trusts and choice of law November 2, 2008
Posted by Bradley in : Uncategorized , comments closedIn Jose Gonzalez Gomez V Encarnacion Gomez-Monche Vives (Court of Appeal Oct. 3, 2008) the Court of Appeal was faced with figuring out the domicile of a trust for the purposes of Article 5(6) of the Jurisdiction and Judgments Regulation which provides that:
A person domiciled in a Member State may, in another Member State, be sued… as settlor, trustee or beneficiary of a trust created by the operation of a statute, or by a written instrument, or created orally and evidenced in writing, in the courts of the Member State in which the trust is domiciled
The trust in question was established under a declaration of trust by a Jersey corporation (specifying English law as the proper law), the settlor was a Spanish domiciliary, the main assets were shares in a corporation incorporated in the Cayman Islands, and the trust was administered in Liechtenstein. At the time of the litigation the trustees were corporations incorporated in BVI and Liechtenstein. The only connection with England was the choice of English law as the proper law.
Lord Justice Lawrence Collins says that other factors are not to be taken into account where there is an express choice of English law. Choice of law with respect to trusts is different from choice of law with respect to contracts:
The connection between a trust and its proper law is in every sense real and close. A trust is not like a commercial contract where it is only necessary to consider the content of the applicable law in exceptional circumstances. trustees in particular have to be intimately aware of their responsibilities under the general law applicable to the trust. They may have to know whether they can lawfully accumulate income. Resort to the law governing the trust is central to their responsibilities.
But the Lord Justice also states that a choice of foreign law to govern a trust which would otherwise be governed by English law might be treated differently!
virtual world murder – real world consequences October 24, 2008
Posted by Bradley in : Uncategorized , comments closedIt seems that a women has been arrested in Japan for using a borrowed (without consent) password to access Maple Story and kill the avatar who had just divorced her avatar, because she was extremely angry about the divorce. The news story headlines describe this as “online ‘murder'” (Guardian) although the text of the stories makes it clear that she was arrested for the hacking, rather than for the murder – a much less interesting – even uninteresting – story, as the article in the Independent (headlined with a reference to “murder by mouse”) points out, as does Greg Lastowka at Terranova. The Guardian article states that:
Bad online behaviour is usually dealt with within the rules set up by online worlds, which can ban miscreants or confiscate their virtual possessions…virtual crimes can also have consequences in reality.
This seems to me to miss the point if the arrest is for the hacking (a real world act, if you like) rather than for the avatar destruction.
The Fox news version of the story makes a link with other examples where “virtual lives have had consequences in the real world” – and here there is perhaps more to say. Rejection in a virtual world may be harder to take than participants might anticipate. But the purpose of the news stories seems to be the usual virtual world sensationalism rather than anything real. Is this really a more interesting story than if a spurned partner slashes her ex-partner’s suits? And is it more appropriate for criminal law enforcers to intervene in a domestic dispute involving hacking than in one involving hacking jackets?
On the other hand, perhaps we need the distraction of stories like this in the middle of the financial market rollercoaster ride.
forthcoming symposium at um October 20, 2008
Posted by Bradley in : Uncategorized , comments closedThe Jean Monnet Chair and the Miami/FIU European Union Center of Excellence are holding a symposium on Europe’s Constitution: the EU Treaties on Tuesday, November 18, from 3:30-6:30 PM in Merrick 307, at the University of Miami. Speakers include Finn Laursen of Dalhousie University and the Consuls General of France, Italy and the Netherlands.
eu proposed revisions to depositor protection October 16, 2008
Posted by Bradley in : Uncategorized , comments closedThe Commission has published proposals to revise the deposit guarantee schemes directive, which are designed to implement the Council’s recent decisions. The document notes that normal processes have been distorted in current emergency conditions:
Due to the urgency of the matter, neither an impact assessment nor a public consultation could be carried out for the current proposal.
Immediately after recognizing this failure to follow normal processes, the Commission points out in the proposal that it has been thinking about deposit guarantee schemes for the last couple of years or so. But that thinking isn’t very relevant, as it seemed to lead in a direction different from the one in which we are now travelling.
In late 2006 the Commission published a Communication which addressed the issue of coinsurance in this way:
At this stage, there would appear to be insufficient support to introduce any short-term change to co-insurance rules. In general, there seems to be no agreement among stakeholders about whether the underlying principle of moral hazard, (i.e. the risk that, because their deposits are insured in any case, depositors choose a bank without first assessing its soundness) justifies its application. Some consider co-insurance an indispensable element in preventing moral hazard, while others, in particular consumer associations, argue that depositors should not be placed in a position whereby they are expected to judge the soundness of the credit institution.
In the light of these dissenting views, the Commission is not convinced that at this stage a change to the co-insurance rules would be justified.
The new proposal addresses the coinsurance issue as follows:
This has proven counterproductive for the confidence of depositors and may have exacerbated the problems. The argument of moral hazard (depositors should be ‘punished’ if they deposit their funds at a bank offering high interest rates but incurring high risks) is not tenable since retail depositors cannot, in general, judge the financial soundness of their bank. Consequently, this option should be discontinued.
proposed revision of eu consumer protection October 9, 2008
Posted by Bradley in : Uncategorized , comments closedShopping doesn’t seem to be most people’s top priority in current market conditions. But perhaps this means that it is a good time to think about consumer protection. The Commission published yesterday a new proposed consumer protection directive to collect and revise existing EU consumer protection rules. The proposal is designed as a “full harmonisation” measure. Article 4 states:
Member States may not maintain or introduce, in their national law, provisions diverging from those laid down in this Directive, including more or less stringent provisions to ensure a different level of consumer protection.
This is supposed to mean that traders can use the same contract terms in all Member States. At the same time consumer protection is increased in some respects. There are new lists of banned terms in consumer contracts (a black list) and of terms which are presumed to be unfair (a grey list). The proposal has some relevance to financial services, but does not apply to circumstances covered by the Distance Marketing of Financial Services Directive or the Consumer Credit Directive.
competitive depositor protection October 5, 2008
Posted by Bradley in : Uncategorized , comments closedDepositor protection has been a subject of controversy in the EU before now (for example, the negotiations which led to the adoption of the deposit guarantees directive). But no sooner had Peter Mandelson taken the helm of the Department for Business, Enterprise and Regulatory Reform (the “Voice for Business Across Government” – Better Regulation Department) (a very apt appointment, as he has direct, personal, experience of some of the causes of current financial market turmoil – misleading disclosures/non-disclosures to mortgage providers) than Germany announced that it was going to improve protections for depositors with German banks. It’s just not cricket.
the future of florida courts September 30, 2008
Posted by Bradley in : Uncategorized , comments closedA recent press release from the Florida Courts announces a number of public meetings:
Think of the changes Florida has undergone in the last two decades — and imagine the changes that will take place in the next two decades.
As Florida changes, so too must Florida courts. Sheer population growth will increase the number of cases coming into the courts. Significant changes in demographic and societal trends will alter the kinds of cases that the courts must resolve. Economic changes will impact the resources available to handle cases. Emerging technologies will change the ways people interact with each other and with the courts.
Florida’s judicial branch is working on a long-range strategic plan so that the courts can respond to new challenges and stand firm as a strong cornerstone of a well-functioning society and a healthy economy. And it wants to hear from people around the state as it develops its plan.
The Supreme Court Task Force on Judicial Branch Planning will hold nine meetings around the state, including in Miami. The Task Force is inviting citizens and local officials to share their thoughts on trends and conditions that they believe will impact the ability of the judicial branch to carry out its mission over the next 20 years. The current strategic plan for the Florida judicial branch, which can be found at www.flcourts.org/gen_public/stratplan/index.shtml, includes the mission and vision of the branch.
One of the meetings is this coming Thursday from 4-7pm at the Coral Gables Branch Library, 3443 Segovia Street, Coral Gables, Florida.
legislation, delegated legislation and financial emergencies September 30, 2008
Posted by Bradley in : Uncategorized , comments closedThe Bradford & Bingley Transfer of Securities etc Order was adopted yesterday under the Banking (Special Provisions) Act 2008 on an unusual schedule for UK statutory instruments:
3.1 It was not possible in the case of this Order to comply with the 21-day rule according to which relevant instruments are laid before Parliament for at least 21 days prior to coming into force. The Order was made at 7.40 a.m. on 29th September 2008, came into force at 8.00am on that day and then was laid before Parliament on that day.
3.2 It is important that the transfer of securities in Bradford & Bingley, and the transfer of certain property, rights and liabilities and other related matters, has effect as soon as possible following the making of the Order. It is in everyone’s interest for the transfer of shares and transfer of property to be effected as swiftly as possible to avoid uncertainty .
For many of the provisions of the Statutory Instrument, the speed is understandable. But some of the provisions don’t just address the urgent transfer of assets, but purport to alter primary legislation. For example, the Financial Services Act requires the FSA to publish draft rules and try to bring them to the attention of the public before acting to promulgate rules. The original exception to these requirements stated that they would not apply
if the Authority considers that the delay involved in complying with them would be prejudicial to the interests of consumers.
The Bradford and Bingley Amendment Order adds the following language:
or if it is making rules for the purposes of, or to facilitate or in consequence of, a transfer under section 3 or 8 of the Banking (Special Provisions) Act 2008.
Surely this provision would have been more appropriate in the Banking (Special Provisions) Act itself (which was itself enacted very speedily), rather than in a statutory instrument which came into effect 20 minutes after it was made by the Treasury and was only later laid before Parliament? On the other hand, the statute does seem to give the Treasury an incredibly (excessively?) general power to disapply statutory provisions or rules of law in section 12:
(1) The Treasury may by order make-
(a) such supplementary, incidental or consequential provision, or
(b) such transitory, transitional or saving provision,
as they consider appropriate for the general purposes, or any particular purposes, of this Act or in consequence of any provision made by or under this Act, or for giving full effect to this Act or any such provision.
(2) An order under this section may in particular-
(a) disapply (to such extent as is specified) any specified statutory provision or rule of law…
(not) understanding food risks September 26, 2008
Posted by Bradley in : Uncategorized , comments closedReading the recent news about melamine contamination of foods produced in China, and remembering how friends with pets dealt with last year’s pet food melamine contamination problem, I wonder how worried to be. A story which began with problems in infant formula spread to other products made with milk as an ingredient. For example, White Rabbit candy, which, according to the Wikipedia entry has been marketed as a healthy product, is one of the products affected. In deciding how worried to be I would like some data on the risks. The FDA website has a reassuring press release. This morning, the Europa website’s press release page showed a release from the European Food Safety Authority (EFSA) with a link to a detailed statement assessing the risks (unfortunately, since I first saw the press release it has been pushed off the front page by other news). I’d far rather have details than platitudes, even where the details don’t in the end help me very much. (more…)
regulation and the financial crisis September 23, 2008
Posted by Bradley in : Uncategorized , comments closedAlongside the issue of what sort of bailout may be appropriate to stop the financial markets imploding (Richard Epstein argues that bad regulation isn’t the right answer), is the issue of how financial regulation should be amended to prevent such risks of implosion for the future. Dominique Strauss-Kahn of the IMF has written:
There is a deeper structural issue to be resolved. This crisis is the result of regulatory failure to guard against excessive risk-taking in the financial system, especially in the US. We must ensure it does not happen again. Work has started to rebuild the architecture and the leading industrialised countries have already put forward recommendations for better prudential regulation, accounting rules and transparency. The role of credit rating agencies will also need to be rethought, with greater public scrutiny. In a globalised world, these efforts will have to be broad-based if they are to be effective.
But this question of what sort of financial regulation we need is very complex. Part of AIG’s problem (part of the reason for the need to rescue AIG) was its exposure to credit default swaps, some of which were designed to help financial institutions limit their credit risks and reduce their needs for capital. Will we really be better off layering regulation of credit default swaps on top of all of the other regulations financial institutions are subject to, as New York is doing?