Principle Of Indemnity Research Articles

Securitization and Credit Default Swaps (CDSs): Towards Diagnostic of the Fundamental Problem and Suggested Solutions

Most of the blame for the present Global Financial Crisis (GFC) has been attributed to securitization and CDSs in the years preceding growth of the crisis. On reflection, most of the blame must be ?sheeted home? to the former U.S government?s mandate to banks and other financial institutions to mitigate their normal lending criteria on U.S home loans. The fundamental problem with these securitization contracts was not the securitization of good loans, but the securitization of ?lemons?. The loans should have never been entered into in the first place. The ?failure? of securitization contracts was therefore a failure of well-intended (but poor) government policy makers in foreseeing the unintended consequences. In order to ?insure? against expected defaults, the lenders and the investors entered CDS contracts in the shadow banking sector. The fundamental problem with the CDS contracts which are much touted in the regulated and shadow banking sectors as being ?desirable? as a profitable form of ?insurance?, was that they were (and are) able to be used for wagering or betting purposes. In contrast to the conventional insurance, CDS contracts do not require an insurable interest; do not require compliance with the indemnity principle; and are not uberrima fides.

Some Obstacles to Shifting Away the Risks of Takings and Regulatory Transitions from Government to Private Insurance: A Reply to Masur and Nash

Can insurance be created to compensate for lost revenues and business values when government changes the laws - what is known as regulatory transition risk and takings risk in the literature? The most recent advocates for transition insurance are Professors Masur and Nash in their article, The Institutional Dynamics of Transition Relief. But in the half-trillion dollar real world of U.S. insurance subject to real laws and regulations and hundreds of years of experience and case law, such a thing cannot exist. The fundamentals of insurance make transition insurance a stillborn idea because insurance principles both legal and economic are not met: fortuity, insurable risk, known risk, known loss, business risk, moral hazard, adverse selection, distribution of risk and the law of large numbers, insurable interest and the principle of indemnity. Just because there is a risk of something does not mean it is transferable.In addition, to assert some compensation for a “loss” due to a taking or transition should require one to also recognize the gains (or “givings”) that often preceded the taking, which means the subsidies, tax benefits, earmarks, and special legislation that granted the favored position before a change is being implemented. The risk of transitions and takings (short of eminent domain) are already priced and managed through the market of campaign contributions and lobbying. Lobbying is more than just fighting some unfavorable legislative or administrative change, it is also advocating for some benefit, and gaining intelligence. Transition insurance advocates suggest insureds let insurers lobby on their behalf so as to pool arguments, and to avoid moral hazard insureds should give up their right to free to avoid bringing about the loss they are insuring. But this would be an assignment of free speech rights, and create countless problems of coordination and confusion in how insureds and insurers lobby and cooperate.

The Cost of Justice?

The recovery of party-party costs - that is, the recovery of costs incurred by a party in legal proceedings from another party in the proceedings - is governed in Australia by the indemnity principle. This principle states that a client must have an obligation to pay costs to a legal practitioner before those costs can be recovered from the other party in litigation. It might seem, then, that an order for party-party costs would be unproductive if made in favour of a party who is represented by lawyers acting pro bono, since they are not obliged to pay those lawyers' fees.

Of Proprietary Restitution, Insurers' Subrogation and Insolvency Set-Off - The Untenable Case of Re Ballast

The court in Re Ballast [2006] EWHC 3189 (Ch) rejected the proposition that an insurer via subrogation has a proprietary interest in the insured's cause of action, but its reasoning is strewn with confusion and fails to appreciate the impact of insolvency set-off on the principle of indemnity. All the reasons the court gave in Re Ballast for rejecting proprietary subrogation are in fact compatible with proprietary subrogation. Academic criticisms against proprietary subrogation failed to pay sufficient regard to the principle of indemnity. Lord Templeman's preference in Napier v Hunter [1993] AC 713 for proprietary subrogation is correct and is consistent with plenty of North American case-law.

Denial of Justice

My instructions are very explicit. I am asked to read an opening paper of ten minutes duration on Responsibility of States for Damages done in their Territories to the Person or Property of Foreigners, with special reference to Denial of Justice. So there is no danger that I shall exhaust your patience or my subject. The general principle governing the responsibility of states for acts injurious to foreigners within their own jurisdiction is that a state is bound to furnish the same degree and kind of protection to foreigners and provide the same means of redress or measure of justice that it grants to its own nation als; but that ordinarily (i.e., in the absence of special privileges conferred by treaty or municipal law) foreigners are not entitled to a greater degree of protection or better guarantees of justice than are afforded to a state's own citizens or subjects. This principle, although it is not without exceptions, is generally ad mitted to be an undoubted rule of international law. Upon it is based the famous Calvo Doctrine, which condemns intervention (diplomatic as well as armed) as a legitimate method of enforcing any or all private claims of a pecuniary nature, at least such as are based upon contract or are the result of civil war, insurrection, or mob violence. Says Calvo: To admit in such cases the responsibility of governments, i.e., the principle of indemnity, would be to create an exorbitant and fatal privilege essentially favorable to powerful states and injurious to weaker nations, and to establish an un justifiable inequality between nationals and foreigners. This doctrine is undoubtedly sound in principle, but subject to certain exceptions. It has been incorporated, though perhaps in too absolute a form, into some of the constitutions and into many treaties by Latin Ameri can States. In attempting to secure redress or justice, foreigners should, in the first instance, have recourse to the local or territorial tribunals of the district in which they are domiciled, or, as Vattel put it, to the judge of the place. Judicial remedies should, generally speaking, be exhausted before resorting