COMPARATIVE PRIVATE LAW LEGAL TRANSPLANTS

1. COMPARATIVE PRIVATE LAWLEGAL TRANSPLANTS University of Oslo Prof. Giuditta Cordero Moss

2. Legal Transplants • Circulation of legal models • Reception of structure and principles of a legal system • ”Borrowing” of ad hoc legal rules

3. Reasons for legal transplants • Imposition • E.g.: French law - colonies • Prestige • E.g.: German law - pandectists • Efficiency • E.g: English law – financial transactions • Chance • E.g.: Russian transition

4. Legal transplants and legal families • Cross-family transplants • Possible: • Legal families are classification of legal models, not legal models themselves • Difficult: • Legal families present structures and principles that may not be compatible with rules generated under different structures

5. Multiple models • Russian company law before JSC Act 1995: • Gov.Decree 601/90: JSC – US model • Enterprises Act 90: LLC – German model

6. Transplant from common law into a civil law system Coexistence of models from two different legal families Classification describes to reality, not reality adapts to classification Main consequences : richness of system Multiple models – criticism

7. Incompatible models • Decree 2296/93: • Transplant of trust into Russian system

8. Trust – common law: Dual property: formal ownership, beneficial interest Injunction to use property in best interests of beneficiary Tracing with third parties (if bad faith) Protection against trustee’s creditors Ownership – civil law: Unitary property Fiduciary obligations Only contractual liability Incompatible models?

9. Transplant of different models • Trust transplanted into various civil law systems: Louisiana, Quebec, Scotland, Japan, Liechtenstein,… • Why is it incompatible with the Russian system?

10. Transplant of trust into Russia • Context: improvement of industry prior to privatisation. • Shares transferred to banks against loan, banks manage companies, on maturity loan repaid or bank remains owner of company • Art. 1: ”The institution of trust is transplanted into the civil law of the Russian Federation” • Art. 13:Trustee responds of proper performance with all its assets

11. Common law trust: Transfer of formal ownership, creation of beneficial interest Injunction Tracing Separation from trustee’s assets Decree 2296 trust: Transfer of total ownership Contractual liability of trustee in case of breach of fiduciary obligations Comparison of models

12. Incompatible models - conclusion • Trust may be transplanted from common law to civil law • Transplant of trust by Decree 2996 not successful • Decree 2996 failed to see function, legal effects and remedies in the original system and differences in the own system • Decree 2996 transplanted terminology, but not legal effects

13. Transplants at a lower level • Contract practice in business transactions • Use of English language • Use of English language contract models • Contract regulation is tailored to common law even if governed by civilian law

14. Literal interpretation Exhaustive contractual regulation Caveat emptor Judge shall ensure accurate implementation of agreement Purposive interpretation Extensive and analogical interpretation Implied principles and rules Judge shall ensure fair and balanced deal Common law v. Civil law

15. Count on contractual regulation and details What is not in the contract is not part of it Contract to be performed literally irrespective of balance bewteen interests Contract is integrated by implied terms Contract details are mer illustrations and may be extended Good faith and fair dealing restrict literal application of the contract Expectations of drafters

16. Common law models governed by civilian law • Does contract practice effect a legal transplant of ”caveat emptor” into governing law? • To what extent is this transplant feasible? • To what extent is this transplant justified? • http://www.jus.uio.no/ifp/anglo_project/index.html