Abstract
This chapter demonstrates the problem-solving nature of creative legal work, focussing on an example of how cross-border transactions in emergent economies have been satisfactorily constructed in the absence of established local law and regulation. Lawyers use contract to create private regulatory structures as surrogates for state or international controls. The chapter however, also demonstrates the negative consequences of legal creativity, which is routinely used not to replace regulation but to circumvent it. Though legal creativity can be a force for regulation, the driving force behind it – innovation for competitive advantage – is more likely overall to frustrate regulation than to promote it.
Published with permission from M. Likosky ed., Transnational Legal Processes (LexisNexis, Butterworths, 2002).
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Notes
- 1.
See for example R. Goode, “Reflections on the Harmonisation of Commercial Law” (1991) 1 Uniform Law Review 54 [Goode]; See also M. J. Bonell (1992) “Unification of Law by Non-Legislative Means: the UNIDROIT Draft Principles for International Commercial Contracts” 40(3) The American Journal of Comparative Law 617.
- 2.
See for example, V. Gessner, and A. C. Budak eds., Emerging Legal Certainty: Empirical Studies on the Globalization of Law (Dartmouth, 1998) [Gessner and Budak].
- 3.
G. Teubner ed., Global Law Without a State (Dartmouth, 1997) [Teubner].
- 4.
J. Flood, and E. Skordaki, “Normative Bricolage: Informal Rule-making by Accountants and Lawyers in Mega-insolvencies”, G. Teubner ed., Global Law Without a State (Dartmouth, 1997) [Flood and Skordaki]. Flood and Skordaki analyse the role of lawyers and others in a specific case, but with an interest in the collective creation of norms to deal with a cross-border dispute rather than the construction of a cross-border transaction in the first place.
- 5.
Gessner and Budak (n 2).
- 6.
Flood and Skordaki (n 4).
- 7.
Goode (n 1).
- 8.
See for example, H. Mertens, “Lex Mercatoria: A Self-applying System Beyond National Law?”, G. Teubner ed., Global Law Without a State (Dartmouth, 1997); See also R. Banakar, “Reflexive Legitimacy in International Arbitration”, Gessner and Budak eds., Emerging Legal Certainty: Empirical Studies on the Globalization of Law (Dartmouth, 1998) [Banakar].
- 9.
Y. Dezalay, and B. G. Garth, Dealing in Virtue: International Commercial Arbitration and the Internationalization of Legal Practice (University of Chicago Press, 1996); Banakar ibid.
- 10.
D. McBarnet, “Law and Capital” (1984) 12(3) International Journal of the Sociology of Law 233 [McBarnet, “Law and Capital”].
- 11.
See T. Frankel, “Cross-border securitization: without law, but not lawless” (1998) 8(2) Duke Journal of Comparative and International Law 255 [Frankel] for an interesting elaboration of this.
- 12.
For examples in the context of the Single European Market, see D. McBarnet, and C. Whelan, “International Corporate Finance and the Challenge of Creative Compliance”, S. Wheeler ed., The Law of the Business Enterprise (Oxford University Press, 1994).
- 13.
The project as a whole draws on data on legal transaction work collected in the course of research conducted over several years in the areas of tax, corporate and banking law and practice (all of which inevitably involved transnational deals), along with new work on the specific issue of transnational transactions. The research has involved documentary analysis, including analysis of contracts and transaction structures, participant observation and especially in-depth technical interviews with individuals from major international law firms, international accounting firms, senior in-house legal counsel for multinational corporations, barristers, bankers, regulators and government agencies. Funding sources include the ESRC, the Jacob Burns Foundation and the European Commission.
- 14.
The analysis that follows quotes from some of the documentation studied in detail as part of the research.
- 15.
Kazakhstan Survey, May 1997.
- 16.
Teubner (n 3) xiv also observes relationships between the public and the private in the global context, although in his case in the context of norm creation by non-governmental organizations – “private governments” with “a public character”.
- 17.
Not that this alone guarantees reliable reporting. “Creative accounting” as well as enforcement issues remain a problem even where there are established rules. See I. Griffiths, Creative Accounting (Sidgwick and Jackson, 1986) and D. McBarnet, and C. Whelan, Creative Accounting and the Cross-eyed Javelin Thrower (Wiley, 1999) [McBarnet and Whelan, Creative Accounting].
- 18.
How legally binding in practice these are depends, of course, on the efficacy of cross-border enforcement.
- 19.
Teubner (n 3) xiii.
- 20.
See Y. Dezalay, Marchands de Droit (Fayard, 1992).
- 21.
McBarnet, “Law and Capital” (n 10); M. Powell, “Professional Innovation: Corporate Lawyers and Private Lawmaking” (1993) 18(3) Journal of Law and Social Inquiry 423; Frankel (n 11).
- 22.
From research by D. McBarnet, and C. Whelan.
- 23.
Gessner and Budak (n 2) 438; See also Banakar (n 8) 382.
- 24.
McBarnet, “Law, Policy, and Legal Avoidance: Can Law Effectively Implement Egalitarian Policies?” (1988) 15(1) Journal of Law and Society 113; D. McBarnet, and C. Whelan, “Creative Compliance and the Defeat of Legal Control: The Magic of the Orphan Subsidiary”, K. Hawkins ed., The Human Face of Law (Oxford University Press, 1997) [McBarnet and Whelan, “Creative Compliance”].
- 25.
D. McBarnet, and C. Whelan, “The Elusive Spirit of the Law: Formalism and the Struggle for Legal Control” (1991) 54(6) The Modern Law Review 848; McBarnet and Whelan, “Creative Compliance” Ibid; McBarnet and Whelan, Creative Accounting (n 17).
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McBarnet, D. (2009). Transnational Transactions: Legal Work, Cross-Border Commerce and Global Regulation. In: Masson, A., Shariff, M. (eds) Legal Strategies. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-02135-0_18
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