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Issue 2, Volume 64

Finance Against Law: The Case of China

Finance Against Law: The Case of China

By Shitong Qiao

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Can there be a highly developed financial market without legal protection for investors and creditors? The influential law and finance literature is built on the assumption that legal protection is essential to the development of an impersonal financial market. This Article investigates how two financial markets of trillions of dollars have developed extralegally in the past two decades despite the risk of regulatory enforcement and contract defaults. Specifically, I examine (1) how Chinese internet companies from Sina to Alibaba have designed contracts to circumvent the Chinese government’s ban on foreign capital in its internet industry and (2) how Chinese entities and foreign investors contract out of China’s stringent regulations on the issuance of international bonds. These extralegal contracts incur significant legal risks and are unlikely to be enforced in Chinese courts. Nevertheless, numerous international investors have invested in China through such contracts, providing capital essential to the country’s economic growth over the past two decades. My research reveals that (1) the extralegality of both the international capital market supporting China’s internet companies and the market of Chinese-issued international bonds originates from China’s struggle between development, which requires access to the international capital market, and control, which requires keeping both Chinese enterprises and foreign capital on a short leash; and (2) networks of Chinese state actors, market intermediaries, and Chinese corporations concentrated in certain industries replace judicial enforcement in supporting financial development of a remarkable duration and scale.

Based on the above case studies, this Article coins the term “finance against law,” challenging the necessity of law to developing impersonal and sophisticated financial markets. Law and finance scholars are right that impersonal finance needs the backing of the state, but wrong to assume that the state can only back impersonal finance with legal institutions. China’s approach, “governing by extralegality,” sheds light on the role of the state and politics in extralegality, pointing to a new direction that scholars of law and social norms who mainly focus on private ordering should attend to. The Chinese experience also demonstrates an approach of developing markets by circumventing existing legal and regulatory barriers, further complicating the relationship between law and development.

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Issue 2, Volume 64

State-Academic Lawmaking

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State-Academic Lawmaking

By David Hughes and Yahli Shereshevsky

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What role does legal scholarship play in the development of international law? How do states advance a preferred international legal position when the formal methods of creating or amending the law are unavailable? As global stagnation and great power competition increasingly preclude access to the formal methods of international lawmaking, those states that seek to drive international agendas to gain or maintain influence are pursuing novel methods to shape international law. This article identifies one such method, what we term “state-academic lawmaking.” State-academic lawmaking describes an observable, generative method by which purportedly independent academic articles, authored by an esteemed legal expert(s), and published in a leading law journal, are advanced as an informal means of international lawmaking.

By producing purportedly independent academic articles, state-academic lawmaking couples the state’s formal lawmaking authority with the value of scholarly neutrality and expertise that is assumed of work that is independently published in a legal journal, but which also makes an explicit lawmaking claim. In this article, we present a series of case studies that document a form of informal lawmaking that has increasingly been used by the United States, China, and other influential states. The case studies that document this burgeoning lawmaking phenomenon describe how these powerful, but diverse, states use legal scholarship to pursue legal agendas in the most contested fields of international law – the use of force, international humanitarian law, and the law of the sea.

Through the lens of state-academic lawmaking, we offer a critical and socio-legal account of the microprocesses that drive informal lawmaking. These observations provide important insights into broader questions about international law that challenge existing understandings of how the law develops. They evidence a shift from vertical to horizontal lawmaking that presents a novel conception of the relationship between international law and power, that bears implications for how states from the Global South can amplify their voices within the lawmaking processes from which they have traditionally been excluded, and that complicates understandings about how states on either side of the so-called authoritarian-democratic divide engage with international law.

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Issue 2, Volume 64

Bend, Don’t Break: China’s Approach to the International Human Rights Order

Bend, Don’t Break: China’s Approach to the International Human Rights Order 

By Jackson Neagli

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I argue that Beijing is seeking to alter, but not undermine or replace, the international human rights order. Generally speaking, I agree with Andrew J. Nathan that “the liberal international order is resilient and that China prefers to join it rather than to overturn it.”19 It follows that, with respect to human rights in particular, Beijing “does not appear to be aiming either for major changes in the regime or for its abandonment,” but instead “appears to be content to work within the existing human rights institutions to shape them to its own interests.” Put otherwise, Beijing is seeking to bend, not break, the current human rights order.

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Issue 1, Print Journal, Volume 64

Courts Without Separation of Powers: The Case of Judicial Suggestions in China

Courts Without Separation of Powers: The Case of Judicial Suggestions in China

By Minhao Benjamin Chen & Zhiyu Li

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Like courts everywhere else, socialist courts are tasked with settling disputes. Their decisions are backed by the force of law. But unlike courts everywhere else, socialist courts are also required to support official ideology and policies. They are subject to legislative supervision and party leadership in the performance of their duties. The repudiation of the notion of separation of powers and the instrumental conception of law are conventionally taken to be defining—and defective—aspects of socialist legality.

But the political accountability of socialist courts could also be empowering. Because socialist courts answer, in theory, to the party and the people, they have the warrant and duty to contribute to the orderly administration of society. Constitutional scripture does not prohibit socialist courts from venturing beyond the confines of adjudication to address issues not presented for resolution.

We study how courts in the world’s largest socialist regime intervene in policy domains ranging from public health to education to crime by making judicial suggestions. These suggestions identify issues that go beyond the legal questions raised by a case and may be directed to private actors like business enterprises and public entities like governmental agencies. Though not binding on their recipients, judicial suggestions are often acknowledged, sometimes adopted, and have occasionally even precipitated legal reform.

Our exploration of judicial suggestions in the People’s Republic of China illuminates a function that is available to socialist courts because of their political subordination to the party-state. More broadly, the approach exemplified here steps outside the rule of law and judicial independence paradigms to examine how constitutional doctrine shapes the boundaries of institutions, thereby contributing to a more complete understanding of socialist courts and the roles that courts might usefully take on in a world without separation of powers.[hr gap=”1″]

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Issue 1, Print Journal, Volume 64

Reconceptualizing the Party-Appointed Arbitrator and the Meaning of Impartiality

Reconceptualizing the Party-Appointed Arbitrator and the Meaning of Impartiality

Catherine A. Rogers

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Despite the popularity of the age-old practice, several prominent arbitrators and industry leaders have proposed eliminating party appointed arbitrators. These critics contend that party appointment injects bias into a tribunal that is supposed to be impartial.

Various empirical studies seem to confirm the uncomfortable contradiction between the rhetoric of impartiality and the purportedly biased conduct of party-appointed arbitrators. Most of these empirical claims, however, are deeply flawed both in their substance and methodology. More fundamentally, these claims ignore Legal Realism’s insight that decisionmaker “bias” (or reliance on extra-legal factors) is an inevitable consequence of law’s inherent indeterminacy.

If some forms of bias are inevitable, it does not make sense to ask whether bias exists. Instead, more nuanced questions must be asked: Which forms of bias are legitimate? Who decides which forms of bias are legitimate? And how do we police the boundary between legitimate and illegitimate forms of bias?

This Article answers these questions with respect to party-appointed arbitrators.

Rejecting both critiques and defenses, this Article makes an affirmative case for party-appointed arbitrators. This Article reconceptualizes party-appointed arbitrators as an essential structural check against various forms of cognitive bias that necessarily exist among all arbitrators on all arbitral tribunals. Arbitrators’ cognitive biases cannot be eliminated, even by eliminating party-appointed arbitrators. They can, however, be bounded and counter-balanced by reconceiving party-appointed arbitrators as a type of Devil’s Advocate that guards against the cognitive biases that distort tribunal decision making.

In this reconceptualized role, party-appointed arbitrators serve three important functions: 1) They provide a check against individual- and group-based cognitive biases; 2) They also ensure representativeness on the tribunal; and 3) they provide a structural counterweight to the opposing party-appointed arbitrator. This reconceptualized role, in turn, delimits a range of specific impartiality obligations that are both more conceptually coherent and more consistent with actual practice and expectations

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Issue 1, Print Journal, Volume 64

Expert Governance of Online Speech

Expert Governance of Online Speech

By Brenda Dvoskin

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In a world of fundamental disagreements about how social media companies should govern speech, it is striking that nearly everyone agrees that online speech governance should be based on human rights. The human rights project for content moderation proposes that social media platforms align their own internal speech policies with international human rights law. It seeks, I argue, a system of expert governance: one in which a corporate technocracy applies a set of exogenous principles imagined as objective and global. Ultimately, this governance model shifts power to experts under the illusion of empowering the people.

To support these claims, this Article unveils the intellectual work that scholars, U.N. bodies, and the Facebook Oversight Board are doing to portray international human rights law as an objective synthesis of the global public interest. The Article analyzes how they have recreated several dimensions of international law. A salient example is their new reading of the U.N. Guiding Principles on Business and Human Rights. According to a recent interpretation, companies are expected to align their content policies with international law. But this interpretation widely diverges from the text and the original meaning of the instrument. The Article also examines other tools the project uses such as creating boundaries between local facts and normative work and framing normative questions as technical challenges. Overall, the Article provides a deep dive into the toolkit that scholars, advocates, and the Facebook Oversight Board have developed to date to pursue a system of expert governance of online speech.

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