This contribution estimates the legal risk of contract discontinuity posed by the transition to new interest rates benchmarks through a comparative study of four national doctrines of force majeure and contract frustration. A pluralistic landscape emerges. Whereas discharge is likely in the United Kingdom, the chances of discontinuity become rather remote in Italy. A middle way solution is found in France or Spain. The lack of harmonization stems from the separation between EU governance, which is regulatory in nature and whose aim is to remove barriers to trade within the internal market, and the traditional legal systems of Member States. Such dichotomy results in an unjustified distinction among market players depending on the jurisdiction they operate on, amounting to a contravention of the principle of generality, a key pillar of the rule of law. This article contends that the EU legislator should pass a legislative provision to ensure a smooth and just transition to new interest rates benchmarks. Force majeure, contract frustration, interest rates, €STR, comparative private laws, internal market, rule of law, principle of generality, law and finance, free markets
{"title":"The Bumpy Reform of EU Interest Rates and the Rule of Law","authors":"Elena Sedano Varo","doi":"10.54648/eulr2022012","DOIUrl":"https://doi.org/10.54648/eulr2022012","url":null,"abstract":"This contribution estimates the legal risk of contract discontinuity posed by the transition to new interest rates benchmarks through a comparative study of four national doctrines of force majeure and contract frustration. A pluralistic landscape emerges. Whereas discharge is likely in the United Kingdom, the chances of discontinuity become rather remote in Italy. A middle way solution is found in France or Spain. The lack of harmonization stems from the separation between EU governance, which is regulatory in nature and whose aim is to remove barriers to trade within the internal market, and the traditional legal systems of Member States. Such dichotomy results in an unjustified distinction among market players depending on the jurisdiction they operate on, amounting to a contravention of the principle of generality, a key pillar of the rule of law. This article contends that the EU legislator should pass a legislative provision to ensure a smooth and just transition to new interest rates benchmarks.\u0000Force majeure, contract frustration, interest rates, €STR, comparative private laws, internal market, rule of law, principle of generality, law and finance, free markets","PeriodicalId":53431,"journal":{"name":"European Business Law Review","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43678283","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Climate-related financial risks have become a crucial concern in financial policymaking. This recent development is propelled by concerns that financial markets have underestimated, and are unprepared for, the costs and losses that will follow as the effects of climate change escalate. It is also driven by the enormous scale of investments required to facilitate the transition to a low-emission society. The Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) are one example of a response to these developments in the realm of financial policymaking. They aim to encourage disclosure of climate-related risks, by introducing new categories of risk – namely, physical risk and transition risk. This article examines the new categorization of risks and discusses both its integration into non-binding reporting guidelines in the European context and its potential for broader adoption. Climate-related financial risk, Action Plan on Financing Sustainable Growth, ESG, TCFD, physical risk, transition risk, non-financial reporting, responsible investment
{"title":"Climate-related Financial Risks: Considering an Emerging Framework for Assessment and Disclosure in a Regulatory Perspective","authors":"T. Myklebust","doi":"10.54648/eulr2022020","DOIUrl":"https://doi.org/10.54648/eulr2022020","url":null,"abstract":"Climate-related financial risks have become a crucial concern in financial policymaking. This recent development is propelled by concerns that financial markets have underestimated, and are unprepared for, the costs and losses that will follow as the effects of climate change escalate. It is also driven by the enormous scale of investments required to facilitate the transition to a low-emission society. The Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) are one example of a response to these developments in the realm of financial policymaking. They aim to encourage disclosure of climate-related risks, by introducing new categories of risk – namely, physical risk and transition risk. This article examines the new categorization of risks and discusses both its integration into non-binding reporting guidelines in the European context and its potential for broader adoption.\u0000Climate-related financial risk, Action Plan on Financing Sustainable Growth, ESG, TCFD, physical risk, transition risk, non-financial reporting, responsible investment","PeriodicalId":53431,"journal":{"name":"European Business Law Review","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48562863","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In nowaday’s international trade, the contracting parties often come from a different linguistic background. As a consequence, the use of foreign languages in contractual relationships raises many issues the implications of which are often underestimated. They are thereby analysed in a comparative law perspective and with reference to the CISG experience.Before invoking consent defects and invalidity, a central role must be devoted to the interpretation of contract. In particular, we have to mention the following criteria: the principle of good faith/fairness, the binding effects of agreed usages and established practice, the promotion of uniform languages and neutral terminologies with specific reference to business contracts. In the first Section, I briefly introduce the debate on language risk in contractual communication, discussing the implications of language barriers for the validity of the contract. Then, I outline the problem of legal constraints protecting offical languages that may significantly impact the choice of a foreign idiom in contractual relationships. The call for language uniformity in the international commercial framework and the prominent role of English, as a ‘lingua franca’, are also discussed. The last Section is devoted to the use of clauses aimed at preventing language inconsistencies in international contracts. Then I deepen the CISG experience by approaching the following key points: formation of contract, incorporation of standard terms, applicable law and foreign terms, non-conformity of the goods. Language, Contract, Validity, Interpretation, Official Languages, Sales of Goods, Good Faith, Lingua Franca, Legal English, Controlling Language Clauses
{"title":"The Languages of Contract: A Comparative Law Perspective with a Focus on the CISG","authors":"Nicola Brutti","doi":"10.54648/eulr2022008","DOIUrl":"https://doi.org/10.54648/eulr2022008","url":null,"abstract":"In nowaday’s international trade, the contracting parties often come from a different linguistic background. As a consequence, the use of foreign languages in contractual relationships raises many issues the implications of which are often underestimated. They are thereby analysed in a comparative law perspective and with reference to the CISG experience.Before invoking consent defects and invalidity, a central role must be devoted to the interpretation of contract. In particular, we have to mention the following criteria: the principle of good faith/fairness, the binding effects of agreed usages and established practice, the promotion of uniform languages and neutral terminologies with specific reference to business contracts. In the first Section, I briefly introduce the debate on language risk in contractual communication, discussing the implications of language barriers for the validity of the contract. Then, I outline the problem of legal constraints protecting offical languages that may significantly impact the choice of a foreign idiom in contractual relationships. The call for language uniformity in the international commercial framework and the prominent role of English, as a ‘lingua franca’, are also discussed. The last Section is devoted to the use of clauses aimed at preventing language inconsistencies in international contracts. Then I deepen the CISG experience by approaching the following key points: formation of contract, incorporation of standard terms, applicable law and foreign terms, non-conformity of the goods.\u0000Language, Contract, Validity, Interpretation, Official Languages, Sales of Goods, Good Faith, Lingua Franca, Legal English, Controlling Language Clauses","PeriodicalId":53431,"journal":{"name":"European Business Law Review","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49215047","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The introduction of the Cadbury Code in the UK in the early 1990s marked an important turning point in the evolution of corporate governance around the world. The ‘comply or explain’ approach pioneered by the Cadbury Code prioritised flexibility and the role of market discipline in its approach. While those characteristics can be linked to earlier trends in the evolution of corporate governance in the UK, it is more difficult to explain why the Cadbury Code has exerted so much influence over systems which differ from the UK in their approach and evolution. In this article we focus on the extent to which the ‘comply or explain’ approach has been adopted in other countries and attempt to explain why this has occurred. We propose three explanations for the diffusion of ‘comply or explain’ codes around the world and undertake qualitative and quantitative (leximetric) analysis to test these propositions. Corporate governance, codes, ‘comply or explain’, listed companies, disclosure, transplantation
{"title":"The Emergence of ‘Comply or Explain’ as a Global Model for Corporate Governance Codes","authors":"Iain Macneil, Irene-Marié Esser","doi":"10.54648/eulr2022001","DOIUrl":"https://doi.org/10.54648/eulr2022001","url":null,"abstract":"The introduction of the Cadbury Code in the UK in the early 1990s marked an important turning point in the evolution of corporate governance around the world. The ‘comply or explain’ approach pioneered by the Cadbury Code prioritised flexibility and the role of market discipline in its approach. While those characteristics can be linked to earlier trends in the evolution of corporate governance in the UK, it is more difficult to explain why the Cadbury Code has exerted so much influence over systems which differ from the UK in their approach and evolution. In this article we focus on the extent to which the ‘comply or explain’ approach has been adopted in other countries and attempt to explain why this has occurred. We propose three explanations for the diffusion of ‘comply or explain’ codes around the world and undertake qualitative and quantitative (leximetric) analysis to test these propositions.\u0000Corporate governance, codes, ‘comply or explain’, listed companies, disclosure, transplantation","PeriodicalId":53431,"journal":{"name":"European Business Law Review","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42436801","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The practices of corporate controllers to divert company value to themselves at the expense of (minority) shareholders and creditors (tunnelling) present a continuing challenge for lawmakers to address. While there is a variety of ways to control selfdealing in public companies, one less studied and appreciated lever against valuediversion is the role of lenders of such companies. This article examines the lending arrangements and common contractual provisions (undertakings, (non-)financial covenants, restrictions), and argues that such arrangements have considerable potential to monitor, deter and restrain value-diversion via self-dealing in the debtor companies. Likely limits to such a potential, and various important factors are also examined. The study concludes with possible implications of such findings. Tunnelling, self-dealing, related party transactions, value-diversion, creditor protection, lending arrangements, covenants, debtor companies, lenders, creditor discipline
{"title":"Controlling Tunnelling through Lending Arrangements: The Disciplining Effect of Lending Arrangements on Value-Diversion, Its Limits and Implications","authors":"A. A. Gözlügöl","doi":"10.54648/eulr2022004","DOIUrl":"https://doi.org/10.54648/eulr2022004","url":null,"abstract":"The practices of corporate controllers to divert company value to themselves at the expense of (minority) shareholders and creditors (tunnelling) present a continuing challenge for lawmakers to address. While there is a variety of ways to control selfdealing in public companies, one less studied and appreciated lever against valuediversion is the role of lenders of such companies. This article examines the lending arrangements and common contractual provisions (undertakings, (non-)financial covenants, restrictions), and argues that such arrangements have considerable potential to monitor, deter and restrain value-diversion via self-dealing in the debtor companies. Likely limits to such a potential, and various important factors are also examined. The study concludes with possible implications of such findings.\u0000Tunnelling, self-dealing, related party transactions, value-diversion, creditor protection, lending arrangements, covenants, debtor companies, lenders, creditor discipline","PeriodicalId":53431,"journal":{"name":"European Business Law Review","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47961010","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The euro is for many reasons a remarkable legal tender. Even though formally introduced only in 1999, it soon became the second most important currency after the US Dollar in the international monetary system. The 20th anniversary of the euro offers an ideal occasion to reflect on decisive factors underlying its successes and failures. Employing a combined approach that links aspired reforms of the Economic and Monetary Union with novel topics arising from financial technology, this article derives important lessons for the next generation of virtual currencies and furthermore proposes a set of guiding principles for modern regulation and supervision. As a result, the study contributes to safeguarding the financial order in a global and dynamic environment. EU law, euro, virtual currency, crypto-asset, digital currency, legal tender, money, payment system, Economic and Monetary Union (EMU), European Central Bank (ECB), regulation and supervision, international standards, financial crisis, risk management, financial technology (fintech), Distributed Ledger Technology (DLT)
{"title":"The Euro @20: Lessons for the Next Generation of Virtual Currencies","authors":"Y. Chiu","doi":"10.54648/eulr2022002","DOIUrl":"https://doi.org/10.54648/eulr2022002","url":null,"abstract":"The euro is for many reasons a remarkable legal tender. Even though formally introduced only in 1999, it soon became the second most important currency after the US Dollar in the international monetary system. The 20th anniversary of the euro offers an ideal occasion to reflect on decisive factors underlying its successes and failures. Employing a combined approach that links aspired reforms of the Economic and Monetary Union with novel topics arising from financial technology, this article derives important lessons for the next generation of virtual currencies and furthermore proposes a set of guiding principles for modern regulation and supervision. As a result, the study contributes to safeguarding the financial order in a global and dynamic environment.\u0000EU law, euro, virtual currency, crypto-asset, digital currency, legal tender, money, payment system, Economic and Monetary Union (EMU), European Central Bank (ECB), regulation and supervision, international standards, financial crisis, risk management, financial technology (fintech), Distributed Ledger Technology (DLT)","PeriodicalId":53431,"journal":{"name":"European Business Law Review","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45708331","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Agency cost analysis is a fundamental aspect of Anglo-American company law theory. Within the company three types are said to exist: director/shareholder, majority/ minority and firm/outside world. Whilst law is, doctrinally, consistent at mitigating the first of these (the paradigmatic corporate agency cost), it fails to mitigate the second. Several features of UK company law exacerbate this agency cost, which is felt most acutely in private companies. Ostensible protections for the minority fail to mitigate these issues. This raises questions for company law theory: should law provide additional minority protections, or do fundamental differences exist between categories of agency costs identified within the company? Company Law, Corporate Law, Agency Costs, Private Companies, Minority Shareholders, Minority Remedies, Doctrinal Analysis, Economic Analysis of the Law
{"title":"The Plight of the UK Private Company Minority Shareholder","authors":"Jonathan Hardman","doi":"10.54648/eulr2022003","DOIUrl":"https://doi.org/10.54648/eulr2022003","url":null,"abstract":"Agency cost analysis is a fundamental aspect of Anglo-American company law theory. Within the company three types are said to exist: director/shareholder, majority/ minority and firm/outside world. Whilst law is, doctrinally, consistent at mitigating the first of these (the paradigmatic corporate agency cost), it fails to mitigate the second. Several features of UK company law exacerbate this agency cost, which is felt most acutely in private companies. Ostensible protections for the minority fail to mitigate these issues. This raises questions for company law theory: should law provide additional minority protections, or do fundamental differences exist between categories of agency costs identified within the company?\u0000Company Law, Corporate Law, Agency Costs, Private Companies, Minority Shareholders, Minority Remedies, Doctrinal Analysis, Economic Analysis of the Law","PeriodicalId":53431,"journal":{"name":"European Business Law Review","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47261558","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The paper explores the degree to which the recent European law of corporate restructuring may influence distributional decisions in financial resolution. Two fundamental issues arise: the minimum standard of protection for creditors and shareholders, and their treatment beyond this minimum standard.As to the first issue, the minimum distribution to these parties is based on their hypothetical treatment in a counterfactual. It is examined whether the liquidationbased counterfactual in resolution may be influenced by the concept of “next-bestalternative” in corporate restructuring.As to the second issue, while financial resolution allocates losses using a rather strict waterfall, corporate restructuring law may accommodate some broader flexibility, in particular if the novel relative priority rule is adopted. This degree of flexibility does not apply to financial resolution. But a certain parallel could be drawn between discretionary exclusions from bail-in in the BRRD and ad hoc derogations from priority rules in corporate restructuring. Bank resolution, bail-in, insolvency law, corporate restructuring, Directive 2019/1023/ EU, no creditor worse off, best interest of creditors, absolute priority rule, relative priority rule, standard of proof
{"title":"Corporate Restructuring Versus Financial Resolution: Benchmarks for the Lawful Treatment of Creditors and Shareholders","authors":"G. Psaroudakis","doi":"10.54648/eulr2021036","DOIUrl":"https://doi.org/10.54648/eulr2021036","url":null,"abstract":"The paper explores the degree to which the recent European law of corporate restructuring may influence distributional decisions in financial resolution. Two fundamental issues arise: the minimum standard of protection for creditors and shareholders, and their treatment beyond this minimum standard.As to the first issue, the minimum distribution to these parties is based on their hypothetical treatment in a counterfactual. It is examined whether the liquidationbased counterfactual in resolution may be influenced by the concept of “next-bestalternative” in corporate restructuring.As to the second issue, while financial resolution allocates losses using a rather strict waterfall, corporate restructuring law may accommodate some broader flexibility, in particular if the novel relative priority rule is adopted. This degree of flexibility does not apply to financial resolution. But a certain parallel could be drawn between discretionary exclusions from bail-in in the BRRD and ad hoc derogations from priority rules in corporate restructuring.\u0000Bank resolution, bail-in, insolvency law, corporate restructuring, Directive 2019/1023/ EU, no creditor worse off, best interest of creditors, absolute priority rule, relative priority rule, standard of proof","PeriodicalId":53431,"journal":{"name":"European Business Law Review","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2021-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45783087","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Commission evaluation of EU policies has become an important practice for the review of EU rules. This article is a case study of the 2016 evaluation of the remuneration rules applicable to financial executives (Directive No 2013/36 – CRD IV), which led to their amendments made by Directive 2019/878. These amendments have been negligible and despite the efforts of private interest groups operating in the financial sector, the so-called bonus cap has been maintained. This article explores the dynamics amongst the actors involved in the evaluation of the remuneration policy (Commission, European Banking Authority, and stakeholders) and provides an account of the factors that shaped such evaluation. This paper argues that the influence of private interest groups was limited. Although the bonus cap is a contested policy, and the evidence of its impact ambiguous, it still enjoys legitimacy. Financial executives’ remuneration policy, CRD IV Bonus Cap, Commission evaluation, Amendments of Directive No 2019/878.
{"title":"The Commission’s Evaluation of the Financial Executives’ Remuneration Policy and the Amendments of Directive No 2019/878","authors":"C. Petrucci","doi":"10.54648/eulr2021038","DOIUrl":"https://doi.org/10.54648/eulr2021038","url":null,"abstract":"The Commission evaluation of EU policies has become an important practice for the review of EU rules. This article is a case study of the 2016 evaluation of the remuneration rules applicable to financial executives (Directive No 2013/36 – CRD IV), which led to their amendments made by Directive 2019/878. These amendments have been negligible and despite the efforts of private interest groups operating in the financial sector, the so-called bonus cap has been maintained. This article explores the dynamics amongst the actors involved in the evaluation of the remuneration policy (Commission, European Banking Authority, and stakeholders) and provides an account of the factors that shaped such evaluation. This paper argues that the influence of private interest groups was limited. Although the bonus cap is a contested policy, and the evidence of its impact ambiguous, it still enjoys legitimacy.\u0000Financial executives’ remuneration policy, CRD IV Bonus Cap, Commission evaluation, Amendments of Directive No 2019/878.","PeriodicalId":53431,"journal":{"name":"European Business Law Review","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2021-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44856747","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Book Review: Anu Bradford, The Brussels Effect: How the European Union Rules the World (Oxford University Press 2020),","authors":"Natalie L Dobson","doi":"10.54648/eulr2021043","DOIUrl":"https://doi.org/10.54648/eulr2021043","url":null,"abstract":"","PeriodicalId":53431,"journal":{"name":"European Business Law Review","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2021-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48654169","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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