Between 1999 and 2003, three landmark decisions of the European Court of Justice—Centros, Überseering, and Inspire Art—struck down laws restricting the ability of corporations to exercise their right to free establishment under the EC Treaty. The most significant impact of this freedom is the ability of a corporation to choose its state of incorporation. Prior to the three landmark decisions, continental Europe had effectively prevented such choice by forcing a corporation to be incorporated in the state where its central management was located, the so-called real seat doctrine. Yet the revolution in corporate choice of law expected by many scholars after the three landmark decisions did not occur. This Note argues that this failure resulted from indirect restrictions imposed by continental countries which removed the incentives motivating corporate mobility. Three new decisions by the European Court of Justice, de Lasteyrie du Saillant, Marks & Spencer, and SEVIC Systems, have attacked these indirect restraints. The Court’s analysis in this second wave of liberalization demonstrates a willingness to overturn not only laws that directly restrict corporate freedom of establishment but also statutes that reduce corporate incentives to seek more efficient governing law. While the first wave of landmark decisions may have been more significant jurisprudentially, the second will be far more influential on the actual exercise of freedom of establishment. The effect of the second wave cases will be a European corporate landscape that looks much more like that of the United States than of Europe itself last year.
Note
The Unrealized Promise of Section 1983 Method-of-Execution Challenges
Prior to Hill v. McDonough, federal courts largely viewed method-of-execution challenges as being cognizable only through a petition for habeas corpus. Because federal habeas doctrine involves significant restrictions, such challenges were often difficult, if not impossible, to bring. This was particularly true, for instance, where an inmate had already litigated his first habeas petition and attempted to bring a later habeas corpus execution-protocol challenge: the rules against successive petitions nearly always prevented it, regardless of any newly-revealed factual or legal predicates for the challenge.
But Hill (and a predecessor case, Nelson v. Campbell) changed this framework: inmates could now challenge their method of execution through § 1983. By freeing inmates from many of habeas corpus’s restrictions, this ought to have made a significant difference for litigants.
As is often the case, though, theory and practice can diverge. This Note will show that lower courts seeking procedurally to limit the litigation resulting from Hill often fall back on habeas doctrine, importing aspects of it into these § 1983 suits. Given the very different policies and rules that underlie each of these doctrines, this importation frustrates the promise of Hill’s § 1983 vehicle for method-of-execution challenges. And even where courts do not engage in such importation, they frustrate Hill’s promise in other ways not required by applicable § 1983 doctrine, such as by formulating unduly harsh timing rules or overlooking the applicable standard of review. Thus, to date Hill’s § 1983 vehicle has done little to loosen the method-of-execution challenge vise.
Return on Political Investment: The Puzzle of Ex Ante Investment in Articles 3 and 4 of the U.C.C.
When, why, and how does a firm decide to invest its resources in political capital? What factors inform the firm’s decision to lobby political bodies? How important is the resulting durability of law in making this calculus? Although these questions have been largely unanswered in the legal literature, they are fundamental to a complete understanding of public choice theory. Using Articles 3 and 4 of the Uniform Commercial Code as a framework for examining these questions, this Note identifies four threshold inquiries each firm must answer before engaging in political investment. It then develops those factors that a firm may consider in estimating its return on political investment (ROPI). A puzzle emerges, however, when one considers the default nature of the U.C.C. Economic theory and the right to contract suggest that the ex post distribution of such terms will achieve general equilibrium regardless of their ex ante value. Without ex post legal durability in the form of mandatory rules, it is difficult to imagine just how commercial banks are capable of harnessing long-term permanent returns from their political investment in the U.C.C. While the current legal literature simply assumes that banking interests can harness a non-negative return on political investment, this Note relies upon behavioral economics and the notion of bounded rationality to conclude that private banking interests are likely to capture a positive ROPI, even where default rules with seemingly little durability govern their contracts. In arriving at this conclusion, it first identifies the political investment threshold inquiries a firm must answer prior to contributing capital to a political investment, as well as the substantive returns that firms are likely to realize as a result.