Zumbansen Legal Evolution Comment

Peer

Description

Peer Zumbansen Canada Research Chair in the Transnational and Comparative Law of Corporate Governance Osgoode Hall Law School of York University Toronto, Canada [e-mail] Legal Evolution and European Harmonization of Company Law: How many variables are allowed? Comment on Thomas Bachner, Harvard Law School, 12 November 2004, 3:00-4:30 PM, Lewis 202 “Law is a scavenger. It grows by feeding on ideas from outside, not by inventing new ones of its own.” E.D. Elliott, 85 Colum. L. R. 38 (1985) “The most important general legal questions, it seems to me, both in theory and in practice, concern, first, the nature of the relationship between a society and the legal rules that operate within it, and, second, the forces that cause law to change.” A. Watson, 131 U. Pa. L. Rev. 1121 (1982) “The law is full of phraseology drawn from morals, and by the mere force of language continually invites us to pass from one to the other without perceiving it, as we are sure to do unless we have the boundary constantly before our minds.” O.W. Holmes Jr., 10 Harv. L. Rev. 457, 459-460 (1897) I. Introduction In my comments on Dr Bachner’s paper, I would like to do two things. One will be to highlight the background and the originality of his research project with regard to an almost over-researched and yet, as he tells us, still ill-conceived and insufficiently conceptualized study of current trends in European company law formation. ...

Informations

• Publié par: Onje
• Nombre de lectures: 35
• Langue: English

Extrait

1

Peer Zumbansen

Canada Research Chair in the Transnational

and Comparative Law of Corporate Governance

Osgoode Hall Law School of York University

Toronto, Canada

[e-mail]

Legal Evolution and European Harmonization of Company Law:

How many variables are allowed?

Comment on Thomas Bachner,

Harvard Law School, 12 November 2004,

3:00-4:30 PM, Lewis 202

“Law is a scavenger. It grows by feeding on ideas from outside, not by inventing new ones of its own.”

E.D. Elliott, 85 Colum. L. R. 38 (1985)

“The most important general legal questions, it seems to me, both in theory and in practice, concern, first, the nature of the

relationship between a society and the legal rules that operate within it, and, second, the forces that cause law to change.”

A. Watson, 131 U. Pa. L. Rev. 1121 (1982)

“The law is full of phraseology drawn from morals, and by the mere force of language continually invites us to pass from

one to the other without perceiving it, as we are sure to do unless we have the boundary constantly before our minds.”

O.W. Holmes Jr., 10 Harv. L. Rev. 457, 459-460 (1897)

I. Introduction

In my comments on Dr Bachner’s paper, I would like to do two things. One will be to highlight the

background and the originality of his research project with regard to an almost over-researched and yet,

as he tells us, still ill-conceived and insufficiently conceptualized study of current trends in European

company law formation. In the remainder of my time, then, I would like to both build on Dr Bachner’s

conception in sketching the future challenge in European company law research and to place his

research project and other contemporary research agendas into a wider framework.

II. European Company Law (ECL) harmonization as Case in Point for an Inquiry into System

competition and into the nature of legal evolution

1) ECL harmonization is a valuable and rich research field for the following reasons:

-

it reflects a long and complex regulatory process involving a growing member of member states

and their respective company law systems

-

this process has never so far been fusing towards a pure form of either of the two generally

opposed alternatives in system evolution: harmonization or competition

2

-

instead, the persisting dynamic of European company law development mostly results from the

strong tensions among the different systems and the legal framework constraining either of the

two poles in their ideal-type form

-

being a veritable collision of systems, there is much merit in research agendas that aim at a

better understanding of these forces of resistance and, at the same time, of distinct trends to

convergence

-

with regard to company law, then, the European project stands out as one of the most complex,

intricate and tedious political processes that we can observe in the overall integration of

European legal systems.

Against this background, there are in particular the following elements in Dr Bachner’s research

agenda that merit special attention:

a)

His concern with the post-transformation fate of European law in the various

member states opens up an important field of research. Indeed, from a

harmonization perspective, much of European law in its development and its

adoption is closely monitored and analyzed during the time of its inception.

Sometimes, this time will span over several years or, even, decades, as was the

case for the statute and Directive of the European Company or, still more recently,

the Takeover Directive. As Dr Bachner rightly alludes to, it is the time and the

norms’ fate after the adoption of the European instrument that often escape our

attention. It is in fact very worthy of a deeper and more serious inquiry how

exactly this transformation unfolds in different member states.

b) Secondly, his concentration on an evolutionary theory of legal development and of

company law in particular allows for two things: first, this approach – as has

already been argued on several occasions e.g. by Mark Roe or Simon Deakin –

refutes any idea of a linear, one-directional allegedly efficiency- or coherence

driven development of legal norms. Instead, this approach considers historical and

political constellations and decisions that shaped particular developments. As these

environments have been and continue to be in flux, there will always be a

considerable element of unpredictability as regards legal development. Secondly,

an evolutionary approach can illuminate the very intricate forms in which norm

collisions, norm reforms and even revolutions take place. They may have been

driven by new insights, in some cases by a veritable paradigm change or by the

importation of outside, foreign rules and principles – something that corporate

governance scholars have increasingly started to look at in the context of legal and

economic reform projects in young or emerging democracies and transformation

markets. But, even in less dramatic circumstances, the transformation and

translation of European law to the member state level often produces a myriad of

effects within the national legal order. These effects are described by Dr Bachner

by resorting to system theory and to a vision of co-evolution of different social

systems. From that perspective one may observe the introduction of a certain rule

or standard, or as in the example of the very optional Co-determination law of the

newly created European Company (

societas europaea

), even of a flexible option

as having possibly severe repercussions in the receiving legal culture. Now, the

idea of co-evolution suggests that there will not only be unpredictable effects or

even serious irritations in the specific disciplinary or doctrinal area to which a new

3

rule is introduced. No, in addition, co-evolution suggests that the adaptation of the

legal system to a particular rule will not only affect a specific area in law, but the

legal system’s adaptation will likely have effects on the development of

embedding, neighboring systems. Among these, we may count employment law,

tort law, the system of industrial relations or of securities regulation. This wider

perspective on the irritating, chaotic and non-linear effects of harmonization again

sheds light not only on the continuing pressure of contemporary aspirations for a

European company law. It also underscores the intricate dynamics that

characterize legal development in a certain field.

c) Thus, the approach suggested by Dr Bachner, promises to produce very valuable

insights into the dynamics of harmonizing legal cultures and into the problems

resulting from national differences but also from the chaotic effects that any rule

introduction is likely to have within a member state’s legal culture. In rejecting the

idea that law might be – when exposed to and implicated in a process of system

competition – spontaneously gravitating towards uniform solutions, alternatives to

the bifurcation between harmonization and competition emerge. Instead of

operating with an almost quantitative measure by which harmonization successes

and failures are counted, this approach invites a closer analysis of the multilevel

and poly-contextual evolutionary processes set off by legal initiatives, policy

instruments or court decisions.

In the following, I want to briefly build on this foundation to indicate additional perspectives we

might want to take. My starting point is to understand the larger process of European integration

as background against which Dr Bachner’s and also any other research project on European

company law is and can only be conceived. This means, that we can only understand the

development in a certain field of law if we assess it in light of the wider political, economical,

social and cultural framework in which it is unfolding. Dr Bachner has drawn our attention to the

collision of discourses in which different legal cultures, different legal terminology or different

associations with certain terms of art results in continued misunderstanding. This

misunderstanding is increased by the fact that many scholars remain confined to information,

scholarship and commentary within their own legal and linguistic culture. What some see as an

emerging European legal science, is bogged down in many places by budget cuts of law libraries

where foreign materials are often the first to be discontinued.

2) The Embeddedness of European company law harmonization in varieties of capitalism

The company law process in Europe has a significance that transcends company law as such and

goes beyond it in two decisive ways:

a)

researching the genesis and fate of various Community Directives in the field of

company law has wide repercussions on our general understanding of different

legal systems in Europe. In addition, our understanding of these legal systems,

and of company law systems in particular, is prompted to being increasingly

informed by a

richer

understanding of what legal systems and the rules and

standards, the institutions and principles in a specific field are made of. From a

perspective that also includes the historical trajectories, the political constellations

4

at different times of the system’s particular development and the wider socio-

economic embeddedness of a specific legal system, we recognize that, indeed, our

focus on company law

tout court et tout près

must be widened in order to better

understand the forces that drive this development. This development is, for the

time being, only partly and, it seems, inadequately depicted by notions of

convergence or divergence, harmonization, unification or competition.

b)

This leads us to the second way in which our research into the contemporary

trends in European company law making reaches beyond the confines of the

discipline: the just described, wider focus on company law, that also tries to

capture developments and influences in and from employment law, industrial

relations, or tax law is only the beginning of understanding company law in its

wider systemic framework. The next step must be to include a

jurisgenerative

perspective. Widening our research agenda to an in-depth analysis of

contemporary changes in law-making procedures might allow us to still better

understand the specific problems of any process in norm production and legal

development. This approach might achieve several objectives at the same time.

Identifying the

actors

involved in law-making on different levels, be that on the

European and International Level, on the domestic level or in between these

traditional zones, meaning rule-making by transnational, non-governmental actors

within and without nation states and their traditionally understood law-making

venues, opens our eyes for the reality of a multi-polar and multi-level process of

norm-generation. While this is of particular importance for our assessment of

increasingly decentralized law making processes, our commitment to identifying

the new actors as norm-producers has wide repercussions on our approach to legal

harmonization among mature, progressive regulatory states as well as to legal

reform in young states with unstable political or seriously captured governmental

structures. A

jurisgenerative

approach to legal reform in developing countries and

transformation states, then, allows us to identify the challenges to effective law

making, legal enforcement as well as to the building of the rule of law as such.

Certainly, there is an entire set of ideological appropriations implicated in this use

of terms such as law making or the rule of law. However, one way of avoiding

such appropriations might be to make the assertions of good government,

legitimate use of powers, effective separation of powers and the attribution to law

making powers to different branches of government as well as to civil society

actors transparent. It is in this transparency, that one’s own historically shaped

understanding and bias will become apparent, at least to a certain degree. It can

then be critically assessed whether and if, how far, traditional understandings of

government and the rule of law are adequate to describe the law making processes

at work in legal harmonization processes just as in legal reform movements. From

this perspective, the critique of legal harmonization and regulatory competition

meets “law and development”.

This perspective, then, presents us with another set of challenges that go to the

heart not only of our assessment of the European company law process and, even,

the adventure of European Integration as such. A

jurisgenerative

perspective will

ultimately allow for an assessment of law-making itself. In differentiating various

instances and forms of law-making e.g. by national legislatures, the European

Union, the OECD, the World Bank, the Monetary Fund or the International Labor

5

Organization, but also by various private actors such as non-financial corporations

or banks, think tanks and advisory councils, we are prompted to draw a very

detailed and yet constantly changing map for these norm-authors and the different

types of rules issued by them. This leads us, however, to reflect on the nature of

legal

norms and of

other

norms. We are then asked to identify the measure by

which we recognize and differentiate between legal rules and other norms. In light

of the increasing proliferation of norm-producing actors on many different levels,

we need to learn how to possibly differentiate different types of norms. While our

traditional view might include norms set by the legislature or norms and

regulations issued by regulatory agencies, we also find treaty obligations,

conventions and mostly unenforceable rules issued by international actors such as

the OECD or the United Nations Subcommittee. In addition, we need to include a

whole other set of norms into our picture that continues to profoundly challenge

the traditional visions of so-called official law.

The recommendations and best practice guides, the corporate governance codes

and labor codes issued by academic or business organizations, other private

business actors or by semi-public, semi-private expert commissions, contain in

many cases very explicit behavioral commands – but their dignifying by calling

them “law” and their categorization as legal norms lag far behind. It is our task,

inevitably, to engage in a discussion of whether they should at all be considered

“law”. Yet, our differentiating, as can sometimes be found, between hard and soft

law, between official and unofficial law, between enforceable law set by

government actors and codes of conduct issued by private actors, might in fact be

a lost cause from the beginning.

Maybe, the talk of law or non-law matters less on a definition level but, rather, in

two different ways:

i)

One way is that the differentiation between law and non-law matters in a

functional

perspective. Analyzing different norms with regard to their

creation, application and enforceability allows us to better assess the

nature of governance and the emergence of alternative forms of societal

governance. This, indeed, seems to bear similarities with the functional

approach put forward by Kötz and Zweigert, severely criticized by

Thomas Bachner as being “circular” in nature. I shall stay with this point

for just one minute. Certainly, there are problems with the functional

method in comparative law, and they have repeatedly been underscored.

Dr Bachner cites to the importance of differences between rules and

norms as resulting from different legal ‘cultures’ or ‘traditions’; yet, he

finds such approaches to be straying too far from that method which

alone allegedly can guarantee an adequate understanding of a certain

norm within a certain legal system. In this regard, he underlines the

relevance and importance of taking the foreign law seriously, of not

resorting to superficial comparisons, but instead, of attempting to identify

functional comparisons from within a given legal culture and its doctrinal

acquis

. Undoing the abandonment of doctrine and legal culture

considerations by which the functional approach regularly disembeds

rules from both their cultural framework and their doctrinal system, Dr

6

Bachner hopes to replace the functional method’s “external” perspective

by an “internal” one. He writes: “We must pl p6(f.6(s ul to)-3.5( theie4pere)0.31(w[(e-

7

improve the information basis on the structure and texture of

legal systems in the midst of powerful harmonization projects

or developments of regulatory competition. A deeper

understanding of the forces at work within the legal cultures

of different member states can serve as a healing medicine

against too much euphoria (or frustration) over harmonization

projects. Focusing on developments in doctrinal scholarship,

legislation or, more importantly, case law in different legal

systems under the pressure of harmonization or competition,

appears to be not only promising, but necessary to achieve the

intended level of inside-understanding of the developmental

agenda and potential of a legal system.

ii)

Allow me to return to my proposal to introduce to the discussion about the

differences between law and non-law a

jurisgenerative

perspective in a

reconstructive manner and direction: what I wish to refer to as reconstructive

relates to the assessment of the origin of a norm. A reconstructive view on a

norm’s development provides us with the opportunity to reconstruct the general

political process, but also the much more concrete hybrid, public-private,

societal process which accompanied and led to the creation of the rule. This

reconstruction, then, may very well show the possibly drastic differences

between this norm-generating process and other, more traditional norm setting

procedures. Reconstructing the process of norm-generation, identifying the

actors involved and the rules followed in this process, provides a basis on which

legitimacy questions can be asked. With a proliferation of actors, public and

private on the international, domestic and the transnational level, former

concerns with coherent procedures and a unity of legal norms have increasingly

been replaced by concerns with accountability and transparency. Reconstructing

the various forms of norm-generation will thus allow us to make qualified

judgments about certain political outcomes, negotiation deadlocks, power

struggles and political compromise.

3) ECL, Market Integration and Law Making

European Company law and a closer look at the dynamics and tensions continuously unfolding in

this field, becomes thus a part and a starting point into a wider research into contemporary forms

of governance through law. We explore these emerging forms and types of governance against

the background of market integration, international competition and a dramatically borderless

worldwide societal activity. Any assessment of the fate and prospects of legal harmonization or

system competition will have to take into account the various starting points and larger historical,

political and socio-economic particularities of the different countries involved. Against this

background, then, will we arrive at a richer and more complex picture of harmonization and

competition. At the same time, however, we will also better assess the contemporary forms of

lawmaking, ultimately allowing us to again ask the question of how regulation through law is at

all possible.

8

III. Legal Evolution, Governance through Law, and Does Law Matter?

The value of evolutionary approach to understanding European company law developments lies

in the following:

1) The Evolution of Law and Legal Governance

In rejecting the sometimes assumed linearity of legal development towards greater

i) efficiency,

ii) legitimacy,

iii) coherence,

and in focusing on the eruptive nature of legal development. Bachner’s approach is to focus less

on the direction but, instead, on the “mechanisms of development” and it is influenced by

evolutionary theory brought – again – (after earlier, groundbreaking work in the 19

th

and 20

th

Century) into legal theory recently e.g. by Gunther Teubner and Niklas Luhmann, and elaborated

further by Simon Deakin and Marc Amstutz.

This evolutionary approach serves to illuminate a number of fundamental issues arising with the

processes of

legal harmonization

and

system competition

.

These processes that in themselves are in constant competition, be it institutionally, economically,

politically or symbolically, are prompted by more general processes of world wide market

integration and the growing internationalization of social action fields, among them the reach of

corporate action.

The contemporary forms of world wide market integration, however, cannot account for the

current

status quo

of a possibly emerging global law of corporate governance. This

status quo

is

characterized by a continuing tension between different national systems of company law. This

persisting tension, resulting from a simultaneous movement towards convergence in some fields

on the one hand, and towards continued divergence in other fields on the other, has been very

adequately described by Thomas Bachner. Indeed, this tension of dynamic company law systems

has been on the research and policy agenda for many years now. It has also informed and inspired

a continuously growing amount of scholarship.

The research project presented by Dr Bachner promises to reach beyond many of the conceptual

confines in the contemporary discussion in a very fruitful way. This is due to the fact that the

project aims at taking an internal perspective. As sketched above, such an internal perspective

might very well allow for a wider recognition of currently ongoing transformations of law making

and, connected with that, of societal governance and of the role played by law in this process.

The merits of the projects, furthermore, lie in the particular take of evolutionary theory and its

application to legal theory and development. The tracing of a legal concept’s journey through

time, courts, legislatures and scholarship, determined by ‘inheritance’, ‘variation’, and ‘selection’,

promises to produce a far richer account of the actual functioning of a concept and, derived from

it, a rule, within different historical periods.

9

In his approach, Dr Bachner is building on work on legal evolution that has recently particularly

been elaborated by Simon Deakin. Deakin has been putting forward a particular theory of legal

progress that largely builds on evolutionary theory. Central to Deakin’s theory is the

understanding that information is stored and transmitted in legal concepts as ‘memes’,

transporting “information about social adaptations”, and thereby creating and contributing to

complex social arrangements. It is here, where we finally begin to see the true merit of the

internal view taken by Bachner. Instead of being a view

internal

to law and legal conceptualizing,

the internal view focuses on the development and unfolding of legal doctrine against the

background of consideration of surrounding political, socio-economic and cultural features.

The focus on concepts allows for a tracing of this complex co-evolutionary development of rules

that are being consolidated, affirmed, abridged, changed by continuously referring to an allegedly

unchanging legal concept (Deakin refers to “contract” or “employee”). Instead, it is only through

a careful reconstruction of the political economy, political disputes and greater socio-economic

development as well as of the cultural, very importantly, the linguistic quality of a problem’s

description, that we can understand the complex nature of legal institutions. This perspective is

more than law talking with and of itself. Indeed, as Deakin points out, the described look at law’s

reality in its greater embeddedness might offer a more adequate understanding of the ways in

which “law and society interrelate.” If it is true that legal concepts are more durable than legal

rules and as such (as memes) constitute elements of continuity in the legal system, then our

internal view will have to take concepts into close consideration. This means we need to closely

follow the evolution of concepts and institutions by taking a contextual view on the surrounding

political economy and cultural framework that shaped this development.

The permanence and continuing weight of

concepts

in ongoing legal discourses in member states

(and elsewhere) leads to the already mentioned translation-problems in legal harmonization.

While there is much research on different conceptions of the “firm”, the “business association”,

the “corporation”, the “enterprise”, there is still much need for such a comparative evolutionary

exploration of the lasting impact of the (differently made up) concepts as they interplay, e.g., in

the contemporary European company law debate. Some one and a half decades after Michel

Albert’s

Capitalisme contre Capitalisme

, we have heard much about universal trends of

convergence, even the proclamation of the ‘end of history in corporate law’. And we have heard

much on persisting differences, hence on the continuing divergences in company law. Alone, a

further comparative research agenda on the political economy of comparative corporate

governance in the here sketched way still remains a promise.

The weight of semantics and meanings on any legal reform has been felt everywhere as the

ideological struggles over privatization and its re-appropriation by constitutional law, state-

intervention or other forms of constitutional monitoring have started to come to the fore, shortly

after the going-to-market euphoria of the immediate post-cold war years tired out. To take up our

earlier example of transformation states: here, the

permanence

of legal concepts, of

remembrances of regulatory experiences

etc, will continue to shape the adaptation to the new

concepts and rules. In this context, it is one of the big challenges in the process of legal import not

to silence past experiences. Only by exposing, by extrapolating and revisiting regulatory

experience with all of its aspirations, achievements and frustrations is there a chance to more

adequately understand the dynamics and the prospects of legal development.

Bachner also resorts to the idea of ‘alienating justice’ to show that doctrine in a given legal

system can be particularly complex in its development and operation. At the same time, this is a

10

distinct starting point to look at the effects of harmonization efforts. And with regard to a growing

pressure to corporate governance reform both for developed and developing countries, the

analysis of ‘transplantation effect’ has to work both ways: as recently elaborated by Paredes, one

of the guiding questions could be to look both for the success of a transplanted legal regime in

achieving the goals that were attained in its origin system and, on the other hand, for the effects

that a transplant has for the receiving system. The cases in point, chosen by Dr Bachner, for large-

scale transplantation projects are Austria and Poland. They are of particular interest, as here,

much began by way of legal reform, adaptation, mimicry, inspiration or selective borrowing

before

the collapse of communism. With a strong awareness of the changing nature of any given

legal system, its consolidation and ‘reform-in-permanence’, scholars and practitioners in both

countries, closely watch the legal development in Germany, even if this happens to various

degrees in intensity, due to a host of reasons.

Interestingly, Bachner’s harmonization perspective includes the testing of Germany’s legal

development’s influence on the legal cultures in Austria and Poland. In fact, recent developments

in German corporate law are also evolving in response to European law, and thus, the perspective

on Germany, Austria and Poland must be a comparative and a dynamic one as regards the

implementation of European law into the respective domestic legal culture. Certainly, this is a

very valuable perspective. The wider approach of both an internal, heavily doctrine-based

perspective as suggested by Bachner, and a political economy perspective as is my proposal,

promises to provide us with a much better understanding of the various dynamics of European

company law development than has so far been the case.

2) Does Law Matter?

Yet, I want to raise two reservations in closing. One concerns the idea that seems to inform the

project as a whole. The project suggests that one of the outcomes will be an understanding of

ways of how to achieve a more effective harmonization of national laws. My question starts with

the term “effective harmonization”. It still does not seem clear what the yardstick for an effective

harmonization could be. As described, many of the problems in legal harmonization in the EU

stem from the fact that political and other differences water down EU instruments already at the

time of their inception. So, in fact, the problem of ineffective harmonization does not start with

the implementation and translation problems so well highlighted by Dr Bachner. Rather, their

often problematic inception is part of their overall character. The differences between regulations

that become binding law in the member states at a specific date which could be the date of

inception, and directives, that must be transposed and translated into the member states’ legal

systems, already underline this troubled character of EU law making and harmonization.

This leads me to my second concern: Does the idea of effective harmonization not touch upon a

much wider issue? Can it really be that we discuss the effectiveness of harmonization, but no

longer the idea of harmonization as such? Might not the persisting problems in EU law making –

well before the adaptation and transposition problems that lie at the center of Dr Bachner’s

research project – be telling of the continuing problematic nature of European integration overall?

Without a final assessment of the EU, its political and socio-economic, let alone its wider, holistic

legal nature, there cannot be, it seems to me, a final and satisfactory assessment of the

effectiveness or ineffectiveness of harmonization. Accordingly, Dr Bachner’s research project

concludes by focusing on the value of continued monitoring and indeed, a co-evolution of

conventional adoption of directives and an ongoing monitoring of post-implementation efforts in

11

the member states. The value of monitoring and mutual learning has been underscored by many

scholars in the last years with regard to ever growing frustrations with the obstacles with which

harmonization programs and aspirations often meet.

My admittedly somewhat and possibly too skeptical impression is the following: the rise of

mutual learning approaches in legal harmonization agendas or the emergence of e.g. the Open

Method of Coordination from the Lisbon Summit in 2000 to an almost ubiquitous inspiration for

ailing harmonization efforts appear to embody more resignation than hope. But, there is nothing

wrong in my view with that form of resignation. There continues to be a strong problem regarding

the legal and political nature of the EU as a whole, and this identity problem must have an effect

on questions of harmonizing law of the member states. Where methods are thought up to

overcome obstacles to harmonization, these seem to say at least as much about the overall process

of legal harmonization as they do about the persisting differences in a particular field of law as

such.