Abstract
This chapter takes a broader perspective on issues of convergence and divergence between legal systems, in the light of law and economics and the comparative law literature. It deals with the set of fundamental questions which are typically arising in the academic and policy debate. First of all, it examines why different legal systems would diverge, paying attention to non-deliberate explanations next to the more traditional ones. In so doing, this chapter illustrates the basic proposition that the existing state of affairs is not fortuitous and will usually turn out to be in equilibrium. Secondly, this chapter touches upon methodology, i.e. what is divergence and how it can be detected. It reiterates a more general proposition arising from any multi-disciplinary approach to the law, namely that it is crucial that the law be seen in a broader context, i.e. including both the policy choices underlying it and its practical outcome. Thirdly, this chapter explains under which conditions divergence should be seen as a problem. Finally, it explores possible solutions to the problem. On these last two issues, the chapter rest on another fundamental proposition from economics: almost every change involves a trade-off. In that respect, one should be careful before concluding that divergence needs to be removed or that harmonisation is the appropriate way to remove it.
Filomena Chirico is an official at the European Commission, Directorate General Competition (DG COMP). Her contributions reflect her views and not those of the European Commission. At the time of her contribution to the project, she was Assistant Professor, and a member of the Tilburg Law and Economics Centre (TILEC).
Pierre Larouche is Professor of Competition Law, Tilburg Law School, Tilburg University and a founding director of TILEC.
A version of this chapter was published as “Conceptual divergence, functionalism and the economics of convergence”, in Prechal et al. 2008, 463–494. The authors want to acknowledge the contributions made by Arnald Kanning (on regulatory competition) and the comments received from Eric van Damme, Michael Faure and participants at seminars held in Amsterdam (ACLE), Tilburg (TILEC) and the National University of Singapore, as well as the conferences held in Utrecht in the course of the “Binding Unity / Diverging Concepts” project.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Between different legal orders or within a single order which allows this practice under certain circumstances, like a federation.
- 2.
Prechal et al. 2008.
- 3.
Of course, there is no such point of reference as a “spontaneous” market economy at the scale and level of our large industrialsed societies, as economists would sometimes claim. Economics tend to take for granted a set of basic law which enables the market economy to work in the first place (usually the basic legal disciplines as they would be reflected in codes or the common law). “Spontaneous” should perhaps be better read as “bottom-up” in the context of this project.
- 4.
The discussion on the goals of regulating is very wide. From the perspective of the economic analysis of law, see Kaplow and Shavell 2001.
- 5.
- 6.
For instance the doctrine of Wegfall der Geschäftsgrundlage in Germany as a result of the Great Depression.
- 7.
- 8.
Anthony Ogus argued, for instance that “the acknowledged characteristics of ‘legal culture’, a combination of language, conceptual structure and procedures, constitute a network which, because of the commonality of usage, reduces the costs of interactive behaviour”. See Ogus 2002.
- 9.
Hence the practice of pointing to the majority and minority views when there is a controversy.
- 10.
Katz and Shapiro 1994.
- 11.
This lies at the heart of the commercial strategy of most firms active in sectors affected by network effects.
- 12.
The classical example (David 1985) is the QWERTY keyboard that once established itself as a standard, could not be replaced by a more efficient alternative: the users had been trained in the QWERTY system and could not easily switch all together to the other system. See Brian 1989; Liebowitz and Margolis 1999.
- 13.
- 14.
Mattei 2001.
- 15.
- 16.
- 17.
To be sure, if it can be argued that national lawyers prefer divergence for the sake of their own local interest, the same way and on the basis of the same public choice arguments, it can also be observed that comparatist lawyers represent another—albeit far less powerful—pressure group with the opposite interest in favouring harmonisation.
- 18.
- 19.
In the case of conceptual divergence, this amounts to looking beyond the keyword and retrieving the subset which this keyword represents.
- 20.
The functionalist method is discussed in greater detail infra, in Chap. 10 of this book, Sect. 10.3.
- 21.
Ibid., Sect. 10.3.2.
- 22.
As is discussed further in Chap. 10 of this book, Sect. 10.3.2.1., differences in outcome are often to be explained by policy differences, and functionalist comparative law has tended not to pay enough attention to the policies and principles underlying the law.
- 23.
Michaels 2006, 339.
- 24.
Ibid., 357.
- 25.
A point which Michaels, Ibid., who also considers equivalence functionalism as the most robust version of functionalism, also underlines at 373 and ff.
- 26.
Infra,Chap. 10.
- 27.
This would be in line with the autopoeitic theory put forward by Teubner 1993 on the basis of the work of N. Luhmann.
- 28.
See for instance the criticism directed at Marxist functionalism by Castoriadis 1975, 159 and ff.
- 29.
In fact, in network markets, network effects can be overcome and a new solution can replace the one previously in place, not necessarily by means of a top–down intervention, but also through bottom-up provision of incentives to transition.
- 30.
Bhagwati 1996, 9 and ff., a survey of the arguments against diversity is presented, by highlighting (1) the philosophical arguments (basic human rights beyond national borders, distributive justice and fairness), (2) the structural arguments (globalisation), (3) the economic arguments (domestic decisions impairing international trade; distributive concerns and predation) and (4) the political arguments (protectionism and the need for a common set of standards within an integrated union).
- 31.
A discussion of this point with respect to drafting a European Civil Code can be found in Grundmann and Stuyck 2002.
- 32.
ECJ, 20 February 1979, Case 120/78, Rewe-Zentral v. Bundesmonopolverwaltung für Branntwein [1979] ECR 649.
- 33.
ECJ, 24 November 1993, Cases C-267/91 and C-268/91, Keck [1993] ECR I-6097.
- 34.
ECJ, 8 March 2001, Case C-405/98, Konsumentombudsmannen (KO) v. Gourmet International Products AB (GIP) [2001] ECR I-1795.
- 35.
ECJ, 5 October 2000, Case C-376/98, Germany v. Parliament [2000] ECR I-8419. Following a series of cases where that judgment seemed to have been weakened, the ECJ (Grand Chamber) has reaffirmed its approach on 12 December 2006, Case C-380/03, Germany v. Parliament [2006] ECR I-11573.
- 36.
Ibid., at Rec. 84.
- 37.
An obvious point for economists. See, for example, in the context of discussions concerning harmonisation: Sun and Pelkmans 1995.
- 38.
Save for what is discussed in the subsequent section.
- 39.
Hayek 1978, 179.
- 40.
See supra, Sect. 2.1.
- 41.
On the costs of diversity, see Ribstein and Kobayashi 1996, 138 and ff.
- 42.
More extensively on this, see Wagner 2005.
- 43.
This is referred to as rational ignorance: I will spend on information only to the point when the last bit of information I have acquired allows me to reap net additional benefits.
- 44.
In this sense, see Wagner 2005, and the references contained therein.
- 45.
It has been noted, however, that in the debate launched by the Commission on the harmonisation of contract law at the European level, some associations of SMEs have expressed their opposition to full harmonisation.
- 46.
There is a shared presumption in the literature that full harmonisation generally brings about higher costs than those caused by maintaining diversity.
- 47.
See Wagner 2005.
- 48.
See, for example, Pozzo 2003.
- 49.
It has been remarked, however, that some areas of law might be deeply connected with local preferences and therefore less subject to “regulatory emulation” and that this might in particular be the case of “interventionist” law, as opposed to “facilitative” law. See Ogus 2002.
- 50.
- 51.
Or at different levels in a single legal system with a federal structure.
- 52.
This is generally the case for legislators that, each within their geographical borders, have the power to regulate the same kind of situations.
- 53.
Romano 1985.
- 54.
Legal emulation is developed in greater detail infra, Chap. 10, Sect. 10.4.
- 55.
Of course this is not meant to deny that some adaptations were not the fruit of choice but rather the consequence of certain obligations, but the described convergence was certainly not a deliberate act of harmonisation.
- 56.
In this direction, Barnard and Deakin 2002, 220.
- 57.
In favour of this alternative, Alférez 1999.
References
Barnard C, Deakin S (2002) Market access and regulatory competition. In: Barnard C, Scott J (eds) The law of the single European market, unpacking the premises. Hart, Oxford, p 220
Becker G (1983) A theory of pressure groups for political influence. Quart J Econ 98:371
Bergh R (2000) Towards an institutional legal framework for regulatory competition in Europe. Kyklos 53:435
Bhagwati J (1996) The demand to reduce domestic diversity among trading nations. In: Bhagwati J, Hudec R (eds) Fair trade and harmonization. MIT Press, Boston
Brian AW (1989) Competing technologies, increasing returns, and lock-in by historical events. Econ J 97:642
Castoriadis C (1975) L’institution imaginaire de la société. Seuil, Paris
David PA (1985) Clio and the economics of QWERTY. Am Econ Rev 75:332
Esty D, Geradin D (2001) Regulatory competition and co-opetition. In: Esty D, Geradin D (eds) Regulatory competition and economic integration: comparative perspectives. OUP, Oxford
Farber DA, Frickey PP (1991) Law and public choice: a critical introduction. University of Chicago Press, Chicago
Garcimartín Alférez FJ (1999) Regulatory competition: a private international law approach. Eur J Law Econ 8:251
Gillette CP (1988) Lock-in effects in law and norms. Boston Univ L Rev 78:813
Grundmann S, Stuyck J (eds) (2002) Academic green paper on contract law. Kluwer, Deventer
Hadfield GK (2000) The price of law: how the market for lawyers distorts the justice system. Mich L Rev 98:953
Hart H (1954) Definition and theory in jurisprudence. L Quart Rev 70:37
Hataway O (2001) Path dependency in the law: the course and pattern of legal change in a common law system. Iowa L Rev 86:601
Hayek FA (1978) Competition as a discovery procedure. In: Hayek FA (ed) New studies in philosophy, politics, economics and the history of ideas. Routledge, London, p 179
Heine K, Kerber W (2002) European corporate laws, regulatory competition and path dependence. Eur J L Econ 13:47
Kaplow L, Shavell S (2001) Fairness versus welfare. Harv L Rev 114:961
Katz M, Shapiro C (1985) Network externalities, competition and compatibility. Am Econ Rev 75:425
Katz M, Shapiro C (1994) Systems competition and network effects. J Econ Pers 8:93
Legrand P (1996) European legal systems are not converging. ICLQ 45:52
Legrand P (2004) A diabolical idea. In: Hartkamp AS et al (eds) Towards a European civil code. Kluwer Law International, Deventer, p 245
Lemley MR, McGowan D (1998) Legal implications of network economic effects. Cal L Rev 86:479
Liebowitz SJ, Margolis SE (1994) Network externality: a uncommon tragedy. J Econ Pres 8:133
Liebowitz SJ, Margolis SE (1999) Path dependence. In: Bouckaert B, de Geest G (eds) Encyclopaedia of law and economics. Edward Elgar, Chatham
Mattei U (2001) Legal systems in distress: HIV-contaminated blood, path dependency and legal change. Glob Jurist Adv 1, Article 4
Michaels R (2006) The functional method of comparative law. In: Reimann M, Zimmermann R (eds) The Oxford handbook of comparative law. OUP, Oxford, p 339
Mueller DC (1989) Public choice II. CUP, Cambridge
Ogus A (1999) Competition between national legal systems: a contribution of economic analysis to comparative law. ICLQ 48:405
Ogus A (2002) The economic basis of legal culture: networks and monopolization. Oxf J Leg Stud 22:420
Pozzo B (2003) Harmonisation of European contract law and the need of creating a common terminology. Eur Priv L Rev 11:754
Prechal S et al (eds) (2008) The coherence of EU law. OUP, Oxford
Ribstein LE, Kobayashi BH (1996) An economic analysis of uniform state laws. J Leg Stud 25:131
Roe MJ (1995) Chaos and evolution in law and economics. Harv L Rev 109:641
Romano R (1985) Law as a product: some pieces of the incorporation puzzle, J L Econ Org 1:225
Ross A (1957) Tu-tu. Harv L Rev 70:812
Shy O (2001) The economics of network industries. CUP, Cambridge
Stigler GJ (1971) The theory of economic regulation. Bell J Econ Man Sci 2:3
Sun JM, Pelkmans J (1995) Regulatory competition in the single market. J Common Mark Stud 33:67
Teubner G (1993) Law as an autopoietic system. Blackwell, Oxford
Teubner G (1998) Legal irritants: good faith in British law or how unifying law ends up in new divergences. Mod L Rev 61:11
Wagner H (2005) Economic analysis of cross-border legal uncertainty—the example of the European union. In: Smits J (ed) The need for a European contract law. Empirical and legal perspectives. Europa Law Publishing, Groningen
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2013 T.M.C. ASSER PRESS, The Hague, The Netherlands, and the author(s)
About this chapter
Cite this chapter
Chirico, F., Larouche, P. (2013). Convergence and Divergence, in Law and Economics and Comparative Law. In: Larouche, P., Cserne, P. (eds) National Legal Systems and Globalization. T.M.C. Asser Press, The Hague, The Netherlands. https://doi.org/10.1007/978-90-6704-885-9_2
Download citation
DOI: https://doi.org/10.1007/978-90-6704-885-9_2
Published:
Publisher Name: T.M.C. Asser Press, The Hague, The Netherlands
Print ISBN: 978-90-6704-884-2
Online ISBN: 978-90-6704-885-9
eBook Packages: Humanities, Social Sciences and LawLaw and Criminology (R0)
