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Northwestern Journal of International Law & Business
Journal Prestige (SJR): 0.107
Number of Followers: 4  

  This is an Open Access Journal Open Access journal
ISSN (Print) 0196-3228
Published by Northwestern University Homepage  [6 journals]
  • The Doha Declaration at Twenty: Interpretation, Implementation, and
           Lessons Learned on the Relationship Between the TRIPS Agreement and Global
           Health

    • Authors: Eric M. Solovy
      PubDate: Mon, 21 Nov 2022 22:17:02 PST
       
  • Monitoring Sanctions Compliance at Sea

    • Authors: Richard L. Kilpatrick Jr.
      PubDate: Mon, 21 Nov 2022 22:17:01 PST
       
  • Unraveling the Longstanding Riddle About the Doctrine of Legitimate
           Expectation Under International Investment Law: Ascertaining Legal Tests
           for the Customary International Law’s Minimum Standard of Treatment

    • Authors: Haneul Jung et al.
      Abstract: In 2018, the ICJ rendered a judgment in Bolivia v. Chile that effectively denied the status of the doctrine of legitimate expectation as a customary international law. The ICJ’s judgment came as a surprise to many in the international arbitration community because a whole host of international tribunals established under various investment treaties have found that this doctrine, as well as the broader principle of “fair and equitable treatment,” has effectively attained the status as the “minimum standard of treatment” under customary international law. Given the lack of elaborated reasoning, however, the ICJ’s ruling fails to resolve the recurring debate over the legal status of the doctrine. This paper addresses this issue squarely, by first examining the historical development and the nature of the doctrine, and then the conflicting lines of jurisprudence that arose out of a number of investment arbitrations. Thereafter, this paper attempts to provide an answer to the longstanding question as to whether the doctrine of legitimate expectation has now attained status as customary international law. Finally, based on a systematic analysis of various investment treaties and numerous arbitral awards from the perspective of public international law, this paper tackles the old conundrum by providing a pragmatic guidance on ascertaining applicable legal tests for the “minimum standard of treatment” under contemporary customary international law.
      PubDate: Mon, 21 Nov 2022 22:17:00 PST
       
  • This Must Be Our Place: Protectionism and Foreign Investment in
           Kazakhstan’s Farmland

    • Authors: Kristi Lew
      PubDate: Mon, 24 Oct 2022 11:44:37 PDT
       
  • Winter is Here: The Impossibility of Schrems II for U.S.-Based
           Direct-to-Consumer Companies

    • Authors: Vanessa Zimmer
      Abstract: In this paper, Vanessa Zimmer exposes the precarious position of Direct-to-Consumer (DTC) companies that are physically located in the United States but still subject to the European General Data Protection Regulation (GDPR) under Article 3(2) because they offer goods or services to European consumers online. Standard Contractual Clauses (SCCs) and supplementary measures have dominated privacy conversions in the year since the European Court of Justice invalidated the EU-U.S. Privacy Shield framework with its Schrems II decision.However, Zimmer argues that the greater issue for U.S.-based DTC companies is the lack of clarity over what constitutes an international, or restricted, transfer under the GDPR in the first place. Is an international transfer any physical transfer of personal data from within the European Economic Area to outside its borders (the so-called “geographic” definition of international transfer) regardless of whether the foreign recipient is already directly subject to the GDPR' Or, is an international transfer only considered such if the recipient is located outside of the European Economic Area and not already directly subject to the GDPR (the so-called “jurisdictional” definition of international transfer)' Zimmer explains the rationale for each position and ultimately argues in favor of a jurisdictional definition of international transfers.The European Data Protection Board of the European Commission (the EDPB) and individual Member State supervisory authorities have repeatedly failed to define international transfers since the passage of the GDPR. This repeated failure to clarify the interplay between the territorial scope of the GDPR under Article 3(2) and the transfer restrictions of the GDPR under Chapter V has left U.S.-based DTC businesses uncertain of whether they are making international transfers under the GDPR and whether they must subsequently implement safeguards, such as SCCs, to protect those transfers.Zimmer explains how the Schrems II decision exposed the EDPB’s failure and exacerbated the already uncertain status of European personal data processing by U.S.-based DTC companies. The EDPB has further complicated the status of international transfers in its post-Schrems II guidance and its issuance of new SCCs for international transfers.Zimmer contends that it is vital for the sake of transatlantic trade and the continued integrity of the EDPB that the EDPB clearly defines international transfers and explains the applicability of transfer mechanisms to U.S.-based DTC companies.
      PubDate: Mon, 24 Oct 2022 11:44:36 PDT
       
  • Offshore Wind Development in the Great Lakes: Accessing Untapped Energy
           Potential Through International and Interstate Agreement to Overcome
           Public Trust Concerns

    • Authors: Jordan Farrell
      Abstract: Offshore wind energy development in the Great Lakes presents an immense opportunity for distributed generation of renewable energy; however, this potential has thus far remained untapped. One significant barrier to why there has not yet been such wind energy development in the Great Lakes is the public trust doctrine. This doctrine generally stands for the principle that a state cannot convey its submerged lands to a private party. However, there remains much legal uncertainty with regards to the doctrine. Courts and scholars have struggled to determine with any certainty the origins and grounding of the doctrine and the limits it places on states with regards to public trust lands. This uncertainty poses a barrier to wind energy developers, leaving projects open to legal challenges and, even if public trust scrutiny is overcome, significant delays.This article examines the general principles of the public trust doctrine and analyzes the public trust doctrine in each of the eight Great Lakes states. While the uncertainties and ambiguity of the doctrine cannot be resolved, based on this review there are two common exceptions that minimize public trust concerns and may allow private developments on public trust lands: (1) control or title remaining with the public; and (2) promotion of the public interest. This article argues that there is an opportunity to construct an international agreement between the United States and Canada, and a subsequent interstate compact between the eight Great Lakes states, to establish a structure for offshore wind energy transactions in the Great Lakes and to emphasize the public benefit therein. Such agreements have the potential to mitigate public trust uncertainty and litigation risk on wind energy developers seeking to harness the wind potential of the Great Lakes.
      PubDate: Mon, 24 Oct 2022 11:44:36 PDT
       
  • Bridging Separate Worlds— Application of Human Rights Law in
           Investment Treaty Arbitration

    • Authors: Raymond Yang Gao
      Abstract: With the proliferation of investor-state treaty arbitration, international investment law has been increasingly caught in a “legitimacy” crisis, with concerns looming large over resultant disruptive effects on human rights. Amid existing scholarship seeking to recalibrate the balance between investment protection and public interests, what is relatively undertheorized is a public international law dimension. In this regard, this Article explores the role of human rights law in integrating human rights considerations into investment tribunals’ decision-making, bridging the normative divide between international investment law and human rights. It makes three contributions. First, it systemizes the normative tensions and potential conflicts between international investment law and human rights, analyzing the primary manifestations and root causes thereof. Second, from the position of a respondent state, this Article typologizes the application of human rights law to investor-state treaty disputes, providing legal grounds to alleviate the potential conflicts between investment protection and human rights. In so doing, it also provides a clearer clarification of the relationship between international investment law and human rights law. Third, this Article evaluates the relative strengths and weaknesses of these human rights arguments, shedding light on how international investment agreements could be reformed to better balance investment protection with noneconomic issues.
      PubDate: Mon, 24 Oct 2022 11:44:35 PDT
       
  • The Efficient Breach Theory in International Investment Law

    • Authors: Sangwani Patrick Ng’ambi
      Abstract: When a State unilaterally abrogates its contractual obligations, it is under a duty to compensate the investor. The aim of the compensation regime under International Investment Law is to restore the investor to a position he or she would have been in had the breach not taken place. Thus, the award of compensation should not only include sunk costs (damnum emergens) but also lost future profits (lucrum cessans).In this article it is argued that the rules relating to compensation promote efficiency, as per the ‘efficient breach theory’ because they dissuade governments from unilaterally abrogating concession agreements, unless they can compensate the investor, including lost future profits, whilst making some money on top of that. However, the limitation of the efficient breach theory is that it presupposes that wealth maximization is the paramount consideration for all parties involved in a contract. This article shows that this is not necessarily the case with States.Typically, host States cite socio-economic reasons for their termination, rather than profit maximization. This can be contrasted with commercial actors whose only concern is making money. Thus, while the International Investment Law certainly encourages efficiency, it does not provide host States with sufficient flexibility to pursue its legitimate public objectives, when it breaches agreements.
      PubDate: Thu, 09 Dec 2021 09:17:30 PST
       
  • Between Backlash and the Re-Emerging “Calvo Doctrine”: Investor State
           

    • Authors: Ylli Dautaj
      Abstract: The Investor-State Dispute Settlement (ISDS) regime stands on shaky ground. Its legitimacy is heavily questioned by critics and a “backlash debate” has ensued. As a result, a contested and infected debate has been on-going for some years now and multiple reform proposals have been offered, ranging from (a) moderate (and sensible) reform proposals—e.g., increased transparency; the inclusion of state counterclaims; the inclusion of higher ethical standards; reformulating deference standards; applying human rights and environmental law when interpreting international investment treaties; etc.—to more (b) radical reform proposals—e.g., the elaboration of either an Appellate System or an Investment Court System (ICS). Such latter proposals are radical because they seek the total re-designing of the entire ISDS regime. It is argued that these radical proposals ultimately seek to undercut the fundamental elements of international arbitration in favor of a supposedly “fairer” and more “just” system. The proponents of these “equitable” reforms seek to dismantle ISDS as we know it.It is submitted that all reform proposals are best analyzed through the lens of the mental representation of the stakeholders to the ISDS regime, namely, the essential actors; service providers; value providers; and the global community at large. But what interests should be preserved and further enhanced'This paper makes several points, inter alia, (1) that the contemporary criticism is not a new phenomenon and that we must emphatically reject the spill-overs of extreme left-leaning ideology, nationalism, protectionism, idiosyncrasy, parochialism, and populism in transnational litigation; (2) that moderate reform-proposals merit attention if—and only if—those further the fundamental elements of international arbitration, and conversely, rejected if not; (3) that the way, shape, and form of ISDS must be analyzed through the lens of its historical and philosophical underpinning; and (4) that every stakeholder’s claim must be heard, but that in the sociology of ISDS there should be a hierarchal structure deciding the validity (or normative value) of each claim depending on the stakeholders overall positioning in the regime.Finally, the ISDS-reform discussions should be conducted in a manner that underscores broader historical, economic, political, philosophical, and sociological lessons of the project called “transnationalism,” which happens to be a brainchild of liberal capitalism.
      PubDate: Thu, 09 Dec 2021 09:17:29 PST
       
  • Send the Word Over There: An Offshore Solution to the Right to Be
           Forgotten

    • Authors: Jay Kaganoff
      Abstract: The right to be forgotten is a subject of contention in both the United States and the European Union. In the E.U., the right to be forgotten gives one the right to demand that information—even if published legitimately—be taken down or removed from search engine results. While well-intentioned, this has led to concerns of free press restrictions. In contrast, the right to be forgotten is not recognized in the U.S., although there are scholars who would like to see such a right here. This Note takes the view that introducing a right to be forgotten would be contrary to the first amendment and privacy law frameworks in the U.S., and further is not desirable based on the European experiment.In 2019 the European Court of Justice held in Google v. CNIL that a multinational platform does not have to comply with E.U. regulations on the right to be forgotten on its non-European platforms. Building on this distinction, this Note suggests an “offshore solution” to host articles and search engines outside the reach of European jurisdictions.This Note is of interest to scholars and practitioners curious about the right to be forgotten debates, as well as the general differences in jurisprudence between the U.S. and the E.U. in balancing privacy rights against freedom of speech and the press.
      PubDate: Wed, 28 Jul 2021 20:45:05 PDT
       
  • Outsourcing the Police: How Reliance on the Private Sector for Law
           Enforcement Threatens Privacy Legislation Around the World

    • Authors: Karl Colbary
      Abstract: Data privacy is an increasingly important issue in the world today. People are increasingly aware of, and concerned about, their digital footprint. As a result, many jurisdictions around the world—the United States excluded—have enacted legislation with an eye towards giving their citizens greater control over their data. However, the movement to give individuals greater control over how their data is used by tech providers often overlooks the fact that the government is one of the biggest consumers of the data that tech providers collect. Therefore, data privacy regimes that allow the flow of personal information to the government do not meaningfully protect individual privacy. As the people of the United States continue to debate how to best safeguard their personal information, they should be mindful of how law enforcement demand for their information can undermine those efforts.This note begins by observing how the current legal framework in the United States is ill equipped to deal with the privacy issues of an increasingly digital world. Then, it examines the impact that data privacy legislation in China and Europe has had on the relationship between tech companies and law enforcement. Finally, by applying the lessons learned in China and Europe, this note attempts to predict how efforts to protect consumers’ data privacy may work in the United States. Ultimately, this note argues that, because law enforcement in the United States is reliant on the data collected by the private sector, meaningful data privacy reform is likely impossible unless it applies to both the private sector and government equally.
      PubDate: Wed, 28 Jul 2021 20:45:04 PDT
       
  • Self-Regulation in the Derivatives Markets: Stability Through
           Collaboration

    • Authors: Heath P. Tarbert
      Abstract: Sound financial regulation does not require choosing between governmental and private action. Instead, optimal regulatory solutions often blend the expertise and adaptability of private-sector influence with the stabilizing effects of federal oversight. This collaborative framework has a rich history in U.S. derivatives regulation, which has long relied on self-regulatory organizations (“SROs”) like exchanges, clearinghouses, and the National Futures Association to help promote market stability and customer protection. SROs remain subject to oversight by the Commodity Futures Trading Commission (“CFTC”), which guards against the proverbial fox-in-the-henhouse scenario while advancing quintessential government functions like mitigating systemic risk.The advantages of this self-regulatory framework were underscored in 2020, when the coronavirus (COVID-19) pandemic spurred unprecedented volatility across U.S. derivatives markets. Effectively navigating the market effects of the pandemic required a calibrated approach that drew from the advantages of SROs and the CFTC. The integrated response that emerged is a model for how SROs and the CFTC can together promote stability through collaboration.
      PubDate: Wed, 28 Jul 2021 20:45:03 PDT
       
  • Forget BIT: The Impact of RTA on FDI and Economic Growth – A
           Comparison of Brazil and Mexico

    • Authors: Rosa Meguerian-Faria
      Abstract: This article explores the relationship between international trade law, foreign direct investment (FDI), and economic growth of developing countries. Here, I argue that a developing state needs to capture the right combination of the different types of FDI to promote domestic growth. I apply principles of law, economics, and finance to my analysis of the importance of Bilateral Investment Treaties (BITs), compared to Regional Trade Agreements (RTAs) to FDI inflow, and how it can impact economic growth in developing countries. I show that the RTAs give a signal that the country is open to foreign investment, and therefore it promotes FDI inflow more efficiently than BITs. Nevertheless, there are different levels of states’ commitment to free trade, and to the RTA signed, which does impact the kind of FDI received. I compare Brazil and Mexico’s FDI inflow and national regulatory governance to illustrate my theory. Finally, I propose that the goal of developing countries’ international trade policy should go further than just the promotion of FDI inflow. It should focus on promoting the right combination of the different types of FDI inflow that will promote long term investment and stable economic growth.
      PubDate: Wed, 28 Jul 2021 20:45:02 PDT
       
  • Crowding Out Theory: Protecting Shareholders by Balancing Executives’
           Incentives in France, the United States, & China

    • Authors: Palden Flynn
      Abstract: This paper explores the differences between executive compensation regimes in France, the United States, and China. It asks whether there is a link between state regulation of real options as a form of executive compensation and state regulation of shareholder protections. This paper argues that if a country regulates the use of real options as compensation, then that country is also more likely to have strong shareholder protection laws. This argument seems to be true based on a descriptive review of executive compensation law and shareholder protections in France, the United States, and China.If it is true that countries that regulate real options compensation are more likely to enact strong shareholders protections, then it is also likely that these countries are relying on the Crowding Out Theory. Under the Crowding Out Theory, executive compensation is designed to strike a balance between low pay, which motivates executives to work harder , and high pay, which disincentives executives from pursuing alternative forms of compensation that would harm shareholders.
      PubDate: Tue, 27 Apr 2021 16:52:21 PDT
       
  • Comparative Analysis of U.S. and Saudi Arabia Investment Funds Regulations

    • Authors: Gabriella Tang
      Abstract: The investment funds sector has always been a major player in the financial industry globally. As such, many countries with mature financial markets have enacted regulations to govern the activity and management of investment funds. The U.S. Securities and Exchange Commission (SEC) enacted the Investment Company Act of 1940(the Act) as an effort to restore investor confidence in investment funds and safeguard investors from future abuses after the market crash in 1929. On the other hand, emerging financial markets started to take part in regulations in the hope to attract more investors and outside resources. The Capital Market Authority of Saudi Arabia (hereinafter CMA) enacted the Investment Funds Regulation (hereinafter the Regulation) in 2006, as the Sovereign aims to turn the State into an investment powerhouse. Due to the newness of the Regulation, an analysis of the Act will be helpful for the CMA to improvise the Regulation and avoid mistakes.This paper will first focus on four areas of the Investment Company Act of 1940, analyzing the strengths and weaknesses of the Act with suggestions provided. It will then offer an analysis of the Investment Funds Regulation of Saudi Arabia and discuss areas for improvement based on the analysis of the Investment Company Act of 1940.
      PubDate: Tue, 27 Apr 2021 16:52:21 PDT
       
  • Mechanisms for Consultation and Free, Prior and Informed Consent in the
           Negotiation of Investment Contracts

    • Authors: Sam Szoke-Burke et al.
      Abstract: Investor-state contracts are regularly used in low- and middle-income countries to grant concessions for land-based and natural resource investments, such as agricultural, extractive industry, forestry, or renewable energy projects. These contracts are rarely negotiated in the presence of, or with meaningful input from, the people who risk being adversely affected by the project. This practice will usually risk violating requirements for meaningful consultation, and, where applicable, free, prior and informed consent (FPIC), and is particularly concerning when the investor-state contract gives the investor company rights to lands or resources over which local communities have legitimate claims.This article explores how consultation and FPIC processes can be practically integrated into investor-state contract negotiations to better safeguard the land rights and human rights of members of project-affected communities. Based on a review of relevant international law standards and guidance documents, a close analysis of typical investor-state negotiations and of consultation and consent processes in other contexts, and a workshop with Indigenous and civil society representatives, the article provides three options for integrating consultation and consent processes into contract negotiations, the appropriateness of which will vary depending on local contexts and communities’ resources and decision-making structures.
      PubDate: Tue, 27 Apr 2021 16:52:20 PDT
       
  • Chasing the Fruits of Misery: Confronting the Historical Relationships
           Between Opioid Revenues, Offshore Financial Centers, and International
           Regulatory Networks

    • Authors: Stephen C. Wilks
      Abstract: As the opioid crisis continues to claim lives throughout the U.S., tort litigants have faced challenges pursuing Purdue Pharma – one of the drug makers responsible for aggressively promoting OxyContin while downplaying the drug’s addictive effects. Much of this litigation posture sought to recover billions in public health costs incurred responding to the crisis at federal, state and local levels. As the plaintiff class grew, Purdue Pharma petitioned for bankruptcy protection, at which point auditors discovered the entity’s beneficial owners had caused it to wire billions in opioid profits into offshore accounts – placing them beyond the reach of litigants. These transactions reveal the limits of domestic financial reporting regulations and international regulatory bodies, like the Financial Action Task Force (FATF), whose frameworks narrowly focus on intercepting proceeds of terrorism and money laundering.Existing scholarship has not considered why the offshoring of opioid revenues remains legal in a regulatory landscape conceived to protect the common good. The soft-law system of norm-building responsible for building these frameworks would best fulfill its purpose by broadening its reach to include a wider sweep of capital mobility. The opioid crisis offers a useful context for exploring this claim. By devising a class of activity – described below as the Public Interest Transaction (PIT) – modified FATF rules would offer a principles-based alternative to the existing system’s language and provide a pathway for intercepting a wider variety of capital mobility with an emphasis on profits derived from “high casualty” crises such as the opioid crises. By precluding language that targets other forms of publicly harmful transactions, existing norms will continue to undermine the public good in a transnational banking environment lacking more principles-based approaches to financial regulation. The timing and context of Purdue Pharma’s wire transfers offer a useful laboratory for making these arguments.
      PubDate: Tue, 27 Apr 2021 16:52:19 PDT
       
  • 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
       
 
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