Introduction
The purpose of this paper is to critically examine the article entitled “The Globalization of American Law,” as written by R. Daniel Kelemen, and Eric. C. Sibbitt, and published within International Organization, Vol. 58, No. 1 in 2004 (Kelemen, Sibbitt, 2004). It was published by the Cambridge University Press on behalf of the International Organization Foundation. In critically analyzing the article, the following areas will be addressed: a summary of the arguments made by the authors, the expertise of the authors, and whether they are qualified to answer the question under review, whether their arguments hold up to logical scrutiny, and whether or not viable alternative arguments are presented and treated accordingly. Based on these criteria, and the review of the article previously reverenced, it is the opinion of this reviewer that the article in question does not stand up under logical scrutiny, and that the arguments made by the authors should be considered as an incomplete explanation to the complex phenomenon addressed within the article.
Summation of “Globalization of American Law”
The central thesis presented in this article is that the apparent convergence between the legal styles found in democratized, industrialized countries to that found in the American system of justice is not adequately explained by international regulatory competition or emulation. Instead, the authors propose that it is more adequately explained by the forces of economic liberation and political fragmentation being experienced in many of the countries that fall into the category presented above.
These two factors, economic liberalization and political fragmentation have been shown to undermine the traditional, and informal approaches to regulations previous utilized by many sovereign nations. They have also, according to the authors reasoning, provided functional pressures and political incentives to make the movement toward a more formalized and transparent legal style.
This article is subdivided into six main sections: (1) A brief overview of the topic under study, and an overview of the American legal style, (2) a brief exploration of alternative explanations for the phenomenon, (3) The explanation proposed by the article, (4) a case study of the Americanization of the European Union’s legal style, (5) a case study of the Americanization of Japan’s legal style, and (6) conclusions drawn by the authors. Each section will be summarized in the following paragraphs.
Introduction, Topic Overview, and Overview of the American Legal Style
This initial section of the article states that there has been a substantial body of research on comparative public policy and law completed that would suggest that the U.S. regulatory policies are distinctive among the international community, and mentions one article (Kagan, Axeland, 1997) to illustrate this assertion. The article then details the characteristics of the American legal system and that it is manifests themselves through transparency, expansive disclosure requirements, and formalized, adversarial procedures in place. It is also characterized by expensive legal contestations involving lawyers, and judicial intervention in administrative affairs.
This description is that compared to some of the legal style found outside the United States, with the focus placed on countries that are considered to be both industrialized and democratic by definition. The compared legal styles are presented as a combination of informal and cooperative styles with little transparency provided to their inner operations to outside interest parties. These systems rely less on the involvement of attorney’s and judicial courts, but rather on mutually beneficial actions and bureaucratic mechanisms. The section then describes the purpose of the article is to advance the debate on the globalization of law, and link it more broadly to the debates of globalization and policy convergence.
The article then proceeds to describe how the main characteristics of the American legal style, that of transparency, and broad empowerment of the private sector to assert legal rights is manifested within the system. Transparency is illustrated by the number of detailed, transparent legal rules, disclosure requirements, and enforcement proceedings by various regulatory agencies. These manifestations also collectively illustrate how transparency works as a regulatory force by deterring actions that would not withstand public scrutiny. Examples of the empowerment of the private sector is illustrated by such things as liberal discovery rules, lax standing requirements, class action lawsuits, contingency fee arrangements, as well as a multitude of available attorneys and lawyers. These manifestations also help to regulate products and services entering into the public sector by playing an integral part in the advising on policy interest, and legal contestation that could conceivably lead to administrative or legislative changes.
After describing the various manifestations of the American legal style and how it can and does effect the general policy making procedures, the article then focuses on two specific areas of regulatory action. The first is that of securities regulation; the second is product liability law. It states that securities law focus on regulating the quality of disclosure, thereby focusing on maintaining the relative transparency of the operations. It makes no effort to regulate the securities themselves. The regulatory process for securities is shown to be extremely transparent, including the public disclosure of new rules, public commentary, and even the availability of telephone question and answer sessions. Empowerment of the private parties is illustrated by the Securities Act of 1933 and the Securities Exchange Act of 1934, which provided procedures for private individuals to sue the Securities Exchange Commission (SEC) for further disclosure. It then focuses on product liability law, which is shown to rely heavily on the threat of litigation by private parties to identify defective products. Through the use of strict liability, consumers do not have the burden of proving negligence, merely that a defective product caused them harm. This easily met threshold for litigation has led manufacturers to develop more stringent guidelines for production and development.
Explaining the Spread of American Legal Style – Alternative Views
This next section describes two generalized theories that are often used as an explanation for the apparent spread of American legal style to other nations. The first is an argument commonly referred to as “race to the bottom,” or a competition in laxity. This argument suggests that competition between jurisdictions to retain corporate entities lead to a reduction in the stringency of regulations. Conversely, the argument known as the “race to the top is also presented, indicating that as a particular jurisdiction adopts a more stringent set of guidelines, corporations wanting to compete in that market will raise their own standards to comply. This in turn, leads to the standards within the home country of the corporation becoming more stringent, since the corporations already have their procedures in place.
According to the article, both these popular explanations for the convergence of legal styles do not stand up to scrutiny. For the “race to the bottom argument to be valid, it would stand to reason that foreign countries would emulate United States regulation, assuming that the U.S. has lower standards. However, in some instances this assumption is a false one. In both securities and product liability law, the U.S. has been shown to be more stringent.
Also, the argument of “race to the top” cannot be used to adequately explain the convergence of legal styles simply because this argument is mainly limited to goods and services that are traded, indicating that changes in such things as product liability can only be explained another way.
Article Explanation for the Convergence
According to the article, there are two driving forces that could easily explain the convergence of other countries legal style with that of the United States. These are economic liberalization, and political fragmentation. According to the article, economic liberalization, specifically two decades of deregulation and trade liberalization has affected both the national legal and regulatory systems of the various countries in question. It allows new actors into previously closed markets, and current ones to expand into other markets. The fact that there are now more corporations vying in the limited market space also would mean that the previous system of opaque cooperation and close knit ties might not be as suitable. It is difficult to maintain a system of mutually beneficial services when there are so many different players on the field. So, in one sense, according to the authors of the article, economic liberalization has led ultimately to further re-regulation to help develop and maintain a transparent system where all parties can function effectively. This development has also led to a greater demand for people skilled in the law profession to protect the interest of consumers, and corporation alike.
Political fragmentation is defined by the authors as when the centralized political authority of a country changes into a system with multiple political entities. Prior to this occurrence, there is no significant need for codified legalistic means to control those being regulated. Instead, often an informal incentive structure is utilized. The courts themselves play a weaker role, since there is a lack of enforceable regulations. When the fragmentation occurs, however, judicialization becomes a more attractive form of regulation. This is because if there are more individuals or parties that can veto a particular enforcement regulation, there is more need for compromise and cooperation, making an informal incentives program extremely complicated. Therefore, law and policy makers within a fragmented political system often create laws or regulations that can withstand both legislative and bureaucratic drift. In addition, political fragmentation can lead to a more adversarial legal system through various interested parties reporting to an authority on the actions of other parties.
The Americanization of Law Styles in the European Union
Generally speaking, the legal style of countries found in the European Union place a much weaker importance on lawyers in the development and implementation of regulatory policy. The policy has been historically developed by interest groups and the government working together, not through litigation as in the United States. The European Union has historically relied on closed policy making networks, and the broad discretion of regulators to achieve their regulatory goals. Conflicts are usually resolved informally among the interested parties. Lawyers and attorneys, if used, are utilized in private, small time litigation, and not company policy alterations.
However, with the economic liberalization of the EU internal markets seen over the last few decades, the resultant deregulation has led to the undermining of the established cooperative relations. Because of the resultant diversity from new parties entering the various markets, the subsequent re-regulation has been shown to be more formalized and transparent. In addition, political fragmentation has caused once country specific regulatory bodies to be replaced somewhat by an authority system split between the EU member states and the EU Council of Ministers and the European Commission and the European Parliament respectively. The distrust among the parties involved has led to a demand for transparency and public participation. This in turn, according to the argument presented by the authors, has led to detailed laws, including defined goals, deadlines, and procedural requirements. In fact the European Court of Justice (ECJ) was developed to be insular, and deals only with the non-compliance of the EU member states.
In addition to alteration in the general policy making procedures, economic liberalization and political fragmentation has also led to the influx of American legal firms, beginning in the late 1960s and accelerating through the present day. In fact, between the years of 1985 and 1999, according to the article, the number of American lawyers operating in the EU grew by six times. This high influx of American law firms has helped to spark a significant re-organization of the EU legal system through the adoption of various American legal techniques.
The article then proceeds to describe how securities were handled in the EU prior to the various changes brought about through economic liberalization and political fragmentation. Prior to the 1980s the securities exchanges relied on flexible, informal self-regulations. The securities themselves were provided a great deal of autonomy. They were also shielded from private litigation, since private causes of action were mostly dealt with through deals made between the regulators and those being regulated. However, since that time the EU has changed its regulatory regime for securities to more closely resemble those found in the U.S. Laws and regulations focusing on disclosure, transparency in the regulatory process, and an adversarial and judicalized approach to enforcement were seen by the early 1990s.
The article then asserts that the economic liberalization of the market led to the need for transparency and the subsequent re-regulation of the securities markets within the European Union. This point is illustrated by the creation of the European Securities Commission (ESC) in 2000, and the Committee of European Securities Regulators (CESR) as an advisory group to the ESC. Both are presented as examples of the changes brought about eventually through economic liberalization.
In addition, American law firms were shown to be somewhat active in the European Union securities market through advising on public mergers, offerings, and acquisitions. This growing influence, according to the article has helped to facilitate the growing trend of increasing American legal style within the EU legal system.
The article then illustrates how the nature of product liability law in the EU has changed over the last few decades. Historically product liability cases within the EU had been dealt with through breach of contract or tort claims; both of these have more stringent standards for the consumer, requiring either proof of negligence or intentionality on the part of the corporation being sued. This changed with the Product Liability Directive of 1985, which moved the standards for bring a suit much closer to those of strict liability found within the United States. While the system is moving toward a more American legal style, it is far from a perfect match according to the article. Overall product litigation cases are still rare, and class action lawsuits are still prohibited in some member states. Also, massive damage awards, often seen as an incentive for corporations to utilize stricter product quality control, is still absent the majority of the time.
Finally, the article asserts that the Americanization of the EU legal style results not from emulation of the American style, or direct competition with it, but rather from a natural growth of the forces of political fragmentation and economic liberalization caused by the increase in number and diversity of the principal players across the markets that the EU regulates.
Americanization of the Law of Japan
This section of the article describes how Japan has historically dealt with regulatory issues since World War II, and how it has changed over the last few decades. In essence, post-war Japan had relied on an informal regulatory style, where the government used informal and flexible administrative guidance as a way to influence the affairs of firms and pursue their regulatory goals. This set up was bolstered by the close ties within the Iron Triangle of Japan, which comprised of the Liberal Democratic Party (LDP), the bureaucracy, and the firms being regulated.
In general, litigation was discouraged through the limitation of the number of lawyers in Japan, as well as the channeling of policy dispute resolution into more non-transparent bureaucratic solutions.
Since the early 1980s, however, Japan has undertaken a significant economic liberalization across a number of different sectors. Just like in the EU, this liberalization has introduced a number of new actors, both foreign and domestic into previously sheltered markets. This has led both domestic entities within Japan, and those wishing to exploit their sizable markets to demand a system that emphasized a more transparent and judicial centered way of settling disputes.
While the economic liberalization of Japan allowed for the introduction of reform, it was only with the added combination of political fragmentation that a true shift toward American legal style was seen, according to the authors. Political reforms of the mid 1990s, brought about by the loss of the LDP, encouraged a shift from the more centralized to a more fragmented political one. This in turn led to deregulation followed by a more transparent re-regulation which appealed to more of the electoral base, including consumers and environmental groups. Laws such as the 1993 Administrative Procedures Law (APL) was enacted to codify the administrative procedures, licensing and permitting, public hearings, and required that bureaucrats provide reasons for their rulings.
In addition to further political fragmentation, the economic liberalization of Japan has also led to an increase in the number of American law firms entering into the Japanese market; something previously not encountered. The Foreign Lawyers Special Act of 1986 allowed for this to occur, with a number of restrictions. Also in June 2001, Japan’s Cabinet appointed Judicial Reform Council issued a report calling for a complete overhaul of the nation’s legal system, including changes that would bring it more in line with the law system of the United States.
The article then describes the changes that have occurred specifically to the securities exchange system in Japan. Historically the system focused on merit standards, which reduced the risk by limiting who and what could enter into the system. Also, the Ministry of Finance (MOF) was also known for infrequent usage of formal rules and procedures, instead relying on the wide discretion of the bureaucrats handling the case.
Since the 1980s, however, Japan has shifted to an American approach to securities regulation emphasizing disclosure, transparency, and enforcement through cases brought by private parties. The main cause of this, according to the article was the general increase in investors and financial service providers within the market. This increase undermined the traditional informal way of securities regulation.
In addition to the changes seen in the way securities exchanges were handled, changes were also seen, somewhat in the realm of Product Liability Law. Historically, potential product liability cases were discouraged, so much so that only 150 product liability cases were decided between the years of 1945 and 1990. Cases prior to the reforms were decided under a more stringent tort law and negligence based system. Product safety in Japan relied on the bureaucracy issuing precise design standards and non-judicial routes for injured consumers to secure compensation.
In 1993, however, pressures created through both economic liberalization and political fragmentation combined to help change product liability law in Japan. A series of de-regulation weakened the established bureaucracy, and their ability to protect consumers, and the influx of foreign firms competing in the market demanded a more transparent system. While not completely similar to the U.S. designed system, Japan’s new system also took a step in that direction with the introduction of the idea of strict liability and the expansion of the definition of manufacturer to include any party involved in the manufacturing process.
In this section of the article, the authors again make the statement that the American legal style is going global, but the rate of expansion and it scope varies by location. They state that in both the EU and Japan, the movement towards an American legal style is being driven by increasing economic liberalization and political fragmentation, and the process is unlikely to be reversed.
Qualifications of the Authors
The qualifications of the two authors of this article are extensive. Mr., Kelemen, is a professor of Political Science, at Rutgers University. His areas of expertise and interest range between such topics as environmental policy, federalism, and political practices of the European Union. He is also a Fulbright Fellow in European Union Studies, as well as a member at the Institute for Advanced Study at Princeton. He has both an M.A. and Ph.D. in political science.
Mr. Eric Sibbitt is a practicing attorney within the San Francisco area with O’Melveny and Myers, LLP. His areas of expertise include Chinese Company Public offerings in the United States, Mergers and Acquisitions, Life Sciences, Japan Practice; and Health Care Mergers. He obtained his law degree from the University of Harvard, and was admitted to the law profession in 1997.
Evidence Gathering Methods
Based on the information provided, the evidence utilized in this article was most likely gathered through standard research methods such as literary searches, interviews, and studies in case law. They can be considered appropriate methods of research since the aim of this article, in part was to present historical information and the record of changes in international law that could be attributed to the thesis. To this end, the information and evidence presented was not inaccurate, but could possibly be construed as misleading because the only real evidence presented supported the theory being proposed. However, if the reader did not have an understanding of the other potential causes for the spread of American legal style to other countries in the world, chances are he or she would draw the same conclusions as presented in this article.
Examination of the Logical/Illogical Nature of the Arguments Presented
While the article is logical on the surface, the authors do fall into a number of logical fallacies throughout their article. One fallacy that is apparent throughout the article is that of post hoc. This fallacy assumes that simply because a particular instance happens after something else, there is a causal link between the two. An illustration of this fallacy is when the authors state that the influx of American lawyers into the E.U. and Japan are the cause of the introduction of more American legal techniques. While this might very well be the case, the offer no significance evidence to this assertion. They merely state it as a de facto truth.
The second logical fallacy that is encountered in the article is that of the “Straw man” fallacy. This fallacy occurs when the presenter provides a weaker version of the arguments presented as a counter argument to his own. He then proceeds to “knock the straw man down”, thereby scoring points with the audience. The authors accomplish this through their treatment of the “race to the bottom,” and “race to the top” counter explanation for the phenomenon seen. While both these counter arguments are most likely not the sole cause of the phenomenon, there is likely more to their make-up than is what is presented.
The third logical fallacy presented in the article is that of a false dichotomy. This fallacy is characterized by a presentation by the arguer that there is only two choices available to the audience, when in fact this may not be the case. The arguer then eliminates one of the choices, so the audience is forced to accept the only “alternative solution” as the correct one. In actuality though, there are most likely many explanations for the phenomena presented, and the one presented by the authors might not be the complete and most correct answer.
This fallacy is presented by the authors when they implied that the only two options for the cause of the spread of the American legal system to industrialized democratic countries is either (a) emulation or competitiveness with the United States by other countries, or (b) a combination of political fragmentation within the countries in question and economic liberalization. While both these situations most likely contribute to the overall spread of the American legal style of transparency and formalized judicial system to other countries, it is highly unlikely that there is one explanation that would fit every circumstance, including that of political fragmentation and economic liberalization.
Examination of Alternative View Points
It should be noted that policy convergence is a very dynamic and heterogeneous research field, and the likelihood of a complex phenomenon such as this being completely attributed to one concise explanation is highly unlikely. Like the majority of social science questions, a number of different disciplines can all potentially contribute to the answers obtained, including in this case comparative politics, international relations, economic studies, and even the study of cultural similarities and differences. It is not surprising therefore, that a number of different factors should be considered when researching a topic such as this.
Generally speaking, when two cultures or nations appear to a have a convergent system, there are a number of possible contributing factors to this. All of which may, or may not contribute, and there is rarely, if ever an explanation that contains only one of these factors. One mechanism that is often seen in cases of convergence is that of imposition by one country over another. This is usually accomplished through political demands coupled with economic sanctions or pressure. In the case of the relationship between EU, Japan and the United States, this is most often seen through changes in trade tariffs, lending restraints, and political negotiation. The second factor that is sometimes seen is that of international harmonization or the pressure to comply with an international standard, such as those presented by the U.N. or NATO. An example of this contributing factor can be seen within the entrance requirements to join NATO or become an acting member of the U.N. Security Council. A third factor is that of transnational lesson learning, where one country “learns” from the trials and tribulations of another, and ends up following a similar, but not identical path. An example of this can be seen in the reluctance of both Japan and the European Union to completely adopt every aspect of the American legal style, which has been shown to lead to problematic excesses within the system. Finally, policy convergence can, and does happen simply because two separate countries, acting independently of each other have reached similar solutions to similar problems.
As stated earlier, explanations for why and how two or more countries experience a policy convergence, or even a growing similarity in their styles is often attributed to a number of different factors.
Conclusions
While the arguments presented as an explanation for the phenomenon of the Americanization of legal style in both the EU and Japan are likely to be possible contributing factors, the article fails to adequately address many of the alternative, or possibly contributing factors that could be at play as well. The intent of the authors regarding this oversight is unknown, but it is believed that it was only an oversight due to editing restraints and the wish to focus on the evidence supporting their argument within the article.
While the article does contain a number of logical fallacies, the information and evidence presented herein does provide the reader with a potential, albeit partial explanation of the cause of the convergence of two historically different legal systems. While it should not be seen as a complete and comprehensive explanation, it can be viewed as a significant contributing factor.
Works Cited
Kelemen, R. Daniel, Sibbitt, Eric C. “The Globalization of American Law” International Organization Vol. 58, No. 1. Pp. 103-136 Cambridge University Press 2004 103-136.
Kagan, Robert, and Lee Axelrad. “Adversarial Legalism: An International Perspective” Comparative Disadvantages? Social Regulations and the Global Economy, edited by Pietro Nivola, 146-80. Washington, D.C.: Brookings Institution Press. 1997.