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]

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
The Circumvention of UEFA's Financial Fair Play Rules Through the
Influx of Foreign Investments
- Authors: Patrick J. Sims
  Abstract: European football is undergoing rapid changes spurred on by enormous investments from around the globe. Although regulations exist to curtail teams buying their way to success, foreign investors have become ingenious at circumventing Financial Fair Play rules. The European football governing body needs to reevaluate existing rules and strengthen them by looking to outside examples. This article analyzes the current regulations established by the governing bodies of European football and details how foreign investors are able to circumvent these regulations. Further, this article articulates potential solutions to the current Financial Fair Play rules and how the spirit of the current rules can be ultimately realized.
  PubDate: Mon, 28 Jan 2019 08:28:05 PST
The Tipping Point – Reevaluating the ASNEF-EQUIFAX Separation of
Competition of Data Privacy Law in the Wake of the 2017 Equifax Data
Breach
- Authors: Olivia Altmayer
  Abstract: Contrary to the Court of Justice for the European Union’s decision in the Asnef-Equifax case, in a world of big data, it is inefficient and ineffective to treat EU competition law and EU data protection law as entirely separate legal considerations. Reevaluating this stance is critical in sectors where customer data is highly sensitive, and therefore highly valuable to those who steal it, particularly for the financial and healthcare sectors. Looking forward, companies that store and use biometric data will have to be similarly scrutinized. To correct this problem, the EU has numerous paths it can take: (a) continue as is, treating competition and data protection as separate legal considerations, (b) enact a new body of regulatory law to specifically deal with data protection and competition, or (c) begin using existing competition law, specifically Article 101 of the TFEU, to address data protection concerns. This paper will argue that to best serve the interests of all relevant players – government, businesses, and consumers – option (c) is the optimal choice. Additionally, in implementing this change, the EU can use the FRAND patent and competition law precedence in devising a new data protection and competition framework.
  PubDate: Mon, 28 Jan 2019 08:27:56 PST
Mending the Wound or Pulling It Apart' New Proposals for International
Investment Courts and Fragmentation of International Investment Law
- Authors: Jaemin Lee
  Abstract: Robust discussions on standing investment courts are currently taking place at various fora. In particular, negotiations to include bilateral investment courts in IIAs are in full swing and leading to the creation of such courts. On the other hand, negotiation for a multilateral investment court has yet to start. Even if negotiation begins, it is not clear how long it will take and whether it will indeed lead to a successful conclusion. As such, for a significant amount of time in the future, it is bilateral investment courts that states administer to resolve investment disputes. Bilateral investment courts, however, will further deepen the already existing fragmentation of international investment law. They will be unable to issue harmonized and consistent jurisprudence for similar or essentially the same legal issues. In addition, they will more easily stoke sovereignty infringement claims by domestic critics. If legitimacy enhancement is the ultimate objective of the present ISDS reform discussions, it will only be achieved through a multilateral court. This is the only alternative to address the basic concern that has prompted the ISDS reform debates in general and the court proposals in particular. Global efforts should be mobilized to initiate and conclude negotiations for the establishment of a multilateral court as promptly as possible. In the interim, current negotiations to create and adopt bilateral courts should be suspended.
  PubDate: Mon, 28 Jan 2019 08:27:46 PST
A “Silk Road” for Capital: Trade Policy and Foreign Investment Laws of
China’s Neighbors
- Authors: Zachary Strom
  Abstract: This article presents a comparative study of the foreign investment laws and treaties of two of China's neighbors, Pakistan and Mongolia. As China moves forward in implementing a "One Belt, One Road" policy of major investments in trans-national infrastructure projects, leaders of neighboring countries including the two discussed here have demonstrated eagerness for its plans. The laws governing foreign trade and investment in each jurisdiction may be crucial to the success of Chinese investment efforts. The article discusses the evolution of both Pakistan's and Mongolia's laws and policies–Pakistan, as an enthusiastic partner and linchpin in China's "Belt," and Mongolia, as a resource economy that has, at times, struggled to draw the line on overwhelming Chinese influence. When examined, the laws and treaties of each nation show both reflections of and reactions to China's grand ambitions.
  PubDate: Thu, 12 Jul 2018 22:47:42 PDT
Collective Action Clauses as a Solution to Holdouts in Puerto Rico’s
Unique Debt Crisis: Lessons Learned from Argentina
- Authors: Sumer B. Marquette
  Abstract: On June 30, 2016, in a controversial and bipartisan effort, the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) was signed into law to address the Commonwealth of Puerto Rico’s fiscal crisis. At the time, Puerto Rico’s government and its agencies had $72 billion in debt. However, Puerto Rico’s status as a U.S. territory disqualified the island from filing for court-arranged bankruptcy under the U.S. Bankruptcy Code and from seeking emergency assistance from the International Monetary Fund. As a result, PROMESA was enacted to create a structure for exercising federal oversight over the fiscal affairs of the territory by establishing an Oversight Board, a process for restructuring debt, and expedited procedures for approving critical infrastructure projects. This Note focuses on PROMESA’s Title VI retroactive inclusion of collective action clauses (CACs). Following the landmark decision in NML Capital Ltd. v. Republic of Argentina, CACs gained widespread appeal because they effectively safeguard against a perverse holdout incentive in the restructuring process. CACs expedite the restructuring process by allowing a supermajority of bondholders to agree to a debt restructuring that is legally binding on all bondholders. This Note concludes that Title VI’s inclusion of CACs is a normatively desirable result. When applied to the Puerto Rican debt crisis, CACs will likely mitigate the risk of holdouts and incentivize vulture funds to come to the bargaining table.
  PubDate: Thu, 12 Jul 2018 22:47:36 PDT
Contractual Joint Ventures in International Investment Arbitration
- Authors: Dmitry A. Pentsov
  Abstract: Contractual joint ventures, sometimes also called as "consortiums", where several participants, without creating a new entity, unite their personal efforts and material resources with a view of achieving a certain common goal, remain a popular organizational form of large-scale international investment projects all over the World. In view of significant amount of their investments in these projects, any prospective foreign participants may wish to consider whether structuring their activities through a contractual joint venture would allow them to effectively protect their economic interests against possible adverse actions of a host State. Or, they should rather create a joint venture in the form of a partnership or a corporation under the laws of the project’s host State or under the laws of another country' To answer these questions, the article analyses the status of contractual joint ventures and their participants in international investment arbitration and compares it with the status of partnership and corporate joint ventures and their participants. The analysis is primarily carried out on the example of contractual joint ventures under Swiss law, because this law has been frequently chosen by participants of international investment projects as applicable law in a wide variety of international projects. Although the absence of legal personality of contractual joint ventures prevents them from acting as a claimant in both ICSID and non-ICSID investment arbitration, it does not by itself preclude individual claims of their participants in both types of arbitration. Furthermore, the comparison between possible amounts of participants’ individual claims reveals that under similar circumstances foreign investors in contractual joint ventures could potentially recover the same amount of damages as those in partnership and corporate joint ventures. On the basis of this comparison, the article argues that the use of contractual joint ventures would not put foreign investors in a disadvantageous position as concerns the possibility to protect their economic interests against an adverse action of a host State as compared with the participants in other two types of joint ventures.
  PubDate: Thu, 12 Jul 2018 22:47:29 PDT
Poor States or Poor Governance' Explaining Outcomes in Investment
Treaty Arbitration
- Authors: Daniel Behn et al.
  Abstract: Is investment treaty arbitration (ITA) tarnished by a bias against developing states' The international investment regime relies heavily on arbitration for the enforcement of its substantive rules but critique has risen as the number of foreign investor claims have stacked up in recent years. Current empirical research is ambiguous in its evaluation of ITA outcomes, but an interesting strand finds that the difference in treatment afforded to developed and developing respondent states in ITA seems to be explained by a conflation of democratic governance and economic development status. We present an elaboration of this conflation theory and, using the largest dataset of ITA cases compiled to date, we conduct a more thorough empirical test of its tenets. Our findings importantly determine that, instead of an anti-developing state bias disfavoring less developed respondent states in ITA, there appears to be a strong pro-developed state bias favoring more developed respondent states in ITA. That is, higher economic development at the respondent state level is associated with lower claimant-investor success rates in ITA. However, we also find partial support for the conflation theory. While a state’s overall democratic governance levels per se do not explain the pro-developed respondent state favoritism in ITA, we find that two particular governance aspects—the strength of a state’s ability to protect property rights and the degree to which a state maintains impartial bureaucracies—can possibly explain higher degrees of respondent state success in defending against ITA claims. The strength of these state-level governance institutions also possibly explains why relatively wealthy respondent states fare better in ITA than other respondent states.
  PubDate: Thu, 12 Jul 2018 22:47:21 PDT
A Comparative Study of the European Stability Mechanism with the Troubled
Asset Relief Program of the United States
- Authors: Tanu Sinha
  Abstract: This article presents a comparative study of the Troubled Asset Relief Program (TARP), established by the U.S. Treasury during the 2008 financial crisis, and the European Stability Mechanism (ESM), a permanent bail-out fund established by the European Union (EU) in 2012. The article begins by introducing the European Union and the Sovereign Debt Crisis briefly, and discusses TARP and its impact on the United States economy. Then the article summarizes the evolution of ESM along with the bail-out programs that have been provided by ESM and its predecessors. The article then outlines the similarities and differences between ESM and TARP, particularly in the accountability structures of the two programs, and finally, analyzes the current situation in the European Union and how the region could achieve sustainable stability.
  PubDate: Wed, 21 Mar 2018 16:31:13 PDT