JournalTOCs

Northwestern Journal of International Law & Business
Journal Prestige (SJR): 0.107

Number of Followers: 5

This is an Open Access Journal

Open Access journal
ISSN (Print) 0196-3228
Published by Northwestern University

[6 journals]

A New Development in Private Equity: The Rise and Progression of Special
Purpose Acquisition Companies in Europe and Asia
- Authors: Brandon Schumacher
  Abstract: This comment presents a comparative study of Special Purpose Acquisition Companies (SPAC) in the international context and the United States. In the course of examining international SPACs, it is necessary to first discuss and analyze the history and development of private equity and how SPACs became established players in the domestic and international markets. This comment will examine the impact that these short-term investment devices have had for investors, SPAC management, and private companies. The paper will evaluate the perceived advantages and disadvantages of using a SPAC as an acquisition form, as well as reflect on potential future developments pertaining to both the United States and the international setting. While a particular emphasis is set forth as to Europe and Asia, this scholarship aims to advance ideas and make reflections applicable to the entire international community.
  PubDate: Fri, 01 May 2020 07:41:30 PDT
Establishing Economic Independence in Haiti Through Public-Private
Partnerships and Foreign Direct Investment
- Authors: Jasmine Armand
  Abstract: In 1804, the Caribbean island of Haiti became the first black republic in the world after leading the only successful slave rebellion in history to result in the formation of an independent nation. Overflowing with valuable natural resources and equipped with a strategic Caribbean location, Haiti was positioned to remain one of the most prosperous territories in the world. But the price of independence was steep, and the country failed to thrive under crushing foreign intervention. But its story does not end there.This note examines the opportunities for Haiti to establish economic independence through public-private partnerships and foreign direct investments. First, this note will recount Haiti’s complicated past, from the native Taino Indians, the commencement of African slavery, to the historic slave rebellion and the fight for independence which elicited extreme backlash from the Western world. Next, this note will take an in-depth look at Brazil’s recent anticorruption success and apply those lessons to Haiti. By firmly addressing its own corruption issue, Haiti can create an environment that is welcoming to foreign investors, paving the way for transformative public-private partnerships.This note will then address the characteristics of an effective public-private partnership (P3)—a mechanism by which a government can partner with the private sector to fund and operate key infrastructures and stimulate economic development. Haiti’s lack of essential structure makes it ripe with opportunities for P3s in virtually every industry—water, sanitation, electricity, internet, transportation, education, and more. Developing this infrastructure will not only stabilize daily life for Haiti’s citizens but it can begin to attract foreign investors.As such, this note will explain the role of foreign direct investments (FDIs) in strengthening and expanding Haiti’s economy. In addition to injecting capital into the country, FDIs can also help Haiti develop its human capital by providing jobs and skill training.This note proposes that through the development of essential infrastructure via P3s and the expansion of the economy with FDIs, Haiti can begin to establish economic independence and take its rightful place in the global economy.
  PubDate: Fri, 01 May 2020 07:41:26 PDT
Can Smart Contracts Enhance Firm Efficiency in Emerging Markets'
- Authors: Kevin J. Fandl
  Abstract: Blockchain technology has the potential to eliminate one of the most significant barriers to economic growth through private business transactions in developing countries—lack of trust. In a typical developed country, individuals and firms conduct transactions within an institutional environment that offers security through the enforcement of agreements. Transparent and effective courts, while imperfect to be sure, enable parties to feel secure in their transactions even if their level of trust in the other party is low. This security, in turn, facilitates transactions far afield from high-trust relationships (e.g., immediate relatives), generating transactions based upon economic value rather than party trust alone.Developing countries often lack effective or transparent institutions and are frequently plagued with corruption that weakens substantially their level of security in economic transactions. Accordingly, individuals and firms in developing countries seek contracting parties whom they trust, knowing that it is trust that will ensure enforcement more than courts or law enforcement. Transactions in this type of environment are thus limited to known entities, such as relatives or colleagues who have a trust-relationship with the individual. As a result, potentially valuable transactions are avoided due to lack of trust, which, on a macro-level, limits the economic growth potential of the entire economy.Blockchain technology and smart contracts offer a solution to the trust problem prevalent in developing country contractual transactions. First, because blockchain uses an open architecture, all transactions are publicly accessible, immutable, and verifiable by anyone. This helps to eliminate corruption and fraud from the transaction. Second, because all smart contract transactions are recorded along a blockchain and cannot be modified ex post, a permanent and publicly accessible ledger is available to shed any doubt about payments or other transactions throughout the process. And third, because blockchain systems are automated, security in the enforcement mechanism is all but guaranteed. For instance, failure to deliver goods by a set time will automatically trigger a default clause that transmits payment of liquidated damages to the injured party without the intervention of a judge or arbitrator.Numerous problems with this approach exist. For instance, access to information about technology such as blockchain, especially among firms that would most directly benefit from it (e.g., informal firms), is highly limited for the moment. Second, smart contracts are in their infancy and work primarily with clearly stipulated terms that allow for no interpretation, which are not always common in contracts between firms. In this case, eliminating a neutral arbiter from the transaction also eliminates the possibility of reviewing the circumstances of a breach or other contract mishap. And third, though lack of trust in parties may be reduced through this technology, lack of trust in online financial transactions may be exacerbated. The use of electronic finance options in developing countries is far less common than in developed countries, making implementation of a completely online transmission system particularly challenging.Despite the evident weaknesses in applying smart contracts and blockchain technology to developing country firm transactions, there is great potential for at least small-scale application in certain markets where party trust levels are particularly low. In this paper, I will review literature on the development of smart contract technology and its application in relevant contexts. I will consider the potential impact that this technology could have if properly implemented in emerging markets. And I will offer a set of suggestions for policymakers to consider in educating firms and incentivizing their use of this technology. What follows is an introduction to the area of smart contracts as a substitute or at least a complement to legal institutions. I fully expect a robust literature to develop around this topic in the near future.
  PubDate: Fri, 01 May 2020 07:41:23 PDT
Inefficiency of Specific Performance as a Contractual Remedy in Chinese
Courts: An Empirical and Normative Analysis
- Authors: Lei Chen et al.
  Abstract: This article investigates the values and latent policies in the area of the availability of specific performance (SP) as a contractual remedy, which have shaped the development of Chinese law. The National People’s Congress (Legislature) and Supreme People’s Court in China have addressed the remedial structure of Chinese contract law, namely, the availability of the remedy of SP as opposed to the awarding of damages only. The law is clear that the remedies of SP and damages are ordinary remedies that a claimant is free to choose between. The question that this article confronts is whether in practice the equality of SP and damages as remedies are applied in a neutral, unbiased way by the Chinese courts. Simply put, how often do Chinese courts use SP as a remedy for contract breaches' If SP is seldom awarded, the question then becomes: what are the underlying reasons or rationales given for its underutilization' This article employs an empirical study based on data collected by surveys and follow-up interviews with hundreds of Mainland Chinese judges at various levels of the Chinese court system (related to civil and commercial disputes). Based on the statistical findings of the empirical study, a theoretical inquiry is offered to better understand the relative use or non-use of specific performance as a contractual remedy. The findings show that damages are often favored over SP; additionally, judges in the Mainland Chinese court system take a far more proactive role in the preliminary stages of trials and will actively persuade parties to claim damages over specific performance where expedient. The study also shows that, despite popular belief, the higher supervision costs associated with specific performance are not a determinative factor in the decision not to award SP.
  PubDate: Fri, 01 May 2020 07:41:20 PDT
Reds, Whites, and Sulfites: Examining Different Organic Wine Regulation
Practices in the United States and the European Union
- Authors: Ryan Puszka
  Abstract: Abstract:This note examines the history of regulation within the organic wine industry in the U.S. and the E.U. and explores the motivations behind the production of organic wine in these two regions. The variance in the historical significance of wine between these two regions is reflected in the contemporary differences between the two regions’ rules for organic wine certification. In 2012, the U.S. and the E.U. entered into a comprehensive organic equivalency agreement that covered nearly all organic agricultural products but due to significant differences in the two regions’ regulatory schemes concerning the inclusion of added sulfites in wine, the equivalency agreement did not extend to wine. This lack of organic equivalency between two of the world’s largest producers and consumers of wine has resulted in a number of labeling difficulties in the international wine market and consequentially, has resulted in economic inequities, which disincentivize organic viticulture. These difficulties have trickled down to the consumer and resulted in both confusion and a general distrust for organically certified wines, further harming the reputation of organic wines. This article proposes the creation of a private international agency for certifying organic wine, mirroring the Demeter Standard for biodynamic products. This private certifying agency would provide greater transparency to consumers and a more economically attractive and streamlined regulatory process for wine producers who are considering organic viticulture.
  PubDate: Tue, 03 Mar 2020 09:15:22 PST
Do You Accept These Cookies' How the General Data Protection
Regulation Keeps Consumer Information Safe
- Authors: Jayne Chorpash
  Abstract: Abstract:This note examines the General Data Protection Regulation implemented in the EU in 2018. The GDPR was the result of a long history of data privacy laws that have been met with varying levels of success. While the GDPR has retained many characteristics that have made past privacy laws successful, it has also made some important changes. Most notably, the GDPR gives generous rights to consumers to guard and protect their data, which is of growing concern in light of how easy it is to share information in our modern age. Additionally, the GDPR has a much broader territorial scope, covering data processing activities related to either the offering of goods or services to EU data subjects or the monitoring of their behaviors within the EU. As a result, the hefty fines imposed for violating the GDPR have forced many companies to comply quickly. This note continues by comparing the GDPR’s regulations with those of the United States and concludes that, although there may be more upfront barriers and costs to adopt regulations as stringent as the GDPR, overall, the GDPR is superior to privacy laws in the United States. Finally, this note concludes by briefly examining the future of the GDPR, as well as the potential for GDPR-like regulations to be adopted in the United States.
  PubDate: Tue, 03 Mar 2020 09:15:20 PST
The Indian Securities Fraud Class Action: Is Class Arbitration the
Answer'
- Authors: Brian T. Fitzpatrick et al.
  Abstract: Abstract:In 2013, India enacted one of the most robust private enforcement regimes for securities fraud violations in the world. Unlike in most other countries, Indian shareholders can now initiate securities fraud lawsuits on their own, represent all other defrauded shareholders unless those shareholders affirmatively opt out, and collect money damages for the entire class. The only thing missing is a better financing mechanism: unlike the United States, Canada, and Australia, India does not permit contingency fees, so class action lawyers cannot front the costs of litigation in exchange for collecting a percentage of what they recover. On the other hand, the 2013 law enacted a public financing regime for securities fraud class actions and it is possible third-party financing will be permitted; these mechanisms may make up some of the loss in effectiveness caused by the lack of contingency fees. It is still too early to tell.Yet, commentators are very pessimistic that the Indian securities fraud class action will do much good because the Indian court system is glacially slow. For example, it takes over six years on average to resolve some civil appeals.The solution to this problem in the 2013 law was to channel the securities fraud class action to a special tribunal, the National Company Litigation Tribunal (“NCLT”). Yet, this type of solution has been tried before in India: special tribunals tend to quickly take on the negative characteristics of the general courts. This may be why very few securities fraud lawsuits have been filed since the 2013 law was enacted.We propose a different solution to the problem of the Indian court system: class arbitration. As we explain, although class arbitration is not perfect, it may better facilitate robust private enforcement than the Indian court system.
  PubDate: Tue, 03 Mar 2020 09:15:17 PST
Alibaba, Amazon, and Counterfeiting in the Age of the Internet
- Authors: Daniel C.K. Chow
  Abstract: The advent of e-commerce marketplaces such as Alibaba and Amazon in the new millennium has led to the proliferation of the sale of counterfeit goods around the world through the Internet. Brand owners find that Internet counterfeiters operating in the digital world present even more challenges than those using only brick-and-mortar operations. Internet counterfeiters have unprecedented access to consumers. They use false identities and addresses and vanish into cyberspace at the first sign of trouble. Brand owners seeking help from Alibaba and Amazon to remove listings of counterfeits have become frustrated by their convoluted and labyrinthine notice and take-down procedures. Even when these procedures are used successfully, brand owners find that the process can take months only to have the counterfeiter reappear in short order using a new false identity. Many brand owners find that dealing with Alibaba and Amazon only adds to their misery and believe that both tolerate counterfeits as they earn revenue from all sales, including sales of counterfeit goods.This Article sets forth for the first time how brand owners can use a set of currently available information technology tools to help create an effective deterrent to counterfeits on the Internet. Using these tools, brand owners can force counterfeiters to abandon the subterfuge and disguise that they rely on so that brand owners can—without the assistance of e-commerce platforms—directly pursue counterfeiters in civil and criminal actions in China where most of the counterfeiters are located and in the United States. The proposed approach should help deter counterfeiters who always work in secrecy and disguise by exposing them to what they fear and loathe the most: transparency and accountability for their illegal actions.
  PubDate: Tue, 03 Mar 2020 09:15:14 PST
Western Corporate Fiscal Citizenship in the 21st Century
- Authors: Alex Freund
  Abstract: For the Western world, the challenges of the 21st Century are numerous, from climate change’s effects on food production and coastal cities to underfunded social safety nets to automation’s impact on the middle class. To handle such costly problems, government intervention will be required. Government intervention, however, always comes at a cost to either individuals or corporations. To determine who should bear these costs, scholars and experts should turn to notions of fiscal citizenship – the social contract between the state and private parties through taxation and the provision of goods and services. By applying principles of individual fiscal citizenship to corporations, which have traditionally not been included in notions of fiscal citizenship, a strong case emerges for corporations to bear the costs of these impending 21st century harms.
  PubDate: Mon, 09 Dec 2019 14:16:50 PST
How Countries Seek to Strengthen Anti-Money Laundering Laws in Response to
the Panama Papers, and the Ethical Implications of Incentivizing
Whistleblowers
- Authors: Carmina Franchesca S. Del Mundo
  Abstract: The Panama Papers is currently the world’s largest whistleblower case that involved 11.5 million leaked documents and over 214,000 offshore entities. It all linked back to one Panamanian law firm, Mossack Fonseca. In 2016, over 400 investigative journalists collaboratively and simultaneously published stories that exposed the money laundering and tax-evading schemes committed by the rich and powerful. This included political figures and heads of states, celebrities, sports figures, criminal organizations, and terrorist groups.This article aims to dissect the innerworkings of Mossack Fonseca’s asset-shielding strategy and investigate how the Panamanian law firm was able to circumvent the tax and anti-money laundering laws of over 50 countries. We will also examine the global responses to the Panama Papers, the proposed reforms and strategies, and the obstacles to moving forward. Finally, this article explores the ethical duties of lawyers, the significance of attorney-client privilege, and the implications of monetarily incentivizing whistleblowers.
  PubDate: Mon, 09 Dec 2019 14:16:47 PST
Corporate Social Responsibility versus Shareholder Value Maximization:
Through the Lens of Hard and Soft Law
- Authors: Min Yan
  Abstract: Even with a significant increase in the number of firms around the world engaging in corporate social responsibility (“CSR”), many people still perceive CSR as a voluntary commitment and shareholder value maximization (“SVM”) as a mandatory requirement. This paper borrows the concept of hard law and soft law in terms of coerciveness and overturns the stereotype that SVM is a hard-law constraint and CSR a soft-law constraint. The paper first demonstrates that directors of the board are not obliged to maximize shareholder value even in the Anglo-American jurisdictions where shareholder primacy culture is more dominant. Next, the paper critically discusses an enforceable regulatory regime for CSR. After studying various countries’ practices, this paper highlights three main forms of the hard-law approach for CSR: namely through (i) enacting mandatory CSR laws to directly promote socially responsible behavior; (ii) defining minimum standards for corporate behavior to deter socially irresponsible behavior, and/or (iii) mandatory disclosure of CSR-related issues. The conventional (economic) justification for CSR is subsequently challenged, i.e., why we should align CSR with SVM after the above misunderstandings are corrected. More importantly, in addition to overcoming the weakness of soft law’s non-coerciveness, the hard-law approach will also provide additional grounds for furthering CSR.
  PubDate: Mon, 09 Dec 2019 14:16:44 PST
A Critical Reassessment of the Role of Neutrality in International
Taxation
- Authors: David Elkins
  Abstract: Neutrality plays a central role in the literature on international taxation. In its most prevalent form, the concept of neutrality posits that in order to maximize aggregate global welfare, capital needs to flow to where it would produce the highest pretax return. The thesis of this Article is that neutrality is ordinarily inapplicable in the field of international taxation.When considering neutrality in the international arena, the problem that one encounters is that the term “international taxation” is commonly used to describe a number of very different types of tax regimes (what the Article refers to as “intranational taxation,” “supranational taxation,” and “inter-jurisdictional taxation”). Although the literature tends not to distinguish among them, the different types of international tax regimes are conceptually distinct and require radically dissimilar guiding principles. The Article argues that neutrality is an appropriate principle with regard to only one type of international taxation: a hypothetical non-Pigouvian supranational tax. With regard to intranational taxation, neutrality has no role to play, as a rational country will exploit its tax system to promote the welfare of its own constituents without regard to which investments it would have attracted in a no-tax world. With regard to a hypothetical Pigouvian supranational tax and in particular with regard to the much-scrutinized field of inter-jurisdictional taxation, neutrality is irrelevant, as here it is the after-tax return and not the pretaxreturn that is determinative of allocative efficiency. Promoting neutrality would undermine the very goals that the principle of neutrality purports to serve.The Article concludes by noting that the current discourse with regard to international taxation is fraught with conceptual confusion. First, there is a tendency to rely upon concepts that were developed within the context of domestic taxation without a thorough examination of their applicability to the international arena. Second, there is a tendency to lump together a number of very distinct types of tax regimes under the overbroad category of international taxation, and to ignore the fact that due to the fundamental dissimilarities among them, the principles of tax theory relevant to each will also be different.
  PubDate: Mon, 09 Dec 2019 14:16:41 PST
"Hash"ing Out Inequality in the Legal Recreational Cannabis
Industry
- Authors: Maya Rahwanji
  PubDate: Sun, 13 Oct 2019 11:22:12 PDT
The Next Global Disruptive Innovation: Can Mobile Money Make the Journey
Upmarket to Disrupt the Financial Services Industry'
- Authors: David Myerson
  PubDate: Sun, 13 Oct 2019 11:22:03 PDT
Reforming WTO Rules on State-Owned Enterprises: SOEs and Financial
Advantages
- Authors: Yingying Wu
  Abstract: State-owned enterprises (SOEs) are pervasive worldwide nowadays, particularly in the emerging countries. SOEs are currently more active in global markets than decades ago, engaging in cross-border trade and investment. Concerns, hence, have arisen, that there are negative effects on global markets associated with SOEs usually receiving various advantages, particularly, such as financial advantages. Meanwhile, SOEs often act as the givers of financial advantages. Current WTO rules are not sufficient to address the problem of SOEs as givers of financial advantages, and the problem of SOEs as recipients of financial advantages. This article tries to push the current WTO rules to their limits, and to find potential approaches to address those problems. The efforts, however, failed to some degree.Hence, the article makes recommendations to improve them by three types of proposals, i.e., trade remedies proposals, trade rules proposals, and a competition rules proposal within the framework of the WTO. In the end, the author also engages with other academic articles on SOEs, and where they support the author’s position or differ from it. Explanations are also given on how proposals made by the author are similar to or differ from what was proposed in the Trans-Pacific Partnership (TPP) and why the author’s approach is better.
  PubDate: Sun, 13 Oct 2019 11:21:55 PDT
Embracing Non-ICSID Investment Arbitration' The Chinese Perspective
- Authors: Meng Chen
  Abstract: This article introduces and examines Chinese arbitration institutions’ recent movements to expand non-ICSID investment arbitration services, which could potentially contravene existing relevant Chinese laws and judicial practice, and it explores the prospects for non-ICSID investment arbitration in China. The article first compares ICSID and non-ICSID investment arbitration to determine the differences between them and their respective selling points for stakeholders in investment disputes. Next, the article examines the diverse mechanisms involved and highlights the different rules that govern non-ICSID arbitration, including the rules established by Chinese arbitration institutions in recent years. The article then further analyzes the obstacles in existing Chinese legislation and judicial practice that have impeded the use of non-ICSID investment arbitration in China. Finally, after briefly introducing proposals to remove these obstacles, the article examines the future prospects for Chinese non-ICSID investment arbitration.
  PubDate: Sun, 13 Oct 2019 11:21:46 PDT
Why the MLI Will Have Limited Direct Impact on Base Erosion Profit Sharing
- Authors: Joseph Morley
  PubDate: Mon, 09 Sep 2019 15:32:14 PDT
The 'Wild West' of Medicine: An Argument for Adopting the United
Kingdom's 'HFEA' Framework, to Improve the Market for
Assisted Reproduction in the United States
- Authors: Ellen S. Fischer
  PubDate: Mon, 09 Sep 2019 15:32:05 PDT
Investor-State Dispute Settlement in the Digital Economy: The Case for
Structured Proportionality
- Authors: Robert Ginsburg
  Abstract: The surge of economic nationalism and cross-border technology investments foreshadows disputes between inbound investors and host governments. While cross-border technology transfer is essential for economic development in many countries, host governments retain the right to safeguard citizens against potential consequences of such investments. The tension between these two concepts provides a significant challenge to the future of foreign direct investment and the global economy. For these reasons, legislators and arbitrators must develop and enforce regulations that protect public interests while enabling investors to successfully operate in the host country. In anticipation of these disputes, this article will explain how arbitral tribunals can use structured proportionality to accomplish this objective. More specifically, this article explains the causes of upcoming disputes, introduces a proportionality analysis of the government’s right to regulate and the degree to which the investor’s rights are threatened, and demonstrates how the consistent implementation of a structured proportionality test will maximize the chances that regulators and arbitrators will find balanced solutions that account for the interests of all stakeholders of FDI projects.
  PubDate: Mon, 09 Sep 2019 15:31:53 PDT
An Institutional Theory of Corporate Regulation
- Authors: Iris H-Y Chiu
  Abstract: The regulation of corporate behavior has persisted in spite of peaks of neo-liberalism in many developed jurisdictions of the world, including the U.K. This paradox is described as “regulatory capitalism” by a number of scholars. Of particular note is the proliferation of corporate regulation to govern “socially responsible” behavior in recent legislative reforms in the EU and U.K. In seeking to answer the broader question of whether corporate regulation indeed effectively governs and moderates corporate behavior, this paper focuses on the nature of corporate regulation. Although different pieces of corporate regulation purport to achieve different objectives and impose different types of obligations, this paper offers an institutional account of corporate regulation, specifically in relation to the U.K.’s regulatory capitalism, as the U.K. is typically held up as having a liberal market economy (which is broadly similar to the U.S.). In this article, I argue that the nature and effectiveness of corporate regulation crucially depends on the nature of regulatory capitalism in the type of economic order under discussion. Hence the study of the U.K.’s economic order and its efforts in introducing corporate regulation to change corporate behavior holds lessons more generally for corporate regulation in economies that share similar features. The examination in this article provides an overarching framework for distilling the achievements and limitations of corporate regulation in such economic contexts.First, the paper clarifies that regulatory capitalism in the U.K. is characterized by three key tenets that reflect the spirit of the liberal market economy embraced here. Over time, gaps have been revealed in the achievements of these tenets of regulatory capitalism, particularly in relation to social expectations of the regulation of corporate behavior. These gaps have become the subject of debates in the realm of “corporate social responsibility” (CSR), where business, civil society, and the state frame the expectations of corporate behavior in contested ways: in relation to the scope of responsibility, the motivations for corporate behavior, the theoretical premises, and business practices. In the aftermath of the global financial crisis in 2007-2009, we observe increasing legalization in the EU and U.K. of CSR issues, framed in “new governance” regulatory techniques. They hold promise for change in corporate conduct through deeper forms of corporate engagement and accountability, but they appear at the same time relatively undemanding and susceptible to cosmetic compliance. By discussing key examples in new corporate regulation reforms in the EU and U.K., we seek to understand why recent corporate regulation reforms seem to offer mixed and, in some cases, relatively limited achievements in governing corporate behavior. We argue that the institutional account of corporate regulation continues to be able to explain regulatory weaknesses and limited achievements, in spite of the deployment of “new governance” regulatory techniques. This is because new governance regulatory techniques are implemented within the ethos of regulatory capitalism which limits their potential to introduce paradigm shifts. However, the limitations of these regulatory reforms highlight more sharply the institutional shifts that are needed in order to connect the efficacy of corporate regulation with meeting social expectations.
  PubDate: Mon, 09 Sep 2019 15:31:44 PDT