Justice Holmes’s Response to Legal Formalism in Context: A View on the Cornerstone of a Realistic Approach to the Common Law

The purpose of this study is to bring some insights from the civil law tradition to the corporate debate on asset partitioning, which has developed over the last decade in the common law literature. Exposing common law scholars to legal solutions that are rooted in civil law systems has the potential to transform the traditional approach taken by comparative civil law scholars in this field. In fact, it is a well-known fact that civil law scholars have produced an extensive body of literature on the feasibility of transplanting one of the most successful products of equity - trust law - to the civil law tradition. In comparative law study, the possibility that the common law legal system could benefit from solutions developed under the civil law tradition with respect to the partioning of assets has been essentially overlooked. Therefore, the purpose of this research is to create a two-way dialogue between the common law and civil law traditions regarding this particular area of law, and to reveal efficient solutions developed in continental Europe.Asset partitioning can be defined either as the segregation of an owner’s assets from a firm’s creditors, or the segregation of an organization’s assets from its owners’ personal creditors. The latter aspect, in particular, has been emphasized by H. Hansmann and R. Kraakman, who suggest that an organization is truly characterized by such a protection of its assets. These authors have noticed that this legal effect cannot be effectively achieved by contract alone, and that a special rule of law is necessary in order to exclude claims by owners’ personal creditors on a firm’s assets without those creditors’ consent. This study aims to identify, from a functional perspective, the costs and benefits of different legal substitutes used to partition assets. The comparative analysis of these various partitioning devices is being conducted in order to help understand the economics of achieving affirmative asset partitioning through the creation of a new legal entity, as opposed to doing so through a property law which grants asset separateness within the boundaries of the same entity.While American legal scholars conceive asset partitioning exclusively through the formation of a new legal entity, the civil law tradition allows this legal effect to be achieved within the boundaries of the same legal subject, thereby avoiding the creation of multiple legal entities.The tentative thesis of this study is that in the former system (common law), there is a sharp trade-off between the costs avoided due to asset partitioning (e.g. lower monitoring costs for specialized creditors), and the benefits lost by not having legal integration take place within a single entity (e.g. information economies of scale). In contrast, the asset separateness doctrine of the civil law tradition, by allowing a legal subject to partition these assets not only outside but also within the boundaries of the same legal subject, successfully overcomes this trade-off.The analysis is organized as follows. Part I provides a description of the current debate on asset partitioning in the U.S. Part II describes the doctrine of “asset separateness” rooted in the civil law tradition. Part III provides the historical evolution of asset partitioning in civil and common law traditions. Part IV examines the costs and benefits of civil and common law regulations on asset partitioning, with regard to different business transactions (including asset securitization and the organization of a mutual fund). Part V offers concluding remarks describing how financial transactions are the driving power behind the current convergence between civil and common law traditions on asset partitioning.

Over the last decade, missions of the UN have assisted with constitutional reforms including issues of federalism. The hopes for peace with regard to federal structures have often failed. This paper elaborates possible reasons why these hopes were disappointed. It will show that one should understand the differences between Common Law and continental systems with regard to federalism. Some experts from Common Law countries fail to appreciate the substantial difference between federal Constitutions embedded in a Civil Law culture and those embedded in a Common Law culture. The reasons for the success or failure of past, present and future federal reforms may help to improve UN activities in this field. States of the Common Law tradition are not collective units, which have to steer their society. The Jacobins of the French Revolution, considered the State as their instrument to transform feudal society into a society of equal individuals. The Civil Law tradition has its roots in the French Revolution and in the sovereignty of the national legislative assembly as the only legitimate lawmaker of the State. The unity of the law does not depend on decisions of courts but only on the legislature. Constitutions of Civil Law federations need to enable the specified governmental branches of the federation to impose sanctions against federal units that fail to comply with federal laws. According to the perspective of the Civil Law one has to deal with two ‘States’ claiming sovereignty in a hierarchy, while from the perspective of the Common Law one has to deal with mere ‘governments.’ Constitutions of multicultural federations embedded within the Civil Law culture will have to empower not just the federation but also the federal units to develop the different cultural identities. To foster different cultures is however, not a major function of the State of the Common Law tradition. Federalism of the Civil Law tradition is more complex than according to the Common Law tradition. Important differences between federations of a Common Law and Civil Law tradition lies in the lawmaking power of the courts. In Common Law, courts and legislature share the task of lawmaking; in Civil Law countries, the legislature regulates all issues of civil and criminal law. In a Civil Law country, legislatures, executives and courts cannot function if there is no valid local Constitution empowering those branches of the federal units. Thus, the federal Constitution of a civil law country has to establish the powers of the governmental branches of the federal units. Within federal system of the Civil Law, the federal units administer, implement and execute the laws of the federation. Constitutions of Civil Law federations need special provisions for the power of the federation to control and implement federal laws in the federal units. The civil law judiciary has no contempt of court against the administration and against authorities of federal units.

Canada's legal culture is a mixed legal culture, encompassing both the common law tradition inherited from England, and the civil law tradition, which connects Canada to its roots in Continental Europe. This mixed legal culture has come to be known as bijuralism. Inevitably, the presence of two legal cultures or traditions on Canadian soil means that they often come into contact with one another; the interaction of concepts, values and practices expressed in each of those legal traditions results in a true conversation of cultures. I will suggest that broader insight can be drawn from the conversation of Canada's legal cultures, insight that may be helpful in other contexts in which a plurality of cultures or systems of values and norms interact in a sustained manner, within a single space. I begin by explaining how Canada came to encompass both the civil and common law traditions and how Canada's federal system affects the conversation between these legal cultures. I will then consider the three possible modes of interaction that are possible where legal traditions, cultures, religions, or any other set of norms and values coexist, wrestle or clash in the same space: denial of plurality, which leads to the silencing of the minority tradition; acknowledgement of plurality, which requires one to create a space for each tradition; and embracing plurality, which treats the conversation of cultures less as a challenge than as a gift. I will examine how patterns reflecting each of these modes of interaction have repeated themselves, concluding that despite the unquestionable challenges posed by plurality, there is hope for a fruitful embrace of competing visions which must surely yield better self-knowledge and peaceful coexistence. Canada's Experience of Bijuralism The Roots of Bijuralism in Canada The common and civil law traditions can be distinguished generally on the basis of a few defining characteristics. Historically, the civil law tradition arose in Continental Europe, and traces its origins back to a revival of Roman law that took place between the twelfth and sixteenth centuries. It is characterised by a faith in written law, often manifest in the presence of a Civil Code, in which ordinary rules relating to family, property, contracts and wrongdoings, successions and other such topics - the rules of private law - are expressed in general language, arranged systematically. It is a legal tradition that accords primacy to the sovereign in the act of stating the law (Watkin 1999). As a result, judges in civil law countries typically deny that they are making law when they decide cases. By way of contrast, the common law tradition finds its roots in Great Britain in the eleventh century (Belanger-Hardy and Grenon 1997). It underlies the legal systems of the United Kingdom and the United States, as well as Commonwealth countries around the world. It is characterised by the special authority given to concepts and principles developed over time by judges deciding particular cases and, as a result, by the emphasis on unwritten law and incremental conceptions of the quest for justice (Glenn 2004). While problems in the two legal traditions often reach very similar solutions, one can see from this brief sketch that they operate under very different assumptions about, among other things, the role of legislatures, the role of judges, and the optimal mode of expression of legal norms. Civil law and common law are different legal cultures in that sense. They are two different languages which communicate differently within the law. How is it, then, that Canada came to house these two Western legal cultures? The early history of Canada, as is well known, is a mixture of settlement and conquest. In a land occupied by our First Nations, portions of Canada were settled by British subjects, who were presumed to have brought the common law tradition with them (Hogg 2002). However, what is now referred to as Central Canada was originally settled by the French, who established the civil law Custom of Paris as the principal set of legal norms in New France (Dickinson 2001). …

Monetary Caps on Damages Due to the Liability of Auditors for Audit Failures in Publicly Listed Companies - Subtitle: A Comparative Legal Analysis between Common Law and Civil Law Regimes in Countries, Which Have Capping Damage Awards of Auditors

This chapter offers a comparative consideration of the efficacy of civil versus common law in adjudicating atrocity crimes, using the example of the French war crimes unit prosecution practice. On 16 October 2017, representatives of international criminal courts and tribunals met in France at the French National School for the Judiciary. Their meeting resulted in the signing of a Declaration on the effectiveness of international criminal justice (Paris Declaration). In gathering professionals from international courts and tribunals where the need to comply with founding texts and specific procedures can challenge those who, by habit, comfort, or conviction, draw on their national practise to interpret and apply the rules of procedure, the question of common versus civil law practice was the implicit focus. The Paris Declaration was adopted at a time when disappointment towards the ‘efficiency’ of international(ized) tribunals and courts is high. They are considered too slow and too costly. In this context, it is not unusual to hear that international trials would be better managed and more efficient if they borrowed more elements of ‘civil law’ on their ‘common law’ foundation. The chapter then describes the main characteristics of each procedural system to help identify which procedural model has been favoured before international(ized) tribunals. It also asks whether national investigation and prosecution of core international crimes are more efficient.

In this paper we examine one of the areas where there is a marked difference between Civil and Common contract law, that of the enforcement of liquidated damages and more particularly of penalty clauses. Common law judges are quite reluctant to enforce liquidated damages, especially if they believe that they include penalty clauses which are not enforceable. On the contrary, in almost all European contract laws liquidated damages are readily enforced, as are penalty clauses when they are not manifestly excessive. Although most law & economics scholars have criticized Common law courts for the non-enforcement of penalty clauses, there is a sizable minority of scholars who have defended the Common law non-enforcement policy on the ground that penalty clauses are inefficient because they hinder efficient breach. However, and despite the merits of the arguments advanced by advocates of the non-enforcement of penalty clauses, we believe that Common law's rejection of penalty clauses is inefficient. We further show that the Civil law solution to the problem is not only comparatively more efficient, but that it can also appease the worries of those scholars who are afraid that efficient breaches will be deterred. The solution that Civil law systems give to the problem manages to enforce the parties' wishes and to avoid deterring efficient breaches. However, we point out that in order for the Civil law systems to take advantage of this superiority, the interpretation of their Civil Codes should be guided by economic analysis and the respect to the wishes of the contracting parties.

With recent judicial reforms in both civil and common law jurisdictions, the distinctions between the two systems are lessening. As these reforms continue, the civil law/common law categories are loosing meaning and, except as an historical construct, may become irrelevant. One hallmark of the civil law system has been the judge who frames issues and calls and questions witnesses. Other civil law characteristics include a reliance upon written evidence, minimal use of precedent, and an indistinct trial process. Conversely, common law systems grant attorneys great control over the trial process, have complex codes controlling the introduction of evidence, rely heavily upon precedent, and have a distinct trial process. Now in many civil law countries, attorneys are taking a lead role in calling and questioning witnesses. At the same time, common law judges are becoming more active in framing issues and controlling the litigation process. China, a traditionally civil law country, is in the process of developing and adopting rules of evidence that are partially inspired by the evidence rules in place in the United States, a common law country. In developing and implementing the Uniform Provisions of Evidence, China’s reform effort mirrors the merger in civil law and common law countries that is taking place in so many other countries. This article focuses on the historical distinctions between civil and common law countries, the merger that is taking place between the two systems, and China’s Draft Uniform Provisions of Evidence as an example of this harmonization of the civil and common law systems.

The English legal system is based on the common law. Consistency and predictability are assured by prior decisions of the courts on similar matters establishing judicial precedent. The continuing role of the courts is to apply and develop the common law. Statute law is created by Parliament and takes precedence over common law, Parliament being the supreme legal authority of the United Kingdom. This supremacy has been affected by the UK’s membership of the European Union (EU), with European Law taking precedence over British Acts of Parliament (although it is still thought possible by many that Parliament could reassert its supremacy if it should so choose). The alternative legal tradition in most of Europe is derived originally from the legal system of Ancient Rome, also known as Civil Law (the latter not to be confused with English ‘civil law’ which refers to non-criminal legal matters – see below). Over the centuries the code developed as a body of international law, the ius commune and was later codified in many countries as their own national expression of law. In contrast to common law precedent, consistency is achieved by judicial application and interpretation of the code, rather than of prior case law decisions. The United Kingdom exported the English legal system to its colonies, including the United States, and the countries of the Commonwealth. Most retained it after independence. By similar colonial expansion many countries of Europe established Roman law as the predominant legal system. Other nations, including Turkey and Japan, adopted Roman law as the basis of their legal systems. A few countries have systems exhibiting a mixture of common and Roman law elements. A third international legal system is based on religious law, mainly the Sharia Law, derived from the Islamic faith, which exhibits many differences from Western systems, such as a prohibition on exacting interest. It is the basis of law in countries such as Saudi Arabia and Iran. Wales shares the same common law tradition as England. Scotland had developed its own more Roman law-based tradition and continues with this system today (see Chapter 2). The modern law in Northern Ireland is also based on the common law, a consequence of the Plantation in the seventeenth century, followed by the Union of Great Britain and Ireland in 1801. After Partition in 1922, Northern Ireland retained the common law system.

Is there any economic reasoning behind Civil law as there supposedly is behind Common law? Is Civil law efficient or at least as efficient as Common law? To answer this question, I have decided to use contract law as the object of comparative analysis. In the areas where there is a significant difference between Common and Civil law, which law is more efficient? Which legal family is closer to economic reasoning? In this paper, I am going to explore these questions. First of all, I am going to present my hypothesis that Civil law (or at least Civil contract law) is more efficient than Common law. In order to test this hypothesis, I will be discussing two major issues in the economics of contract law: efficient breach and penalty clauses. In these two areas, economists have criticized Common law, characterizing its institutions as inefficient. I will go over the criticisms and try to show that the opposite is true: that in fact Civil law is more efficient than Common law in these two areas. Finally, I am going to discuss briefly why economic analysis of law is still useful for Civil law and why it can be instrumental for the interpretation of contracts by lawyers.

Synopsis The research problem We investigate whether cross-listing in the United States is associated with a reduction in disclosure deficiencies about related party transactions (RPTs) related to the legal traditions of firms’ countries of origin. Motivation The extant literature shows that there is a disclosure disparity associated to the firms’ legal origin (civil or common law) and the countries’ institutions (regulation, enforcement, and market scrutiny). The literature has not examined whether cross-listing in the United States mitigates (or eliminates) the disclosure gap for firms from civil law countries and countries with worse institutions. We focus on RPTs because the US Securities and Exchange Commission has put particular emphasis on regulation of this type of disclosure. Hypotheses H1: Among domestically listed firms, those from countries with common law tradition present superior level of RPT disclosure than firms from countries with a civil law tradition. H2: Cross-listed firms have a superior level of RPT disclosure compared to domestically listed firms from the same country. H3: Among cross-listed firms, those from countries with common law tradition present a superior level of RPT disclosure than firms from countries with a civil law tradition. Target population Firms from countries that have adopted international financial reporting standards (IFRS). We sample firms from the G20 countries that have adopted IFRS because of their representativeness in the world economy. Adopted methodology Ordinary least squares (OLS) regressions with firm and industry-year fixed effects. Two-stage least squares (instrumental variables) regressions to tackle endogeneity issues. Analyses We manually collected data from the financial reports of 531 firms from the G20 countries that have adopted IFRS to compute indices of compliance with disclosures required by IAS 24. We performed double-difference regressions, comparing firms across their legal origin (common law versus civil law), and cross-listing status (cross-listed in the United States versus domestically listed only). In addition, we studied the institutional channels that drive the disclosure gap between common and civil law firms. Findings For domestically listed firms, we found that firms from the common law tradition have RPT disclosure levels superior to those of firms from the civil law tradition. We found that the level of RPT disclosure is associated with countries’ regulatory quality, rule of law, and control of corruption. However, we did not find any differences in the level of RPT disclosure among firms cross-listed in the United States that can be associated with firms’ legal origin or with other home-country institutional features. Our results suggest that the regulatory enforcement and scrutiny of capital markets imposed by the US market compensate for home-country institutional deficiencies and eliminate differences in firms’ RPT disclosures across legal origins.

One of the essential elements of contract in both civil law and common law systems is agreement or consent of the parties. An agreement is composed of two elements: offer and acceptance. For the agreement to be valid, it must be possible to show that one party made an offer, and the other party accepted this offer. Two questions arise regarding offer in civil law and common law systems, as follows: What is the difference between offer and other steps in the negotiation process in both civil law and common law systems? What is the difference between termination of offer in both civil law and common law systems? The main aim of the current study is to illustrate the concept of offer and termination of offer in both civil law (French, German, Iraqi, Swiss and China Civil Code) and common law systems (English). To achieve this aim, the study examines offer in civil law and common law systems, then distinguishes preliminary statements from the offer and finally, explains circumstances under which offer may be terminated in both civil law and common law systems. Keywords : Contract, Offer, Preliminary Stages in the Negotiation Process, Civil Law Systems, Common Law Systems, Termination of Offer. DOI: 10.7176/JLPG/101-16 Publication date: September 30 th 2020

The purpose of the research is to analyse the convergence of the concept of ‘breach of contract’ as construed under common law and civil law and to identify potential paths for further development of civil law in this field. I find that the common law’s approach to breach of contract is better suited to meet the needs of sophisticated contracting parties and that certain signs of civil law’s move towards the common law approach should be viewed as an indication of a general trend. Common law traditionally applies a broad and uniform notion of breach of contract. It encompasses circumstances that would not fall within the scope of the ‘non-performance of an obligation’ under civil law. The reason therefore is that civil law’s contractual liability is conditioned upon a breach of a pre-existing primary obligation to perform. Any other sort of contractual liability, which is not attached to a breach of a primary performance obligation, needs to be construed under different liability theories. Conversely, under common law the liability for breach of contract does not require a violation of a primary performance obligation; therefore, it can apply also in cases where it is not possible to construe any primary duty of performance. This is particularly the case of warranties. Ultimately, what can be handled under common law with the uniform concept of breach of contract, under civil law may require separate liability theories (indemnity-type liability), which are redundant in common law. Recent developments in civil law, however, provide clear signs of convergence between the civil law’s and common law’s liability theories. Two examples I use for my research is the ‘non-conformity’ under modern European sales law and the evolving approach to initial impossibility. I find that they signal a move towards the common law’s approach, as they attach liability for breach of contract to cases where there may be no primary performance obligation. **I claim that these examples should be viewed as an indication for a general trend, which would meet the expectations of professional contracting parties. Even though these statutory examples may appear isolated, the pattern of practice in complex contracting clearly demonstrates the relevance of developing a reliable liability theory for cases, where there may be no primary duty of performance. Both legal certainty and flexibility would benefit from one liability theory which would include promises not giving rise to any primary duty of performance. Finally, I discuss potential ways in which civil law could integrate these cases in its general liability theory.

Introduction to the Special Issue: The Right to the Protection of One's Own Image in Ibero-America and Its Relevance for the Right of Publicity in Common Law Countries

THE TWO WESTERN LEGAL TRADITIONS The law and legal system of what is now the United States of America form, especially so far as private law is concerned, a part of the common law. With its beginnings in England, the common law constitutes one of the two great legal traditions of the Western world, the other being the civil law, rooted in continental Europe. These two traditions hold much in common. Both are products of western civilization and share its cultural and ethical heritage. However, important differences existed – and still exist, though to a lesser degree – between the two traditions. One difference respects the manner in which the authoritative starting points for legal reasoning are set out: In the civil law, these normally take the form of legislation; in the common law, especially in earlier periods, reliance is largely on judicial decisions. A second difference relates to the influence of Roman law. In the case of the civil law, the Roman influence was various and profound; on the other hand, the common law was little influenced by Roman law. A third difference relates to the style of legal analysis and thinking. Although various forces have today reduced the differences between the two traditions, the civil law still states legal propositions more abstractly and systematically than does the common law. Moreover, the civil law also generally places greater value than does the common law on coherence, structure, and high-level generalization.

Authors from 13 countries come together in this edited volume, Common Law and Civil Law Today: Convergence and Divergence, to present different aspects of the relationship and intersections between common and civil law. Approaching the relationship between common and civil law from different perspectives and from different fields of law, this book offers an intriguing insight into the similarities, differences and connections between these two major legal traditions. This volume is divided into 3 parts and consists of 22 articles. The first part discusses the common law/civil law dichotomy in the international legal systems and theory. The second focuses on case-law and arbitration, while the third part analyses elements of common and civil law in various legal systems. By offering such a variety of approaches and voices, this book allows the reader to gain an invaluable insight into the historical, comparative and theoretical contexts of this legal dichotomy. From its carefully selected authors to its comprehensive collection of articles, this edited volume is an essential resource for students, researchers and practitioners working or studying within both legal systems.