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Volume 45 - Issue 1
Anglo-Saxon Res Judicata Culture for Civil Law Systems
One traditional aspect distinguishing the common law system from the civil law one lies in the perceived disparities in the inspiration of the law-making process. The Anglo-Saxon system typically grounds its rules in explicit and discernible policies spanning social, anthropological, and economic realms directly relevant to the circumstances. In contrast, the civil law tradition frequently necessitates a fixed conceptual framework, sometimes detached from the practical needs of society. Or, at least, this dynamic persisted until recent changes prompted by the “doing business” model, which has timidly ascended to the forefront of the State agenda, particularly across Europe, notably in Italy. Despite some expected resistance from academia, civil law jurisprudence has increasingly taken the forefront, often guiding legislative developments and mirroring the historical governance trajectory in Anglo-Saxon societies.
Hence, res judicata embodies a significant trend in this evolving process, whether for overruling legal precedents or introducing new legislative provisions. In one of the oldest civil law systems, the Italian system, the scope of res judicata has expanded significantly, and the primary goal of civil justice reforms and the new jurisprudence has been to reduce multiple litigations. While some differences exist, there is a growing convergence between the two legal systems on the role and impact of res judicata in preventing the relitigation of cases. Res judicata serves as a privileged lens through which familiar elements of both systems contribute to shaping a global pattern of civil justice.
Confronting AI-Induced Power Disparity and Emotional Disruption: Expansive Duties of Broker-Dealers and Investment Advisers
The increasing use of AI models in investment services has raised concerns about ineffective responses, power disparity, and investor harm caused by emotional disruption. Generative AI-driven investment service providers often fail to address consumer issues quickly, guiding customers through superfluous and meaningless verbiage or professional terminology in infinite loops without providing an option to talk with a human customer service staff. Customers who are “stuck” in ineffective or inaccurate responses from AI agents may waste time for investors, make poor investment or trading decisions, and the platform may profit from investor rational decision-making owing to investors’ emotional disruption.
This article examines these concerns through the lens of broker-dealers and investment advisers regulation in the United States. While the Investment Advisers Act, Securities Exchange Act, and Regulation Best Interest set fiduciary duty and duty to work for the best interest of investors, these rules are designed on the assumption of human service providers who can feel the emotional pressure from investors and have physical and mental limits. These rules fail to address the fundamental power disparity between investors and the platform, as well as the harm and new forms of conflicts of interest caused by AI-powered investment service providers.
To address these problems, this article argues for expansive duties of brokers and investment advisers to guarantee that AI models provide objective and effective recommendations free of biases and conflicts of interest. Customers should be able to get timely human service with a one-click simple operation during regulatory business hours. Investment service providers should establish algorithmic evaluation programs to prevent fraudulent activities and conflicts of interest. These programs should include personnel, policies, standards, and procedures for evaluating and adjusting models. Human specialists with expertise in programming and compliance are needed to analyze source code, examine documentation, and assess training data and model design. When there are no conflicts of interest between the investment service providers and the investor, or when investors are willing to accept the risks and conflicts associated with certain investment suggestions, comprehensive and accurate disclosure is essential for monitoring and regulation. This involves revealing not only any conflicts of interest, but also the decision-making process, data, and algorithm utilized to make important investment recommendations.
A New Era of Accountability? The Holding Foreign Companies Accountable Act’s Pursuit of Regulatory Equality
This paper discusses the Holding Foreign Companies Accountable Act (HFCAA) as a response to the long-standing regulatory disparities between U.S. and foreign firms listed on U.S. stock exchanges, with particular regard to foreign firms from China. The HFCAA requires that any firms listed on U.S. stock exchanges be subject to inspections by the Public Company Accounting Oversight Board (PCAOB) or face delisting, aiming to eliminate historic regulatory disparities. The paper begins by highlighting the historic regulatory gap in oversight resulting from China’s lack of cooperation with U.S. regulators and continues by discussing the investor harm from various scandals that could have been mitigated by addressing the regulatory gap. While the HFCAA successfully prompted unprecedented cooperation from Chinese regulators, the legislation carries risks, including potential delistings, unintended economic consequences, and questions regarding its political overtones. The paper concludes that while flawed, the HFCAA represents a constructive step toward investor protection and regulatory equality, calling for continued vigilance and legislative refinement to sustain its effectiveness.
An Analytical Examination of the Inefficacy of China’s Independent Director System: A Comparative Perspective
This paper analyzes the effectiveness of China’s independent director (ID) system in listed companies following the 2023 regulatory reforms enacted by the China Securities Regulatory Commission (CSRC). These reforms raised the independence standards for IDs by broadening disqualification criteria and modifying the appointment mechanisms. Despite the establishment of an ID system this century and the recent enhanced standards, empirical evidence indicates persistent shortcomings in China’s ID mechanism. Many of the positive outcomes initially attributed to IDs—such as improved internal control or better firm performance—cannot conclusively isolate IDs’ independence or expertise as the true cause. In contrast, negative evidence, which specifically targets directors’ independence and decision-making behavior, suggests IDs often fail to effectively monitor and hold management accountable due to deeply ingrained social ties.
To explain this persistent ineffectiveness, the paper explores structural differences between the Chinese and U.S. legal systems. China’s civil law framework relies heavily on bright-line rules, limiting flexibility and adaptability in determining director independence. As a contrast, the U.S. common law system, particularly exemplified by Delaware’s jurisprudence, adopts flexible judicial assessments of directors’ relationships, allowing an individualized response to evolving corporate governance issues. Furthermore, the enforcement mechanisms in China are significantly weaker, further impairing the deterrence power of regulations.
Ultimately, the paper concludes that due to fundamental divergences in legal enforcement, cultural context, and judicial flexibility, the ID system in China remains largely symbolic, with only a limited effect of improving corporate governance. This comparative examination suggests that simply transplanting a regulatory model from a different legal and cultural setting without sufficient adjustments may result in limited practical effectiveness.
Repurposing the United Nations Trusteeship Council to Govern the Establishment of Outer Space Settlements
Current existing international law and treaties on outer space do not address or regulate private actors’ property claims or human settlements in outer space. American companies such as SpaceX and Blue Origin, as well as countries like the United States, Russia, and China, are seeking to create colonies on the Moon and Mars. However, there is no international legal authority to allow or regulate this. In order to legitimize and control this impending outgrowth of human settlements, this paper proposes that the U.N. Trusteeship Council be repurposed to govern non-state actors’ claims of outer space property.
First, this paper explains the development of space exploration among spacefaring nations like the United States and Russia. Second, this paper explores the current controlling law on activities in space with a focus on the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies in 1967 (the Outer Space Treaty, or the OST). The OST is the predominant controlling law among spacefaring nations and strictly prohibits state sovereignty, and therefore state property rights, in outer space. However, it does not speak to non-governmental actors’ claims of property or settlements in space. As we see a rise in space development by private actors, it is imperative to set up an internationally recognized set of rules and regulations to prevent chaos and even war. Third, this paper examines the history of the United Nations Trusteeship Council and how it has been a successful tool in enabling territories to become independent under the guidance of the U.N. To conclude, this paper proposes that the U.N. Trusteeship Council be repurposed to manage resources in the global commons like space. This solution could allow non-state actors to establish settlements on the Moon and Mars while not violating the sovereignty issues in the OST.