Globalizing Property Law: An Institutional Analysis.

Author:Lehavi, Amnon
 
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TABLE OF CONTENTS I. INTRODUCTION 1174 II. THE COMPLETE NATURE OF DOMESTIC INSTITUTIONS 1177 III. THE GLOBAL SETTING: INCOMPLETE INSTITUTIONS AND NORMATIVE FRAGMENTATION 1181 A. Sovereignty and Institutions: An International Perspective 1182 B. Top-Down and Bottom-Up Institutions 1183 C. In Rem Effect of Property Law: Institutional Implications 1186 IV. INSTITUTIONAL ANALYSIS OF CROSS-BORDER PROPERTY NORMS 1187 A. Soft Law Instruments 1188 1. Declarative International Instruments 1188 2. Collaboration on Best Practices, Guidelines, and Model Laws 1190 B. Conflict of Laws Strategy 1196 1. Treaties on Matrimonial Property, Succession 1197 2. Treaties on Insolvency 1202 C. Approximation Strategy 1204 1. Intellectual Property Conventions 1204 2. Cultural Property 1206 D. Supranationalism Strategy 1207 1. EU--Negative/Positive Harmonization 1208 2. European Convention on Human Rights 1210 3. American Convention on Human Rights 1212 4. Bilateral Investment Treaties 1213 5. European Unified Patent 1216 6. International Registry of Interests in Mobile Equipment 1217 V. CONCLUSION 1220 I. INTRODUCTION

Institutions play a key role in the ability of top-down actors, such as states, and bottom-up ones, such as individuals or corporations, to promote various strategies for globalization. This Article argues that the challenge of establishing authorized and coordinated institutions in the global context is particularly difficult--but is nevertheless essential--in the case of property systems.

Property law is based on creating norms for the in rem ranking of rights, powers, and priorities in regard to assets. (1) This means that property legal interests, such as ownership, leases, security interests, and servitudes, possess a qualitative trait of general applicability toward a broad class of stakeholders. Property law establishes a set of legal rights, powers, and priorities in regard to various types of assets: land, tangible goods, intellectual property and other intangible assets, and resources such as tradable emission rights. Unlike purely contractual disputes, legal scenarios such as conflicting sale transactions, good faith purchase of voidable or void title to assets, and bankruptcies with multiple creditors fighting over priority to a limited pool of the debtor's assets highlight how property law must often decide conflicts between parties that have no contractual privity or any type of preset arrangement for dispute resolution. (2)

Accordingly, the in rem principle of property should optimally provide a single ranking of property interests for different types of assets through structural and legal features, such as some version of a "closed list" principle, registries and other forms of publicity, and principles for the prioritization of certain interests over others. (3) From an institutional perspective, these features of property law call for a dominant role for the legislative, administrative, and judicial branches in devising the list of recognized property rights, establishing formalities for their validation (e.g., through registration), and setting the ranking of property interests in case of conflicting claims.

This Article shows how the challenge of devising a workable property system becomes much more onerous, both qualitatively and quantitatively, in the cross-border context. From an institutional perspective, the in rem feature of property requires a cross-border legal ordering by an array of domestic and supranational institutions: legislative, administrative, and adjudicative. This is especially so because unlike cross-border disputes that apply only among contractual parties, the in rem feature of property law places practical limits on the ability to engage in private ordering, such as through a contractual dispute resolution clause, to circumvent potential problems of legal uncertainty or other types of incongruence of norms across national borders.

At present, the framework of supranational institutions dealing with property law is fragmented and incomplete, and this in turn entails challenges for the ability of top-down or bottom-up actors to move closer to global legal ordering in various contexts of property law.

This Article argues that the need for establishing and operating supranational institutions, whether legislative, administrative, or judicial, depends on the specific globalization strategy chosen in a certain property context. Whereas "soft law" instruments do not require binding supranational institutions, the need for such institutions proves critical for more ambitious strategies for globalization. The Article identifies three types of "hard law" strategies for the globalization of property law, shows how each such strategy currently relies on a certain set of institutions, and demonstrates how a fuller realization of each such strategy may call for better institutions.

The three "hard law" strategies for globalization analyzed in the context of property law are as follows: (1) conflict of laws strategy, which aims at improving certainty about the national forum that would have jurisdiction and the law that would apply, while leaving the mainstay of property ordering to the respective domestic systems; (2) approximation strategy, usually promoted through treaties or conventions that introduce "minimum standards of protection" in a certain field of law (most prominently in intellectual property), while leaving to states and their courts the chief power of lawmaking and enforcement of such norms; and (3) supranationalism strategy, which establishes norms that explicitly enjoy some type of a superior legal status over national norms in case of conflict. Leading examples of the supranationalism strategy are property clauses in binding human rights treaties, such as Article 1 of the First Protocol of the European Convention of Human Rights. (4)

The need for comprehensive and effective supranational institutions is positively correlated with the substantive scope of a certain strategy for promoting cross-border norms. Accordingly, a soft law instrument or a conflict of laws strategy may settle for relatively modest supranational institutions. In contrast, the establishment of binding supranational institutions may prove critical for the approximation strategy, and even more so for the supranationalism strategy. The Article identifies the current gaps in the institutional context and examines future paths for progress.

This Article is structured as follows. Part II demonstrates the complete nature of domestic legal institutions. It shows how in well-functioning states, legal systems include generally acceptable and comprehensive rules that cover the: (1) authority of institutions for lawmaking and enforcement; (2) capability of complete coverage, such that no issue worthy of legal ordering would remain in a vacuum, with no institution authorized to act in the matter; and (3) resolution of potential conflicts among governmental institutions (e.g., legislature vs. judiciary).

Part III shows that unlike nation-states, the international setting is largely lacking in all of the abovementioned institutional aspects. These gaps pose a significant challenge for property law in moving from the domestic level to effective global governance. This Part highlights the interface of sovereignty and institutional capacity in the international arena; the interplay between bottom-up and top-down forces in driving cross-border activities that implicate property law; and the unique features of property law that require both institutional completeness and normative coherence.

Part IV outlines the web of supranational institutions that currently impact property law, based on the taxonomy of the strategies for globalization set out above: soft law instruments, conflict of laws strategy, approximation strategy, and supranationalism strategy. It examines the growing role of supranational tribunal and courts, but also the limited jurisdiction that such judicial institutions have, especially in the context of property disputes between private parties. It underscores global administrative mechanisms that have been developed over the past few years, including a global registry for mobile aircraft equipment and regional patent registries. The biggest challenge remains in regard to global legislative institutions. Relying on theme-specific supranational conventions, property law falls significantly short of global legislative ordering. This is so because the international setting lacks a supranational legislature with comprehensive authority to craft the entire array of in rem property interests, implicating both public law and private law aspects. These types of institutional gaps vividly illustrate the persisting impediments to moving toward an effective global governance of property rights.

  1. THE COMPLETE NATURE OF DOMESTIC INSTITUTIONS

    Under well-established rules of international law, one of the inherent features of a state is the existence of an effective "government." (5) This term should be understood as going beyond the ability to identify some sort of a sovereign power that is generally recognized by persons located inside the state's territory and by other states outside of it. Securing a "general habit of obedience" (6) to a person or collective body identified as the sovereign is the first step in moving away from an anarchic state of nature, but it must be complemented by establishing an orderly system of government. For a state to properly function, it needs to have a complete set of institutions that are formally authorized and practically capable of making, administering, and enforcing an entire set of legal norms that would apply within the state's territory.

    Scholarly accounts of legal systems have traditionally sought to identify the types of fundamental legal norms that define a legal system, but they have also realized that such rules cannot be detached from the institutions that...

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