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How Lochner Became Disembedded: Legal Anxieties in a Global Context, or: Law’s Changing DNA

How Lochner Became Disembedded: Legal Anxieties in a Global Context, or: Law’s Changing DNA. ROMA TRE Superior Graduate School Seminario Diritto Globale 27 February 2014 Professor Peer Zumbansen Osgoode Hall Law School / Yale Law School. Hard Cases Make Bad Law I. Illustration 1:

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How Lochner Became Disembedded: Legal Anxieties in a Global Context, or: Law’s Changing DNA

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  1. How Lochner Became Disembedded: Legal Anxieties in a Global Context,or: Law’s Changing DNA ROMA TRE Superior Graduate School Seminario Diritto Globale 27 February 2014 Professor Peer Zumbansen Osgoode Hall Law School / Yale Law School

  2. Hard Cases Make Bad Law I Illustration 1: Lochner v. New York (US Supreme Court, 1905) At issue: maximum working hours at bakery Background: State legislature caps hours, plaintiff claims violation of constitutional rights (‚freedom of contract‘)

  3. Lochner‘s (always) contested legacy Majority opinion: strikes down law with reference to constitutional rights of contracting parties Dissent (Justice Holmes): no such constitutional protection of economic freedom Dissent (Justice Harlan): issue not domestication of economic warfare, but safety at work: deferral to SepPowers & Knowledge Legacy: Lochner is THE economic laissez faire decision, which will only be reversed during New Deal Era of progressive market regulation. In 1990s, early 2000s, Lochner re-emerges as ‘good‘ law...

  4. Hard Cases Make Bad Law II Illustration 2: Australian Federal Court convicts S&P for fraud (Nov. 2012) Issue: AAA Rating for financial instruments, issued in 2006 S&P: Less than 1% chance to default...W/in 6mo lost 90% Decision: Triple A rating for “grotesquely complicated“ instrument should not have been given by “reasonably competent“ rating agency. Rating was “misleading and deceptive“ Assessment / Consequences? • “big blow to rating agencies“/“potentially groundbreaking“ • “Landmark ruling“

  5. Hard Cases Make Bad Law, or do they? But, are Lochner and S&P ‘hard cases‘? • Cases with a specific grip on their time • Economic freedom and economic/financial regulation in a contentious, intertwined relation • As ‘hard cases‘, they make bad law, as they freeze our imagination within specific boundaries and categories.

  6. Hard Cases Make Bad Law, or do they? Issues/interests pitted against each other: LOCHNER: Employees v Employer Court v Legislator Market v State S&P: CRA v Buyer/Investor Private party v public/private party

  7. Hard Cases Make Bad Law, or do they? Poles: LOCHNER: Opposed views on state-market relations, regulation of freedom and the role of the state (public v private interests?) S&P: Market analyst v investors (private interests?)

  8. Bad Law in which context? At issue, really: Actors‘ positionings in a changing landscape From....national regulatory systems, identifiable political positions, different options available for political market “interventions“ To....overlapping public/private, national/global regimes, broken legitimacy chains, competing competences and interest representations

  9. Contextualising Case Law I Transnational Lift-off and National Touchdown (R.Wai) But, what is the national framework today?

  10. Contextualising Case Law II Context of transnational legal regulation today National European ……………………..…Transnational Public Private ………………………..Hybrid Hard Soft ....................................Pluralist / Regulatory / “Governance“ Rules Principles ....................................Direct & Indirect Approaches

  11. Contextualising Case Law III Proposal I: Contextualize through ‘Translation Categories‘ • Actors (from “state“ to .... intl specialized orgs, regimes, NGOs, private organizations) • Norms (from „“laws“ to .... regulations, codes, recommendations, experts & cases suggesting regulatory frameworks) • Processes (jurisprudence, policy coordination, report drafting, legislature)

  12. Contextualising Case Law III Proposal II: Theorize societal conflicts as ‘case studies‘ Questions to build case studies as laboratories of transnational regulatory governance: 1. Before the Australian decision, what is the “case“ arising from CRAs‘ activities (eg after downgrading of US, grading allocation to risky financial instruments issued to private and public investors) 2. Which interests are pitted against each other? What is at stake? 3. Who are the actors and what is their status? Which functions / responsibilities do they assume?

  13. From cases & laws totransnational regulatory governance ACTORS CRAs as “de facto market“ regulators CRAs are relied upon by public regulators eg, - - when determining capital adequacy requirements for financial institutions - when determining disclosure requirements Interim Result: • increasing outsourcing of regulatory functions to CRAs • making credit ratings essential for issuers and cornerstone of regulations

  14. From cases & laws totransnational regulatory governance Norms: • Ratings • Indirect and direct identification of targets of regulation Processes: • Indirect market regulation • Governance by Disclosure / Information

  15. From cases & laws totransnational regulatory governance Disclosure and Information Specific to rated entities: Countries Financial Institutions How specific?

  16. From cases & laws totransnational regulatory governance Status and function are assessed and contested in context: What is the context? Globalized markets for goods, services & capital .... and policy direction setting Bye, bye to Ruggie‘s “Embedded Liberalism“?

  17. From cases & laws totransnational regulatory governance Who defines and occupies the context? Who has agency? Where are the fora to theorize and contest agency?

  18. From cases & laws totransnational regulatory governance Transnational Governance Context and the (Elusive?) Quest for a Political Framework Complementing analysis of Norms, Actors & Processes: civil society and knowledge brokers: See, eg, Stiglitz‘ http://policydialogue.org/about/

  19. From cases & laws totransnational regulatory governance “The Initiative for Policy Dialogue works to broaden dialogue and explore trade-offs in development policy by bringing the best ideas in development to policymakers facing globalization’s complex challenges and opportunities. We strive to contribute to a more equitably governed world by democratizing the production and use of knowledge.”

  20. From cases & laws totransnational regulatory governance “The Initiative for Policy Dialogue works to broaden dialogue and explore trade-offs in development policy by bringing the best ideas in development to policymakers facing globalization’s complex challenges and opportunities. We strive to contribute to a more equitably governed world by democratizing the production anduse of knowledge.”

  21. From cases & laws totransnational regulatory governance Is this what Justice Harlan dreamed of?

  22. Law‘s changing DNA

  23. Law‘s changing DNA

  24. Law‘s changing DNA

  25. Law‘s changing DNA

  26. Law‘s changing DNA Transnational Legal Pluralism

  27. Law‘s changing DNA LAW T R A N S N A T I O N A L Transnational Legal Pluralism WSF

  28. Law‘s changing DNA The Move to Methodology: As Law becomes (remains) elusive, its study must incorporate its emergence in context of different, overlapping and intersecting societal processes. Focus on Actors, Norms, Processes: Actors: e.g. World Social Forum Norms: e.g. UN Global Compact Processes: e.g. Consultation, Code making, Transnational Private Regulatory Governance Towards: Transnational Law as Methodology of public/private, state-non-state norm making in a Global Knowledge Society

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