political” corruption, as it is the most intractable. Following a review of the literature, which leads to the disappointing conclusion that development aid has not been successful, I consider those nations where poverty-alleviating economic growth has been recently established. A look at these successful nations leads to additional awkward truths about our proud assertions regarding the necessary conditions for creating self-sustaining economic growth. I then analyze current instrumentalities available to combat grand corruption and detail their fundamental inadequacies. The article concludes with a description of current global efforts to make development aid more effective by redesigning delivery mechanics.
Corruption is a global behavior which all agree is a major problem. While corruption can and should be suppressed and deterred, it will not be eliminated. I conclude with several policy proposals designed to make development aid more effective and less susceptible to corruption.
Blake Puckett, Clans and the Foreign Corrupt Practices Act: Individualized Corruption Prosecution in Situations of Systemic Corruption
This article argues that current international anti-corruption efforts understand corruption through what is termed the individual actor paradigm, focusing on the prosecution or sanctioning of individuals involved in corrupt practices. The efforts to reduce the supply side of bribes through the Foreign Corrupt Practices Act and its OECD and UN equivalents and the more recent efforts to tackle the demand side of corruption are important responses to the incredible harm of international corruption; they misdiagnose, however, the dynamics in highly corrupt countries and so fail to adequately address many of the dimensions of corruption. Using the former Soviet republics of Central Asia as a case study, this article shows that anti-corruption efforts face a far more complex problem, that of systemic corruption. In response, an effective anti-corruption strategy must begin with an understanding of the political economy of the developing state, and so requires a more sophisticated approach for the sake of both long-term development and the United States’ own geostrategic interests. The article suggests modifications to current anti-corruption legislation, and more importantly, urges anti-corruption efforts be integrated into U.S. foreign policy through a comprehensive, strategic approach that coordinates anti-corruption efforts with other developmental goals.
Elizabeth Spahn, Nobody Gets Hurt?
Bribery is sometimes justified on the theory that it is a victimless crime, that everybody does it and no body gets hurt. This article examines the assumptions underlying those justifications. First, the article reviews recent macro-economic scholarship refuting the older thesis that bribery ‘greases the wheels of commerce.’ Modern economic research reveals that while bribery may facilitate an isolated transaction, when examined over a longer timeframe bribery provides market incentives to increase regulations. Bilateral monopolies of insiders (business and government), misnamed crony ‘capitalism,’ use their relationships to restrict market access and harass competitors, reducing actual market-based competition. ‘Friendly’ regulatory environments, reducing regulatory burdens for bribepaying insiders, erode safety regulations and distract business from tending to safety and quality control, focusing business efforts instead on developing relationships with powerful officials. The longer timeframe reveals an eco-cycle of regulations, bribery and deteriorating safety/quality control.
As a business transaction from the micro-economic viewpoint, bribery is a high-risk business model. The second section of this article provides specific examples of various risk-points in a bribe-transaction, including unreliability of corrupted partners and intermediaries, difficulties establishing fair prices for bribes, and very risky exit strategies. Where entire cultures tolerating bribery arise, modern scholarship reveals opportunistic penetration by transnational organized criminal syndicates.
Examples of individual victims of crony relationships between government and business are provided in the third section of the article, including humans injured or killed by ‘low quality control’ or eroded safety standards including consumers of fake pharmaceuticals, toxic toothpaste, melamine poisoned pet food and lead in children’s toys. Economic analysis of environmental regulations demonstrates an overall negative correlation between effective environmental enforcement and high levels of corruption.
Legitimate business efforts to remain clean even if others cheat, avoiding bribe-based relationships, are addressed in the concluding section of the article, along with some initial recommendations for strengthening practical, legitimate business strategies. Established profit systems, such as slavery/apartheid or dumping raw toxins, were altered once humans perceived the harms, the actual human costs of doing business under the older, discredited model.
Mike Koehler, The Facade of FCPA Enforcement
The rise in Foreign Corrupt Practices Act (“FCPA”) enforcement actions has been well documented. Against the backdrop of aggressive enforcement and the resulting multi-million dollar fines and penalties is the undeniable fact that, in most instances, there is no judicial scrutiny of the FCPA enforcement theories. The end result is that the FCPA often means what the enforcement agencies say it means. Because of the “carrots” and “sticks” relevant to resolving a government enforcement action, FCPA defendants are nudged to accept resolution vehicles notwithstanding the enforcement agencies’ untested and dubious enforcement theories or the existence of valid and legitimate defenses. The end result is often the facade of FCPA enforcement.
This article discusses various pillars that contribute to the facade of FCPA enforcement and highlights that the FCPA, during its decade of resurgence, is being enforced like no other law. This article does not argue, or even suggest, that every FCPA enforcement action is unwarranted or that no company or individual has ever violated the FCPA. Rather, this article demonstrates that a significant majority of recent FCPA enforcement actions are a facade—including those that allege clear instances of corporate bribery—yet are resolved without FCPA anti-bribery charges.
The facade of FCPA enforcement matters. Even though the resolution vehicles typically used to resolve an FCPA enforcement action are not subject to judicial scrutiny and the vehicles do not necessarily reflect the triumph of the enforcement agencies’ theories, in the absence of substantive FCPA case law, these privately negotiated resolution vehicles have come to represent de facto FCPA case law. The facade of FCPA enforcement also breeds inefficient overcompliance by risk averse business actors fearful of enterprise–threatening liability because of the enforcement agencies’ untested and dubious theories. Because the factors that contribute to the facade are being modeled by other nations when enforcing their own bribery laws, the facade of FCPA enforcement is a global issue affecting a broad segment of the marketplace.
Identifying and acknowledging the existence of a problem is a necessary first step to crafting solutions. This article exposes the facade of FCPA enforcement, argues that addressing the facade and subjecting FCPA enforcement actions to greater judicial scrutiny is in the public interest, and encourages more FCPA defendants to challenge the enforcement agencies and further expose the facade of FCPA enforcement.
Aaron Franklin, Targeted Tariff Preferences to Reduce Corruption in Developing States
How corruption and trade affect one another justifies state economic policies. Typically, states and businesses allege corruption to demand that developing states reform their institutions mediating how their public and private spheres interact. This Note reforms this dominant mindset. Economic growth is a prerequisite for successful institutional reform. As such, the same “corruption-fighting” actors could demand an expanded and tailored preferential tariff system for counties with the most need for institutional reform. Further, such a system would be justified under existing World Trade Organization law.
Daniel M. Firger, Transparency and the Natural Resource Curse: Examining the New Extraterritorial Information Forcing Rules in the Dodd-Frank Wall Street Reform Act of 2010
This Article analyzes the Energy Security Through Transparency Act (ESTTA), which was introduced in the U.S. Senate on September 23, 2009 and passed on July 15, 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The legislation will amend the Securities Exchange Act of 1934 to impose new disclosure and reporting obligations on securities issuers that engage in natural resource extraction projects in foreign countries. These requirements are of particular interest to development and anti-corruption advocates because they represent a novel strategy – based on extraterritorial information-forcing – to combat the “resource curse,” which describes the paradoxical inverse relationship between natural resource abundance on the one hand and economic growth, good governance, and political stability on the other. Beginning with an introduction to the resource curse phenomenon, this Article discusses the ESTTA in light of its antecedents, notably the voluntary, multi-stakeholder Extractive Industries Transparency Initiative, Section 13 of the Securities Exchange Act of 1934, and the anti-bribery provisions of the Foreign Corrupt Practices Act. Informed by this background, the Article identifies two related types of limitations that, if left unaddressed over the long term, may prevent the statute from achieving all of its objectives. Written prior to final passage of the Dodd-Frank bill in the spring of 2010, the Article concludes with several proposals to improve the effectiveness of the ESTTA, as introduced. These suggestions remain relevant as the SEC works to implement the law and civil society groups begin to grapple with a new source of detailed information about the relationship between natural resource wealth, corruption, and development.
Bryan Druzin, Law Without the State: The Theory of High Engagement and the Emergence of Spontaneous Legal Order Within Commercial Systems
Commercial law is a fundamentally unique area of law. Unique because it reacts to, and is a reﬂection of, commercial forces: a vast body of regulation that is a response to a pre-existing and deeply entrenched human activity— commerce. As such, it is a mistake to simply compartmentalize it as one mere subsection of law, such as family law, criminal law, or environmental law. To do so is to fundamentally misunderstand its basic nature. Commercial law is grounded upon an entirely different paradigm of human interaction, one inextricably linked to commercial principles such as exchange, competition and proﬁt. As such, the manner in which parties relate to one another is wholly unique.
The upshot of all this is that while law of a non-commercial nature by and large requires the backing of a state to give it efﬁcacy, a great deal of commercial law as it exists today has, in fact, evolved largely through its own energy, shaped by market forces. Indeed, the underpinnings of the most basic principles of contract such as formation, content, misrepresentation, mistake, and duress, originally arose not through the complex mechanics of legislation, but from the customary rules of merchants, only to be later co-opted by nation-states and codiﬁed. The market requires law because it serves the needs of the market; it has always been so. Just as a common medium of exchange aids the market, common norms (i.e. laws) facilitate exchange. Private ordering reduces transaction costs and protects the property rights exchanged through trade. Today, the practices of merchants continue to drive the development of commercial law as evidenced in international commercial arbitration, and indirectly articulated in documents such as the UNIDROIT Principles of International Commercial Contracts and the Uniform Commercial Code, which point to the reality that business practices in fact serve as the primary source of substantive business law. In our present age, the unremitting force of the market continues to shepherd a regulatory framework within which it can function. Codiﬁcation efforts such as UNCITRAL, UNIDROIT, CISG, and the Lando-Principles are but formal reﬂections of this phenomenon. Indeed, modern international trade displays a strong tendency towards autonomous regulation, with individual contract drafting and international commercial arbitration, both of which are ﬁrmly rooted in the principle of party autonomy, fostering this evolution.
It is the central contention of this paper that commercial law stands apart from other forms of law in that it is uniquely equipped to evolve spontaneously. The core reason for this, I will argue, is that commerce implies a very speciﬁc manner of interaction, which I refer to here as high engagement. This notion of high engagement forms the subject of this discussion. The basic question I will attempt to answer is: In what way is high engagement instrumental in allowing commercial law to evolve in a decentralized, spontaneous fashion, without the need to resort to a central legislative authority? The remainder of this paper attempts to answer this key question. Game theorists have long recognized the importance of repeated interaction in inducing cooperation. However, the distinct manner of interaction implied by commercial dealings has been left largely unexamined. How repetition induces cooperation has been well studied, and thus does not represent the principal focus of this discussion; rather, how commercial interaction induces repetition in the ﬁrst place is what I will examine.
Many have contributed to the idea of “spontaneous law,” in its most recent incarnations, most notably the work of Hayek, and to some degree Fuller. Game theorists, libertarians, anarchists, and law and economic scholars alike all postulate that law may evolve and function in the absence of the state. Indeed, “while law can be imposed from above by some powerful authority, like a king, a legislature, or a supreme court, law can also develop ‘from the ground,’ as a result of a recognition of mutual beneﬁts.” As Cooter phrases it, “Rather than proceeding from the top to bottom, lawmaking can proceed from bottom to top.” Hayek suggests that this spontaneous legal order evolves slowly over time just as markets do, as a by-product of participants’ active engagement in it. In this sense, while most forms of law are creations of the state, commercial law is, in many respects, the creation of commerce itself, stateless and implicitly trans-regional. Indeed, in an inter-regional context, the growth of commercial rules has advanced at a swifter speed than its non-commercial counterpart. This is exempliﬁed in the law merchant, both old and new. There are obvious reasons for this: for instance, commerce’s potential to produce mutual beneﬁt, a commonality of interests, the importance of interregional trade, and so forth. However, the speciﬁc manner of interaction involved in commercial activity is key in truly understanding this phenomenon.
It has been well recognized that the reciprocal gains from the recognition of rules of property and contract (and the potential loss of them) often serve as self-enforcing mechanisms, encouraging compliance. As such, private ordering within the realm of commerce may emerge without the necessity to resort to state-enforced rules. And this, in fact, is precisely what we ﬁnd when we turn and examine the modern complexion of much of the lex mercatoria as it exists today, where indeed a central legislative authority is notably absent. Custom and an aggregation of trans-national treaties have emerged as the principal sources of law. Despite its many deﬁciencies, commercial law has evolved frequently in the absence of a single coercive power. This was possible partly because, unlike other areas of law, the element of reciprocity underlying the activity of commerce allowed it to do so. The spontaneous law literature is grounded upon this dynamic of reciprocity. It is central because, as B. L. Benson concludes, it is the primary means of inducing compliance in the absence of enforcement. In place of enforcement, Fuller opines, it falls upon sheer self-interest to foster a recognition and protection of rights.
While this is certainly true, the literature largely overlooks a second, yet vitally important, element—namely, the high level of general engagement that exists in commerce, and how it operates in supporting the element of reciprocity. Indeed, commercial activity stands apart from non-commercial forms of interaction in that participants simply tend to be more regularly engaged in the undertaking. This is important. This high level of engagement, which is the mark of commercial trade, reinforces the effects of reciprocity on systems of spontaneous order, accelerating the formation of legal norms by pulling relevant actors into repeated and more involved contact with one another. High engagement enhances the impact of reciprocity because it increases the overall rate and scope of interaction, and this helps forge customary norms and promote compliance. The higher the level of overall engagement, the more likely it is that behavioral norms will emerge spontaneously (and be adhered to). Below I argue that this phenomenon of high engagement has two important components. The ﬁrst is sheer repetition and repeated exposure. The second is a tendency to assign positive obligations to participants, creating clear cycles of interaction, inducing cooperation. As we shall see, these two aspects of commercial interaction (along with reciprocity) play a pivotal role in allowing commercial law to evolve spontaneously.
Without the key ingredient of high engagement, it is difﬁcult for social-legal ordering to develop as a result of reciprocity alone. To use an imperfect analogy: if reciprocity is understood as the serrated teeth of a saw, high engagement is like the hewing of that saw. With each quick pass of the blade, a deeper groove of expected behavior is cut, in due course producing a recognized behavioral convention—a legal norm. Repeated cycles of purposive engagement stimulate the emergence of customary norms and induce compliance. Thus, the manner in which the players engage in the activity is decisive, and commercial activity possesses a uniquely accelerated pace of purposive interaction. Although the underlying elements of high engagement and reciprocity predominate in commerce, this is simply not the case of behavior regulated by law of a non-commercial nature, where these features are considerably less pronounced or entirely absent.
The following discussion will be divided into two parts. Part I presents a brief overview of the idea of reciprocity and spontaneous law theory. In Part II, a more detailed explanation of the notion of engagement is offered. Here I set out exactly how high engagement facilitates the development of and compliance with legal norms, mapping out how high engagement induces the evolution of normative systems. Although the topic is deserving of a far more in-depth, intricate, and empirical discussion, the goal here is more modest. It is to merely set out some core observations regarding the nature of commercial interaction in the broadest of strokes—to provide a skeletal framework upon which, hopefully, further examination may be pursued. Finally, the conclusion the paper reaches is that this element of high engagement plays a decisive role in commercial law’s ability to evolve and function in a decentralized, spontaneous manner. This is an important insight in terms of the future development of the modern law merchant, as it emerges in the absence of a central legislative authority. Indeed, degrees of order can arise from anarchy.
Rumu Sarkar, Sovereign Wealth Funds as a Development Tool for Asean Nations: From Social Wealth to Social Responsibility
While sovereign wealth funds (SWFs) have existed since the 1950s, their signiﬁcance and importance in economic, political, and policy terms have increased exponentially in the past decade or so. Ironically, though, it may be argued that the development aspects of SWFs have been a missing dimension from the latest rounds of analysis and scrutiny. This is somewhat surprising since most new SWFs are being formed in emerging or developing economies. This Article will address this vacuum by exploring certain development aspects of SWFs.
Speciﬁcally, this Article will examine three separate but interrelated questions: (1) why, and under what economic and political conditions, should an emerging (ASEAN) economy create an SWF; (2) what should the speciﬁc objectives of a newly formed SWF be, and how should the SWF be structured to meet these objectives; and (3) should an SWF be used as a self-ﬁnancing tool for development purposes and, if so, how?
With respect to the ﬁrst question, the debate surrounding the establishment of an SWF by India is examined. Although India is not an ASEAN member, certain precautionary notes may be useful in this context especially for the ASEAN-4 nations (Indonesia, Malaysia, the Philippines, and Thailand). Secondly, this article will address the speciﬁc objectives that an SWF may support, and how it may best be structured in support of such goals. Finally, the relative merits of using SWFs as a development ﬁnance tool will be explored.
Michael Ilg, Complexity, Environment, and Equitable Competition: A Theory of Adaptive Rule Design
The issue of catastrophic risk has received increased policy and scholarly attention in recent years. Legal theory attempts at dealing with systemic risk have grown in complexity due to the wide range of issues they attempt to analyze: terrorism and political instability, environmental devastation, and, most recently, systemic ﬁnancial failure. Of these dramatic event types, the environmental case is unique in that it combines human agency with dependency upon the physical world and is arguably of the most long-term consequence. The environmental case is the focus of this article.
The object of the following will be to translate protective concerns for complex systems like that of the environment into an adaptive approach to coordination on competition, with the international context the foremost focus. This piece is intended as a legal theory inquiry into how idealized rule design may in the future be better adapted around serious systemic problems on the order of global environmental problems. Rather than an examination of a speciﬁc regulatory issue in light of environmental effect and consequence, the present project contemplates a form of international agreement that would be responsive to unforeseen and formidable challenges to a system’s underlying precepts.
Global environmental problems combine economic output with an observable environmental effect, rendering the established economic concept of an externality into an effect witnessed simultaneously by a global many. Apart from the scope of global environmental problems, arguably the most visible and pressing instances of modern externalities, a crucial characterization of the phenomenon, is that of unpredictability. Theories of law, especially those which aspire to an international focus, may increasingly need to account for an external unpredictability that alters assumptions underlying the very terms of regulation.
The legal theory method proposed here addresses the problem of unforeseeability through the embrace and encouragement of unpredictability. Drawing loosely upon a metaphor of biological diversity—in which a differentiation amongst individuals provides for the greatest number of potential solutions to an unknown selection process, or probability for success—the proposed legal theory method is identiﬁed with diversity and addresses the social conﬁguration of international competition. With a view to answering future and unknown problems of signiﬁcance, the goal of this proposed legal theory method is to encourage individual competitors to attempt as many alternatives to success as possible.
If the primary social good of this theoretical proposal is differentiation, it nonetheless remains that it should be conducted in a fashion dependent upon individual freedom. In devising a Rawlsian inspired bargain, an ideal international contract will identify the need for diverse strategies as at once the means of environmental preservation and of long-term individual gain. Diversity as difference in competitive attempts may be seen as a regulatory goal that is at once individualistic and communal. Individuality may provide the basic means of a system of diversity, as individual competition is encouraged toward creative difference, while the ends of this system, which informs who is to achieve added advantage, may be based upon social goods like the environment. Diversity is not only environmentally sound for encouraging difference from the main; it is inherently adaptive and evolutionary, for it encourages further individual attempts at success and competitive creativity.
Raha Wala, From Guantanamo to Nuremberg and Back: An Analysis of Conspiracy to Commit War Crimes Under International Humanitarian Law
Since the terrorist attacks of September 11, 2001, legal scholars and practitioners have engaged in a lively and evolving discussion about the descriptive and normative contours of International Humanitarian Law (IHL) and its application in the U.S.-led international effort to combat terrorism. However, after almost a decade of discussion, fundamental questions about when and where armed conﬂicts exist, who is a combatant, and what constitutes a war crime, remained unanswered. Despite the uncertain status of IHL on these questions, the United States has invoked the law of war as the foundational legal authority for numerous counterterrorism policies. Among the most controversial of these policies is the continued effort to conduct terrorism-related criminal trials in military commissions.
The use of military commissions by the United States for terrorism-related prosecutions has brought to the forefront a number of issues regarding the military commissions’ jurisdiction to try alleged terrorists under the law of war. This Note addresses one such issue: whether conspiracy to commit war crimes, as used in the military commissions, constitutes a valid basis for liability under IHL. This issue is important for at least three reasons. First, the majority of cases pending in the military commissions contain allegations of conspiracy to commit war crimes, with many of these cases relying on conspiracy as the primary charge. Second, as a matter of U.S. constitutional law and international law, the jurisdiction of the military commissions over these cases depends in part on whether conspiracy to commit war crimes can be considered a violation of IHL. Third, the combination of conspiracy—a doctrine that disposes with the stringent mens rea and actus reus requirements of traditional forms of criminal liability—with military commissions trials—which lack many of the procedural safeguards of Article III courts—presents a dangerously high risk of convicting individuals who have not played a meaningful role in any crime.
This Note proceeds in three parts. Part I outlines conspiracy in its two main forms and describes its use in the military commissions’ war crimes trials. Part II analyzes conspiracy to commit war crimes under an IHL framework, focusing on relevant legal provisions and jurisprudence in the immediate aftermath of World War II and in modern IHL. This Part concludes that conspiracy to commit war crimes is not a cognizable law of war violation or liability theory under IHL. Part III discusses the potential application in the military commissions of a modern relative of conspiracy that is supported by IHL: joint criminal enterprise (JCE) liability. This Part concludes that although JCE is a valid theory for attaching liability in war crimes prosecutions, its potential use by the United States in terrorism-related military commissions trials presents signiﬁcant theoretical and practical issues that require further consideration.
Jialue “Charles” Li, China, a Sui Generis Case for the Western Rule-of-Law Model
The social role of law came to the forefront of scholarly discussions outside American-European jurisprudence during the ﬁrst wave of international development in the 1960s. Western development assistance programs to the governments and legal institutions in developing countries led to active law and development studies that were built upon the Weberian foundation that economic development was the result of rational legal systems. Scholar-reformers, comparative legal theorists, legal anthropologists and social scientists began to study the role of law in development, and the rule-of-law governance model was promoted as a path to freedom for the recipient countries. However, the law and development movement faded into “self-estrangement” because of critical scrutiny of the social utility of aid efforts and the disagreement over the common interests that might justify such a distinct ﬁeld of inquiry.
The 1990s witnessed a rule-of-law revival. During the post-Communist transition, the rule of law became the catchphrase for political and economic reforms in much of the economically under-developed world. The rule of law has achieved almost universal consensus among nations, a rare accomplishment for a concept in a world of controversies. It implies a sense of rationality over arbitrariness, predictability over uncertainty, and fairness over partiality. Assistance in the rule-of-law reform has become a major category of international aid. The World Bank and other development organizations apply the rule-of-law model both to ensure the proper use of ﬁnancial aid and “to build more business-friendly and investment-friendly legal systems that presumably help spur economic growth and reduce poverty.” The reform often promotes implementation of established legal rules premised upon Western liberal democratic principles.
But China has always been a sui generis case in the rule-of-law discussion. The assertion that China has no rule of law contradicts the well-documented Chinese history that does not remotely resemble a state of anarchy or a society without justice. On the other hand, the evaluation of the Chinese rule of law based on the Western model produces obvious mismatches.
This article studies in depth the mismatches between Chinese and Western rule-of-law models. Both the deﬁciency in the Western model and the uniqueness of Chinese jurisprudence contribute to the discrepancy. Part I surveys the Western theoretical frameworks for the rule of law. Part II illustrates the deﬁciencies in the Western rule-of-law theories in the context of American jurisprudence, which shows the complexity of the seemingly straightforward concepts of judicial independence and equal application of justice. Part III explains the theoretical foundations of the Chinese rule of law, and summarizes the fundamental principles of Chinese jurisprudence. Although the Chinese rule of law is a sui generis case for Western legal ontology, a comparison of the two models suggests universal value of democracy and republic governance transcending cultural boundaries.
Surabhi Ranganathan, Between Complicity and Irrelevance? Industry Associations and the Challenge of Regulating Private Security Contractors
In discussing regulation of the private military and security industry, scholars and policy advocates do not ignore the role of industry associations, but they do sideline them. The focus is on regulation by states, or by an international ofﬁce created by treaty, or a combination of the two. Such “formal” regulation is undeniably important. However, a preference for it is not irrational only insofar as it can be assumed that states and international ofﬁces are willing and able to effectively regulate PMSCs. This is often not the case. On several occasions states have shown themselves unwilling or unable (or both) to regulate PMSCs. An international ofﬁce that can do so is far from being realized. On the other hand, several industry associations have come into being in the last few years, each with at least a partial mandate for regulation of PMSCs. It is surprising then that their regulatory potential has received little serious consideration. To date there does not exist a single analytical account of their activities. Little effort has been made to grapple with issues relating to the legitimacy of their regulatory claims, and the effectiveness and accountability of their regulatory activities. This paper aims to ﬁll that gap.
In this paper, I examine the reasons for and against giving serious consideration to the regulatory function of industry associations and engage in a critical evaluation of their claims to legitimacy, accountability and effectiveness as regulatory bodies. I seek to provide a nuanced understanding of the scope and limits of the role of industry associations in furthering accountability of PMSCs.
To clarify, I do not argue that industry associations should replace formal regulation. Recognizing the importance of national and international regulation, and of plural regulatory initiatives, my paper supports three conclusions. First, industry associations are important contributors to better regulation of PMSCs. Second, even so, their claims to legitimacy, accountability and effectiveness are mixed, and differ for each association. Third, some weaknesses in such claims have to do with external factors, such as lack of state backing and negative public perception. However, there are other factors that associations themselves should address to bolster their regulatory claims.
The paper is structured as follows. In the remaining portion of the introduction, I examine, through the lens of behavioral law and economics, some reasons why scholars and policy advocates prefer to focus on formal regulation. The main body of the paper is divided into three sections. In the ﬁrst section, I piece together an analytical account of three major industry associations, in terms of their history and structure, membership, and mechanisms employed to facilitate better standards of service and accountability of PMSCs. Such an account is thus far missing from literature on PMSCs. Yet, such an account is essential because the fragmented nature of the information about industry associations’ operations is an important reason why their regulatory role is overlooked. This account clariﬁes that the activities of the industry associations may be described as regulatory and paves the way for an in-depth discussion on the merits of their regulatory efforts. I address the question of why industry regulation is not given serious consideration in the second section. I situate industry regulation in the broader context of the status of, and legitimacy concerns related to, private governance arrangements. I also examine the additional concerns that are peculiar to the private provision of military and security services. To enable an accurate appreciation of the relevance of such concerns, I also evaluate the current landscape of formal regulation, arguing that its many gaps provide greater impetus to industry associations but also weaken their effectiveness. Finally, in the third section, I turn to an assessment of the associations’ claims to legitimacy, accountability and effectiveness. Along with a critique, I offer a few suggestions for enhancement of these claims.
Christopher Totten & Matthew Bernal, Somali Piracy: Jurisdictional Issues, Enforcement Problems and Potential Solutions
With the dramatic surge of attacks in 2007-08, the Somali piracy crisis has attained a new sense of urgency in the international community. Somalia has been in the international spotlight for some time due to its status as a failed state. Since the overthrow of its leader Siad Barre in 1991, Somalia has been without any effective internal political structure or national government. This political vacuum led, in turn, to the dramatic escalation in incidents of piracy off the Somali coast in 2007 and 2008, with many pirate attacks occurring initially against foreign vessels in the high seas off the Somali coast and then extending into the territorial waters of Somalia itself as the pirates transport the captured vessels to the coast. These acts of piracy have continued unabated into 2009. A resurgence of Somali piracy is particularly troublesome in light of the nation’s geographical location and topography: Somalia boasts Africa’s longest coastline, spanning 3,025 miles, and is located in close proximity to key shipping routes connecting the Red Sea and Indian Ocean. This resurgence of piracy and the very real danger it poses to seafarers and seafaring trade near Somalia’s coastline demands the attention of the international community.
Though various commentators have drawn attention to the issue of piracy in the waters near South-East Asian countries, Somalia presents a unique problem. Unlike these Asian nations that are experiencing success in combating piracy, Somalia lacks a viable central government, a national military, and an effective police force. Without these capacities, it is difﬁcult if not impossible for Somalia to respond to reports of pirate attacks, or patrol its offshore waters to deter such attacks. In addition, the humanitarian crisis in Somalia, which has been the hallmark of everyday Somali life since the governmental collapse, has contributed to the increase in piracy by making it an attractive career path for impoverished Somali citizens.
This Article endeavors to establish a framework for individual nations and the international community to respond to pirate attacks in Somali coastal waters. It examines Somali piracy in light of prevailing international law norms, jurisdictional considerations, and available enforcement mechanisms. The Article calls for the innovative application of these norms and mechanisms to enable nations (and their ships) to respond to individual acts of piracy in Somalia, and to deter future acts. In particular, because many acts of piracy occur initially on the high seas outside Somalia’s territorial waters, these acts fall most prominently within the scope of the United Nations Law of the Sea Convention (LOS) and the United Nations Convention for the Suppression of Unlawful Acts Against the Safety of Maritime Navigation (SUA). Accordingly, when permissible, individual nations falling victim to pirate attacks should seek to arrest and prosecute pirates in their national courts under these principal maritime conventions.
Signiﬁcantly, after the UN Security Council passed a resolution in June 2008 allowing authorized nations and their vessels to enter Somali territorial waters to arrest and prosecute pirates as they are permitted to do on the high seas, the scope of anti-piracy actions permitted under LOS and SUA has been widened. Thus, authorized nations should seize and prosecute pirates operating near the Somali coastline in the country’s territorial waters. In addition, nations may be able to rely upon the International Criminal Court (ICC), and to a lesser extent the International Court of Justice (ICJ), to effectively deter Somali actors from engaging in piracy.
Moreover, to further combat piracy off of the Somali coast, the international community must play an active role. The UN Secretary General should seek to implement as quickly and as robustly as possible the June 2008 Security Council Resolution allowing nations to enter Somali territorial waters with the consent of the Somali government to arrest and prosecute pirates. Finally, existing African Union (AU) troops in Somalia and the International Maritime Organization (IMO) may be able to exert and expand their powers and inﬂuence to ameliorate the Somali piracy situation.
This article consists of four Parts. Part I will describe the current Somali piracy crisis and examine the conditions under which it developed. This Part will provide: (1) the historical and political roots of Somali piracy; (2) the socioeconomic underpinnings of Somali piracy; (3) the role of the UN and AU in the Somali piracy crisis; and (4) a detailed description of the recent piratical activity off the Somali coast.
Part II of this article will explain the applicable international law norms, jurisdictional considerations, and enforcement mechanisms relevant to Somali piracy. The Part will also address international courts capable of adjudicating acts of piracy in Somalia. To this end, Part II includes coverage of the LOS, SUA, ICJ, and ICC.
Part III will apply the relevant international law norms, jurisdictional considerations, and enforcement mechanisms to speciﬁc Somali pirate attacks. In particular, three recent pirate attacks off the coast of Somalia—Denmark’s “Danica White,” Qatar’s “Younus,” and Belize’s “Faina”—will be examined to better understand how nations can respond effectively under international law to attacks on their ships.
Finally, Part IV will posit various solutions for addressing and improving the Somali piracy situation. In addition to the seizure and prosecution of pirates under the SUA or LOS in national courts by countries who fall victim to a pirate attack, these countries may also be able to rely upon the ICC to try some of the pirates. Furthermore, on the international level, the UN needs to use regional organizations such as the AU, EU, NATO, and Arab League to identify and recruit nations capable of implementing its June 2008 Resolution. Such an approach to implementation will allow participating nations to effectively come to the assistance of victims of piracy in Somali territorial waters. Moreover, consistent with UN Security Resolution 1844 of November 2008, UN member states must begin to actively identify those individuals and entities who support piracy and other destabilizing activities in Somalia, and freeze their monetary and material assets. In addition, existing AU troop levels in Somalia must be increased so that the AU can play a signiﬁcant role in the capture and deterrence of Somali pirates. Finally, the IMO, like it did in the South East Asia piracy crisis, should work to establish regional cooperation in Africa on the Somali piracy issue. Only with the participation of various states and regional and international bodies—like the UN, AU, and IMO—will the piracy problem in Somalia be fully solved.
Larry Cata Backer, Sovereign Wealth Funds as Regulatory Chameleons: The Norwegian Sovereign Wealth Funds and Public Global Governance Through Private Global Investment
For much of the end of the last century, legislatures and courts have been grappling with the problems of state participation in private markets and private market actors participating in governance activities within and between states. These issues have become acute in the ﬁrst decade of the twenty-ﬁrst century as a number of forces intersect—an increasing willingness of states to invest their wealth abroad in instruments other than the debt securities of other nations, the rise of transnational normative frameworks for global market and business behavior, the development of a severe economic collapse in the last years of the decade, and an increasing understanding of the public role of private actors, especially in places where state authority is weak. Among the more visible manifestations of these tectonic changes in the way in which the global order is organized are sovereign wealth funds. Over the last decade they have been transformed from a simple and relatively benign sovereign vehicle for the investment of excess wealth in a discrete way, to an important force in global ﬁnance. According to Congressional Research Service, such SWFs currently manage between $1.9 and $2.9 trillion, and they are expected to grow to over $12 trillion by 2015. Similarly, the International Monetary Fund indicates that the expected growth of SWFs’ assets will be over $10 trillion in the next 5 to 10 years. And thus an irony, though they are creatures of states, they also tend to challenge state power to order its internal relations, and the legal systems under which these arrangements are maintained.
At the international level there have been public and private efforts to create either voluntary codes of behavior for such funds, including collective efforts backed by states with important sovereign wealth funds. These tend to privilege transparency, disclosure and equivalent treatment with private funds similarly operated. On the other hand, host states have been tending toward a jurisprudential position that signiﬁcantly narrows the circumstances under which a state ought to be treated like a private entity, at least for purposes of applying the obligations the European Union’s treaty framework. The United States, in contrast, has tended to avoid direct regulation. Sovereign wealth funds can fall within a variety of regulatory ﬁelds depending, for example, on the object of investment, the form of investment, and the relation to sovereign activity. Essentially, however, sovereign wealth funds in the United States are treated as sovereign for tax purposes, and used to invest in those instruments traditionally used by sovereigns to manage their currencies and reserves. Otherwise, sovereign wealth funds will be treated as private entities for purposes of immunity from suit, investment suitability as a foreigner and obligation to comply with generally applicable law.
At the root of these various approaches is both fear and desire—especially among host states. As Gerard Lyons recently noted, these states have come to understand three crucial implications of sovereign wealth funds—ﬁrst, that their inﬂuence is growing in all ﬁnancial markets and across all ﬁnancial products; second, that host and home states will clash over what SWFs can buy and where; and third, that the ﬁrst two implications are powerful evidence of a great shift in the world economy, one not necessarily to the beneﬁt of Western investment host states, now more dependent on direct foreign investment. Yet that fear and desire reﬂects a deeper ambivalence in approach to regulation, one that touches on the complexity of the sovereign wealth fund entity and its use. From a perspective of the formalities of law and organization these entities appear to be creatures of the state that funds and controls them—a public purpose public owned entity. But from a functionalist perspective, these entities appear to behave like other private investment entities similarly constituted. They participate rather than regulate.
Craig Thedwall, Choosing the Right Yardarm: Establishing an International Court for Piracy
Peering into the enormous hold of the captured ship, the Somali ﬁshermen turned pirates must have realized that they would receive worldwide attention for what they had done. Normally, ship owners pay ransoms in exchange for their property and crewmen without drawing much attention to the payoff. But the seizure of a ship full of heavy eastern-European weaponry and Soviet-era tanks was sure to draw the ire of maritime industrialized countries. After a four-month standoff with the U.S. Navy, the pirates accepted a $3.6 million payment by parachute drop and released the ship with its crew and cargo relatively intact, but the publicity attracted a ﬂotilla of international warships that intercepted skiffs and arrested 117 would-be pirates.
What should be done with them? This Note examines the extensive history of the law of piracy to better understand the state of the law today, and proposes that the International Tribunal on the Law of the Sea expand to encompass criminal jurisdiction over piracy. Sea-borne outlaws have plagued trade routes since the ﬁrst men of the ancient world dipped an oar. Even kings encouraged and licensed them as part of their struggle for domination over their neighbors. As piracy grew out of control, international cooperation became essential to curb attacks. This communal responsibility for combating piracy culminated in modern conventions and treaties.
Yet the universal jurisdiction granted by these treaties to prosecute pirates goes unused. Maritime nations do not prosecute captured pirates themselves, but turn them over to willing governments, and in so doing miss a golden opportunity for international cooperation, increased legitimacy, and the promotion of the rule of law. The International Tribunal for the Law of the Sea (ITLOS) already exists to settle disputes arising from the UN Convention on the Law of the Sea, which includes piracy. Though the court possesses the requisite maritime expertise, it lacks criminal jurisdiction. Consequently, the UN Security Council should expand the ITLOS’s jurisdiction to include a voluntary piracy tribunal as a mater of peace and security. This Note explores what the piracy tribunal could look like, and imagines the beneﬁts and challenges of an expanded court.
Maria L. Banda, On the Water’s Edge? A Comparative Study of the Influence of International Law and the Extraterritorial Reach of Domestic Laws in the War on Terror Jurisprudence
The advent of global counterterrorism operations following the attacks of September 11, 2001 on the United States and the subsequent invasion of Iraq by a U.S.-led multinational coalition have presented domestic courts in most democratic nations with complex questions regarding the legality of their governments’ participation in the so-called “war on terror.” While the conduct of the war raises important substantive issues involving the capture, detention, transfer, and trial of terrorist suspects, this article is most interested in the process of judicial reasoning that has empowered domestic courts in three common law countries—the United States, Canada, and Britain—to impose limits on their national executives’ claims of exclusive authority in this area. In particular, this article seeks to determine how international legal norms have informed and shaped domestic terrorism jurisprudence. First, it compares the willingness of national courts to consider international law in their deliberations either as a source of substantive rights or as an interpretive aid. Second, it compares the extent to which national judges have been willing to reach beyond state borders in order to enforce domestic constitutional or statutory rules relating to the conduct of state agents, and to secure the latter’s compliance with human rights norms abroad.
The analysis is organized in four parts. The ﬁrst three sections describe the state of the law in each jurisdiction. Part I discusses the leading U.S. case law, with a focus on Boumediene v. Bush. Part II examines the jurisprudence of the Canadian Supreme Court in R. v. Hape and Canada (Justice) v. Khadr, while Part III reviews the decisions of the British House of Lords in Abbasi v. Secretary of State for Foreign and Commonwealth Affairs and Al-Skeini v. Secretary of State for Defence in light of the extraterritoriality doctrine of the European Court of Human Rights. Part IV concludes with a side-by-side comparison of the case law in order to highlight the differences and similarities in these three common law jurisdictions’ engagement with the politically charged subject of protection of fundamental human rights in counterterrorism operations. The analysis reveals considerable differences between U.S. courts on the one hand and Canadian and U.K. courts on the other in terms of their receptiveness to international law, with the former showing greater reluctance to consider international norms expressly. The readiness of Canadian and U.K. courts to adjudicate extraterritorially in the area of human rights is no less surprising given the traditional judicial aversion in these countries to the extraterritorial exercise of criminal jurisdiction, which has typically been reserved for the most exceptional cases. Overall, as this paper ﬁnds, national courts employed different tools to analyze rights claims in antiterrorism cases and chose different methods of enforcement— by importing international standards into domestic law or exporting constitutional norms extraterritorially. They did so, however, in the pursuit of a common end: declaring that the conduct of the war on terror abroad is not beyond the reach of judicial review.